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Vol 2.47   

Working, or Not Working, in New York State

"Kaleidoscope" is an apt word to describe New York State's job market. As the year turns and the Great Recession's unemployment toll continues to worsen, New York's job market is a moving composite of fragmented sub-markets lurching in different directions � some positive, some very negative, and others just middling. True to form, New York State is quirky, contradictory, puzzling, and critical for the future of America's national economy.

The Fiscal Policy Institute's new 2009 edition of their annual State of Working New York report is an invaluable tool for understanding our kaleidoscopic job market. On the sunny side, New York leads the nation in productivity as measured by output per worker. Greater Metro New York City, the Hudson Valley, Ithaca, and Rochester are magnets for innovative "new economy" sectors.

On the cloudy side, New York is the extreme case of growing income-gaps between the wealthy and the rest of us: the top 4 percent of New York earners received two-thirds of the new income generated during the 2002-07 expansion. Middle class income, factoring in inflation, barely grew: only 3 percent from the late 1990s to the middle of the next decade. In sectors where new employment is being created at the fastest clip, a third of the new opportunities are low-wage, low-skill, low-benefit jobs.

Until recently, New York State's high productivity was accompanied by higher average earnings. No more. Now the average earnings in New York State have dropped to the national average, while it's still an expensive place to live.

On semi-cloudy middle ground, the Great Recession started nationally in December 2007, but took ten months to fully hit New York. We didn't get as deep into bubble mortgages as many other states. For 2008, we ranked 35th among the 50 states in terms of the proportion of the total housing stock in foreclosure.

Paradoxically, the demographic decline of Upstate New York created a soft housing market that protected us from some of the worst speculative excesses.

Our full woes set in with Wall Street's meltdown in September 2008. Even then, while New York's official unemployment rate, 8.9 percent in September 2009, is plenty painful, it was modestly below the national average of 9.8 percent. Comparing the first half of 2008 to the first half of 2009, the number of unemployed people in New York increased by 62 percent, compared to 71 percent nationally.

For the three Mid-Hudson labor markets which provide most of the jobs for readers of this newspaper, the increase was lower yet: 49 percent for Ulster County; 56 percent for Poughkeepsie-Newburgh-Middletown; and 51 percent for Sullivan County. Painful, but not as painful as in many other places.

While the Great Recession clobbered New York State's budget, it's been worse in many other states. Ranking states by projected shortfalls as a proportion of total budgets, New York doesn't make it into the Top 10 most-broke states. We're in the middle of the pack. That has meant, to date, fewer cutbacks in state employment and programs � cuts which worsen Great Recession job markets.

But there's a big however to New York's middle ground: this is a crummy place to be if you're unemployed. Only 40 percent of jobless New Yorkers qualified for unemployment insurance (UI) during April-June 2008. That's significantly lower than in nearby states: Pennsylvania, 58 percent; New Jersey and Massachusetts, 57 percent; Connecticut, 45 percent.

One important reason for our low qualification rate is the many unscrupulous New York employers who illegally misclassified employees as so-called independent contractors. This avoids paying UI taxes and other benefits, and removes the right to unionize. Misclassified employees are ineligible for UI.

Cornell University researchers estimate that 705,000 New Yorkers were misclassified as independent contractors in 2007. By early 2009, admirable efforts by state investigators reversed 85,000 illegal reclassifications. Much remains to be done.

New York's bad story doesn't end there: the 40 percent minority who qualified for UI received lower benefits than in nearby states. New York has frozen UI benefits since 2000, while inflation ate away 25 percent of their value. Our maximum payout of $405 only covers 35 percent of average state earnings.

Ranking states from the lowest to highest percentage of state average earnings covered by UI, New York wins an Uncle Scrooge prize with its third place on the stinginess scale. All of the above plays itself out very differently for men and women, and by ethnicity. A first look seems to show women's situations improving relative to those of men. Closer looks indicate that this is not a question of improving women's employment and income, but of men being hit harder because more of their jobs are in the volatile manufacturing, construction, and financial sectors.

Racial minorities have been especially hard hit by the Great Recession. In New York, four out of every ten people are not what the Census terms "white and not of Hispanic origin." That compares with one-third nationally � which means that we get extra clobbering.

African-American male New Yorkers have received the heaviest drubbing. By June of this year, the official unemployment rate among African-Americans was 18.3 percent. When more current data comes in, this number is likely to exceed 20 percent. If you then calculate the real rate of unemployment � which counts people who want to work, but stop looking because they don't see realistic possibilities of finding a job, and previously full-time workers involuntarily working part-time � the picture is even worse.

For African-American men, real unemployment will measure out around one out of every three people. That's not a Great Recession. It's a Great Depression.

Gutter Gutter


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