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New York's Job Outmigration Ranked as Worst in the U.S

October 7, 2010
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New York state's job base grew at just one-tenth the national rate from 1993 to 2007, largely because more firms left the Empire State than moved there, and because more local companies went out of business than were born, according to a report released Oct. 6 by the Empire Center for New York State Policy.
During that 15-year period, New York added 165,500 jobs, for a growth rate of 1.7 percent, according to the report by the conservative think tank, which draws on a newly developed set of data generated from Dun & Bradstreet Inc. information files.
New York gained 259,090 jobs from firms moving into the state while losing 407,558 jobs from relocations to other states, the report says, with many of the jobs moving to Connecticut and New Jersey . The state's net job-migration loss was the worst of any state.
The bulk of the loss—89 percent, or 129,560 jobs—was in New York City.
Long Island was one of only two regions to post a moderate gain, possibly on the back of the city's loss.
The Empire State also lost 656,942 more jobs to business closures than it gained from startups, a key factor in its weak overall growth, and the sixth most significant loss in the country.
Expansion of existing firms was the principle cause of job growth in the state, with firms creating 900,054 more jobs than they shed.
“But this wasn't nearly enough to make up for the state's job-migration losses and its failure to nurture more startups,” wrote the report's author, J. Scott Murphy. Only seven states had lower growth rates than New York, Murphy noted, calling for changes in tax policy to provide a “shot in the arm” to small businesses.
The report doesn't get into the reasons for the state's poor performance, but E.J. McMahon, the center's director, said New York is not doing enough to create conditions for small firms to grow. Job creation from new firms has significantly downshifted since the burst of the dot-com bubble. Compared to the national average, a smaller share of New York's work force is employed by firms with 100 or fewer workers, and only the New York City work force matched the national self-employment growth rate of 22 percent over the 15-year period.
“The whole reason we gained any jobs at all was expansion by existing firms,” he said. “It's nice to have big firms growing, but the feeder level is the small firms.”
The data used in the study end in 2007, which is when the recession began. New York, especially the city, was not hit as hard as the nation in the recession and has accounted for a bigger share of the job growth in the recovery.
James Parrott, chief economist at the liberal Fiscal Policy Institute, questioned the accuracy of the data used. He said the paltry job growth detailed in the report contradicts state Department of Labor employment data. He says the department data show a net gain of about 1 million jobs, or 12.8 percent, over the 15-year period, much higher than the 1.7 percent shown in the report.
Parrott said a 13,924 gain in Postal Service jobs and an 8,034 loss in colleges and universities due to expansion and contraction runs counter to Labor Department data that show a 13,900-job loss in the postal service and a 101,000 job gain in higher education.
“The data are widely divergent from official employment data, which represents more than 90 percent of the jobs in the state,” he said.
McMahon said his report uses a broader data series—a total of 2.4 million different businesses—that takes a larger group of jobs into account than the Labor Department does, including ones people create for themselves. And he says some of the industry classifications could be different in the two sets of data.  
Filed by Daniel Massey of Crain's New York Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
 
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