New York’s Rising Jobless Rate Poses Test for Cuomo
Published: October 15, 2012 - New York Times
ALBANY — While the nation’s unemployment rate has been
declining over the last year, New York State’s has been rising sharply,
presenting a challenge for Gov. Andrew M. Cuomo as he tries to build an image as
a fiscal centrist who can transform the state’s business climate.
Over the last 12 months, New York has been the only
state with a statistically significant increase in its unemployment rate,
according to the Bureau
of Labor Statistics. As of August, the state’s rate had climbed to 9.1
percent from 8.2 percent when Mr. Cuomo took office in January 2011, a reversal
of the national trend, according to the federal household survey.
In every corner of the state, there are trouble spots.
In the Bronx, the unemployment rate is nearly 14 percent. Along Lake Ontario, in
rural Orleans County, shrinking manufacturing jobs and government payrolls have
pushed unemployment to more than 11 percent. In St. Lawrence County, in the
northern Adirondacks, the rate is also 11 percent.
The Cuomo administration, backed by some economists,
argues that New York’s economic picture is more accurately reflected by other,
more positive statistics. They point to a federal payroll study that shows New
York doing well, relatively speaking — with jobs growing by 1.4 percent over the
last 12 months, an above-average rate. Initial unemployment insurance claims
have also been falling.
“Simply relying on the household unemployment survey
does not paint an accurate or complete picture of job creation in New York State
because the sample used in that survey is inadequate,” said Richard Bamberger, a
spokesman for the governor.
“Under Governor Cuomo’s leadership, jobs are being
created at the fastest rate in four years, and the proof is in the numbers,” he
added, citing falling unemployment claims. “New York has regained all of the
324,000 private-sector jobs lost in the recession,” Mr. Bamberger said.
But for a governor often discussed as a 2016
presidential contender, the rising unemployment rate, which is based on a
national survey of households, could be the statistic that prompts a thousand
political ads if the trend continues — Mr. Cuomo’s potential opponents, after
all, are unlikely to highlight conflicting economic data. (And the unemployment
rate is not the only sign of economic concern: the state’s poverty rate has also
risen sharply.)
“Certainly, this would come under scrutiny if he ever
ran for president,” said Don Dutkowsky, an economist and professor at the
Maxwell School of Syracuse University. “But there is a sense that he’s taking
hold of some real challenges and trying to move forward, and that’s something we
wouldn’t mind seeing on the national stage either.”
Unemployment data from the national household survey
has become something of a fetish in the current presidential race. Mitt Romney
had assailed
President Obama for failing to bring down the national jobless rate below 8
percent; it did fall to 7.8 percent in September.
Economists offered a range of theories about the
reasons that unemployment and payroll numbers diverged in New York City,
statewide and, to a lesser extent, in other parts of the Northeast. There are
notable differences between the surveys: the unemployment data is based on a
household survey that reaches the self-employed and people who work in
agriculture, but the payroll survey is not. Some said the unemployment survey
had shortcomings, particularly the relatively small number of people interviewed
— about 2,330 in New York State.
Others dismissed those concerns and said the numbers
needed to be closely watched.
“It’s something to keep an eye on,” said David
Hitchcock, the primary New York State analyst for Standard & Poor’s.
But he said he was encouraged by data showing
continuing private-sector job growth. Standard & Poor’s has an AA rating for
New York — Mr. Hitchcock called that an “average rating for the average state” —
and also a positive outlook.
“It’s not good if the unemployment rate goes up,” he
said.
“But if it looks like a temporary thing and
private-sector job growth is continuing,” he added, “one would hope it would
level off and come down again. If it doesn’t, then I think there’s something
more fundamental going on.”
Marisa DiNatale, an economist at Moody’s, said the
unemployment numbers might miss some downstate population growth, while the more
positive payroll numbers “seem to be supported by other economic data coming out
of the state that looks pretty good.”
“Certainly the economy has slowed in New York, and the
pace of job growth has slowed,” she said.
And James A. Parrott, chief economist at the
labor-backed Fiscal Policy Institute, said: “Unemployment is still a problem,
but it’s not as bad as the unemployment rate suggests.”
“The recovery is not as strong as it could be,” he
said, adding that much of the job growth has come in low-paying industries, like
retail, restaurants and home health care.
Two senior officials at the New York Federal Reserve
Bank, in a blog
item posted on the Fed’s Web site last month that focused on the New York
City economy, explored and dismissed a few possible explanations for the
divergence between the unemployment and payroll data.
“While there are several potential explanations, the
stagnation of resident employment remains largely a puzzle,” wrote Jason Bram, a
senior economist, and James Orr, an assistant vice president in the regional
analysis group.
“There seems to be no single overriding explanation
for the gap between the two employment measures,” they added. “Other indicators
of the city’s economy are indicating a healthy recovery, particularly the low
office vacancies and rising rents.”
Mr. Cuomo has talked frequently of the importance of
job creation and economic development, but he has been in office less than two
years, so the impact of some of his initiatives may not yet have been fully
felt. He has governed as a fiscal centrist, championing laws that imposed a cap
on property tax increases and lowered pension benefits for new state workers.
This month, he has been conducting
bus trips around the state to show off economic development projects
receiving state aid.
But he has his work cut out for him. While the state
budget is finally coming under control after years of outsize deficits, a
growing fiscal crisis among New York’s municipal governments is likely to put
the state under stress. Last week, the Tax Foundation, a nonpartisan research
group, ranked
New York last among the 50 states for its business climate, while the
conservative Cato Institute gave Mr. Cuomo a “D” grade in assessing
his tax and spending record.
In a radio interview last week, Governor Cuomo’s top
aide, Lawrence S. Schwartz, said the reports were “more based on ideology and
not facts,” adding that the groups “took a bunch of data sets and manipulated
them to fit their worldview.”