Testimony before the Board of the Metropolitan Transportation Authority

September 29, 2004. David Dyssegaard Kallick and Lava Thimmayya spoke at a meeting of the board of the MTA.

David Dyssegaard Kallick
Senior Fellow, Fiscal Policy Institute and Coordinator, Labor Community Advocacy Network to Rebuild New York (LCAN)

Thank you for the opportunity to testify today. My name is David Dyssegaard Kallick, and I am senior fellow of the Fiscal Policy Institute. I am also coordinator of the Labor Community Advocacy Network to Rebuild New York (LCAN), a coalition that came together after September 11th to make sure equity and social issues were part of the planning to rebuild the city.

Since the fall of 2001, the sixty groups in LCAN have had a series of intensive meetings on rebuilding priorities. One of the central points of strong agreement within LCAN has been that infrastructure, especially mass transit infrastructure, should be the backbone of the rebuilding effort.

We are very pleased to see that the proposed capital plan includes $17.4 billion to keep the transit system in a state of good repair, and to replace cars, buses and stations in need of upgrading. But as many other observers have also pointed out, a plan of this magnitude can not be financed with another round of fare-backed bonds. The state and city governments must step up to the plate in recognition of the importance of an effectively functioning mass transit system to the economy of this densely populated metropolitan area.

We are also gravely concerned to see that there are so many expansion projects being rushed into the pipeline that there seems to be a major blockage. And if you’ve ever seen the pipes clogged in your bathroom, you know what happens if you try to force too much through at once. You wind up with a big mess.

The JFK/Long Island Railroad Link is a case in point. The cost estimate for this project is $6 billion. The governor has tagged two billion for the project by convincing President Bush–outside of the context of the MTA capital plan, before the Environmental Impact Study for the project has even begun, and without public hearings–to reprogram 9/11 aid to Lower Manhattan. Another billion is expected to come from the airport passenger facility charge.

You could say that the glass is half full, and $3 billion is available for this project. You could also say the glass is half empty, and that $3 billion is still needed.

Where will that additional $3 billion come from? There are already a number of very big projects crowding around every funding opportunity. The Second Avenue Subway. East Side Access. The extension of the #7 train.

The public transportation system should build out from a solid core; it should not look like a Rube Goldberg machine, with projects dangling here and there that overextend the system and jeopardize its basic service.

Let me also take a moment to state the obvious. Six billion dollars is a lot of money. There has not yet been a convincing study released to the public that shows who will benefit from the JFK/LIRR rail link, and whether the number of people benefiting justifies the enormous expense. The link to the airport, while a nice amenity, is a truly minor aspect of this link. The main intent is to bring commuters into Lower Manhattan, to support new office space that is being built highly speculatively.

We strongly urge the governor not to draw the MTA into obligations that overstretch its capacity.

Thank you.

Lava Thimmayya
Fiscal Policy Institute

I welcome this opportunity to testify on behalf of the Fiscal Policy Institute. The Fiscal Policy Institute (FPI) is a non-partisan research and education organization that focuses on the broad range of tax, budget, economic and related public policy issues that affect the quality of life and the economic well-being of New York residents.

Although the 2005-2009 capital plan is ambitious, it addresses core needs and is relevant to the economic requirements of the region. An efficient and affordable transportation and mass transit system is a crucial element to the City’s and State’s economic competitiveness.

Overall, our view is that the absence of funding by every level of government has the potential to disrupt the core program and abort expansion plans for high priority projects. It is unrealistic to think that we can finance more than a relatively minor portion of this new capital program with fare-backed bonds. Because of the way that recent capital plans were funded, particularly the 2000-2004 plan, debt service payments are already becoming too large a drain on the operating budget, jeopardizing the level of service and its affordability by moderate income households.

The State and the City must again assume responsibility to fund mass transportation needs in the region. New revenue sources should be explored. Consideration should be given to a commuter tax, East River bridge tolls, and other revenue sources that are logically related to the need for and/or the benefits derived from an effectively functioning transportation system.

Contrary to prevailing wisdom which suggests increases in government revenues cause a competitiveness problem for business, funding mass transportation will actually enhance New York’s economy. To this end, we urge the Governor and the Mayor to convene a commission, consisting of business, labor and local governments in the region, that would explore revenue options for funding MTA’s core capital and high priority expansion programs.

The framing of the 2005-2009 capital plan should be guided by principles that reflect:

  • equity between the subway and commuter rail systems and their riders
  • the promotion of a sustainable environment
  • a recognition of the benefits of an effectively functioning mass transit system to businesses, property owners and developers, and residents, visitors, commuters and other users of the system; and,
  • the regional nature of the mass transit system and of the region’s economy and its labor market.

Thank you.

Organizations Join Together to Tell Governor that his Vetoes Will Hurt

September 22, 2004. Diverse organizations urge the Legislature to override the vetoes and restore the budget they have already passed.

Large, Profitable Corporations Not Paying Their Fair Share

September 22, 2004. Eighty-two of America’s largest and most profitable corporations, including twelve New York-based corporations and many other corporations that generate a substantial portion of their profits in New York state, paid no federal income tax at all in at least one year during the first three years of the George W. Bush administration, a period when federal corporate tax collections feel to their lowest sustained level in six decades. This is one of many startling findings of a new report on corporate tax avoidance by Citizens for Tax Justice and the Institute on Taxation and Economic Policy. FPI’s press release with New York specifics>>

State of Working New York 2004: Recovery Yet to Arrive for Many New York Workers and Their Families

September 6, 2004. The U.S. job market overall is still too weak to broadly distribute the benefits of the growing economy. The slack labor market has led to a situation in which wages have started to fall behind inflation. Press release with New York figures below or link to press release with tables and graphs.

FPI’s State of Working New York series, published biennially since 1999, provides comprehensive and up-to-date analysis of the data available on the conditions facing workers and working families in New York State.

Recovery Yet to Arrive for Many New York Workers and Their Families

Labor Day 2004 finds New York, like 31 other states and the nation as a whole, still struggling to replace the jobs lost during the recent recession.

“Many states, particularly in the Midwest, are doing worse than New York, but the situation facing New York’s working men and women is only improving at a snail’s pace,” said Frank Mauro, executive director of the Fiscal Policy Institute. “The national economy has yet to show any strong or sustained growth so it is no surprise that more than half the states still have fewer jobs than when the recession began in March 2001.”

Mauro’s comments were based on the new edition of The State of Working America, which is being released today by the Washington-based Economic Policy Institute (EPI), the nation’s foremost independent monitor of the impact of economic trends on American workers.

The State of Working America, which is published biennially by EPI, details what is happening to jobs, unemployment and underemployment rates, family incomes, poverty levels, and living standards in America and why. The State of Working America 2004/2005 was written by EPI’s President Lawrence Mishel, senior economist Jared Bernstein, and economist Sylvia Allegretto. As users of previous editions of this comprehensive assessment of the condition of the American economy know, it is an invaluable resource for anyone interested in understanding how working families are faring in today’s economy.

In the alternating years, when EPI is not publishing a new edition of the State of Working America, the Fiscal Policy Institute (FPI) releases a comprehensive State of Working New York report. Updated copies of FPI’s The State of Working New York 2003: Unbalanced Regional Economies through Expansion and Recession, are available on FPI’s website.

Overall, the new edition of The State of Working America concludes that the U.S. job market is still too weak to broadly distribute the benefits of the growing economy. The slack labor market has led to a situation in which wages have started to fall behind inflation. Between November 2003 and June 2004, the real wages of the 80% of the employed workforce in blue-collar and non-managerial service jobs have declined consistently. By June 2004, hourly wages for these workers, adjusted for inflation, were 1.2% below their year-ago level; and weekly earnings, due to a loss in hours worked per week, fell further over this period, by 1.5%. Overall, according to EPI’s announcement of its findings, “Today’s picture is a stark contrast to the full employment period before the recession, when the tight labor market ensured that the benefits of growth were broadly shared.”

In New York, the median income of four-person families, in constant 2003 dollars, has fallen even more sharply than in the US as a whole. And despite some improvements in recent years in health insurance coverage, the economic fragility of New Yorkers is increasing over the long term with a downturn in both the number of workers covered by health insurance and the number without pension plans. Between 1988 and 2003, the percentage of New Yorkers with employer-sponsored health insurance fell from 63.3% to 59.8%. Over this same period, the number of New Yorkers without any health insurance increased from 10.7% to 15.1%. Between the 1979-1981 period and the 2000-2002 period, the percent of New York workers with pension coverage fell from 52.9% to 45.3%.

New York suffered far greater rate of job loss than the nation as a whole during the recent recession because of the bursting of the stock market and dot.com bubbles, which affected two industries heavily concentrated in New York, and the fact that New York took the brunt of the terrorist attacks of September 11, 2001. The economic impacts of September 11 roughly doubled the number of jobs lost in New York during the downturn.

Nationally, Gross Domestic Product and other economic indicators began to turn the corner almost three years ago, leading the National Bureau of Economic Research to declare the national recession over in November 2001. Yet even in an official recovery, job loss continued – both nationally and in the overwhelming majority of the states. The result has been the longest period of sustained job loss since the Great Depression.

Since the “official” end of the recession, the New York and national economies have endured a number of fits and starts in terms of employment growth. During the first year of the “recovery,” New York saw job growth in six months and job losses in the other six. By August, 2003, total nonagricultural employment in New York State, on a seasonally adjusted basis, had fallen to 8,386,700, its lowest point during the current business cycle. The rate of job growth since that point has been relatively weak, and far from sufficient after such a grueling period of layoffs. From March 2001 to August 2003, the total number of jobs in New York fell by nearly 286,000; from August 2003 to July 2004, the total job count has increased by 61,000. (See Figure 1 of PDF.)

In 2003, the median wage earned by New York workers fell for the first time in three years and it is now 2.35% below the median wage for the Northeast as a whole (the six New England states plus New York, New Jersey and Pennsylvania). Until 1996, the median wage in New York State had always been higher than the Northeast median. Inflation-adjusted wages for lower-paid New York workers (as measured by the 20th percentile wage) are also now lower than ever before relative to the 20th percentile wage for the Northeast as a whole. (See Figures 4 through 6 of PDF.)

Although New York is less dependent on manufacturing than in the past, the loss of jobs in the sector have a dampening impact on wages since jobs in the sector tend to pay more than the new jobs being created. (See Figure 16 of PDF.) Between 2000 and 2003, employment in the sector declined by 18.1% compared to a national loss of 15.9%. (See State of Working America 2004-05, Chapter 6.)

The weak labor market also contributed to an increase in part-time employment. Between 2000 and 2003, part-time employment in New York increased by 1.6 percentage points to 22.7% of the work force – at the national level it grew by 1.3 percentage points. New Yorkers who say they are working part time for economic reasons increased from 11% of the part-time workforce to 13%. For the nation as a whole, this indicator increased from 10.8% to 14.7%. (See State of Working America 2004-05, Chapter 6.)

In 2001-2002, New York’s four-person median family income decreased by 3.1%, substantially more than the national decrease of 2.4%. (See Figure 3 of PDF.) New York’s unemployment rate continues to be above the national average, and, New York has the second-highest long-term unemployed rate in the nation. (See Figures 7 and 9 of PDF.) Slow job growth continues to contribute to the lag in income and the high poverty rate in the state.

Between 2000 and 2003, New York continued a trend toward increased diversity of an already diverse workforce. In 2003, 65% of workers were white, 14% African-American, 15% Hispanic, and 6.2% Asian/Pacific Islanders. The workforce is composed of a steadily increasing number of older workers. New York has a higher share of older workers than the nation, as well as a higher number than the state itself had three years ago. Compared to the nation, New York’s workforce is comprised of a higher percentage of college graduates (33.2% compared to 28.5%), and a lower percentage of workers with less than high school education (12.2 % compared to 12.8%). (See Figure 15 of PDF.)

Employment (See Figures 1 and 2 of PDF.)

New York is experiencing growth in the total number of jobs in the state. But the growth is very slow, and it comes on the heels of a long and hard period of job loss.

New York recorded modest employment gains over the past year. Between August, 2003 and July, 2004, New York State gained 61,000 jobs, a 0.7% increase–slightly less than the national increase of 1.1%.

Yet, during the recession (from March 2001 to November 2001), New York State lost 200,000 jobs, a decline of 2.3% or nearly twice the national decline of 1.2%. New York had the fourth-largest job loss among the 50 states and Washington, DC.
Even after the official end of the national recession in November 2001, the nation and New York State continued to lose jobs. From November 2001 to August 2003, New York State lost 86,000 jobs, a decline of 1.0% – slightly higher than the national decline of 0.8%.

From March 2001 to July 2004, New York State lost 225,000 jobs, a 2.6% decline, two-and-a half-times the national decline of 0.9%.
New York State lost nearly 3% of its jobs from the first half of 2001 to the first half of 2004. This decline was more than twice the rate of loss for the nation. Job losses were not distributed evenly across New York State. Although some regions had strong gains, the state average was dragged down by sizable losses in New York City. In addition, eight of the 11 upstate metropolitan areas lost jobs, most at a higher rate than the national average.

Wages (See Figures 4, 5 and 6 of PDF.)

Between 1979 and 1989, New York had much stronger wage growth than the national average. However, the 20th percentile wage level had only anemic gains. By 1989, the gap between high-wage and low-wage earners increased – the 80th percentile wage in New York was 2.73 times greater than the 20th percentile wage, similar to the national picture, where it was 2.77 times greater.
In 1989, wage disparity in New York was virtually the same as the national average – the 80th percentile wage in New York was 2.83 times greater than the 20th percentile wage; nationally, it was 2.8 times greater.

But between 1995 and 2000, wage growth in New York, particularly for lower-wage brackets, lagged well behind the national average. This exacerbated the wage gap in New York, while the national average improved. By 2003, the 80th percentile wage in New York was 2.91 times greater than the 20th percentile wage; nationally it was 2.74 times greater.

Until 1996, the median wage in New York was always higher than in the Northeast as a whole. But since then the median in New York has been lower than the regional average, reaching its greatest differential in 2003.

In the same period, low-wage workers fared particularly poorly compared to their counterparts elsewhere. In the early 1990s, low-wage workers (20th percentile) in New York had roughly the same wage as in Northeastern states as a whole, hovering around $8.50 an hour and far higher than the national average ($7.51). Yet, in 2003 New York’s average for low-wage workers ($8.63) fell far behind the regional average ($9.02), while the US average gained ground on New York ($8.42). Although New York has a much higher cost of living than elsewhere, wages for New York’s low-wage workers are now on a par with the nation’s, and far below those of our neighboring states.

Income (See Figure 3 of PDF.)

Median income showed a significant drop in 2001-2002, pushing New York down to 18th among states in median income for a family of four.

In 1980, New York State’s median income for a four-person family ranked 22nd among the 50 states and Washington DC. Over the course of the 1980s, the median income of a four-person family in New York had higher annual growth rates than the national average, allowing New York to jump in the rankings to 14th in 1990. However, this trend saw a drastic reversal in the early 1990s, when the median income of a four-person family in New York grew only 0.1% per year, well below the national growth rate of 1.1%. Median income levels of a four-person family in New York began to grow again in the 1990s, before reaching a peak in 2001. In 2001-2002, median income for a four-person family dropped by 3.1%, compared to a drop of 2.4% nationally, bumping New York State down to 18th in median income for a four-person family.

Unemployment (See Figures 7, 8 and 9 of PDF.)

Unemployment rates remain high, despite recent job growth, and long-term unemployment is among the worst in the nation.

Since the early 1990s, except for a brief period in 2001, New York State has had unemployment rates higher than the national rate. Poor economic performance in the upstate regions and skewed economic growth in New York City largely account for this trend.

In 2002, 43.8% of New York State’s unemployed workers made unemployment insurance claims. This benefit recipient rate was slightly higher than the nation’s 42% rate, but substantially lower than the rate of neighboring states. New York’s low recipiency rate reflects continued barriers that prevent low-wage, part-time and non-English speaking workers from receiving unemployment benefits. New Yorkers also had a very high unemployment insurance benefit exhaustion rate.

In 2000, New York had the fourth-highest rate of long-term unemployment, with about 74,000 people unemployed for longer than 26 weeks (17.8% of the State’s total unemployed). This compares to about 649,500 long-term unemployed workers nationwide (11.4% of the nation’s unemployed). By 2003, the number of long-term unemployed in New York State grew by 127% to about 169,000 (28.7% of the State’s total unemployed), moving New York to the second highest rate of long-term unemployed, behind only Washington DC. During this period, the number of long-term unemployed in the nation grew by nearly 200% to about 1,930,500 (22.1% of the nation’s total unemployed).

Health Insurance (See Figures 11 and 12 of PDF.)

Lack of health insurance continues to be a threat to the stability of families in New York. Yet, there is good news in a recent increase in the coverage of children—an indication, perhaps, of the positive impact of the Family Health Plus program.

From 1987 to 2003, the share of New Yorkers without health insurance for the full year increased from 11.6% to 15.1% with a peak of 17.5% in 1997. During the same time period, the share of Americans without health insurance for the full year increased from 12.9% to 15.6% with a peak of 16.3% in 1998.

From 1987 to 2003, the share of New York children without health insurance for the full year fluctuated from 10.1% to 9.4% with a peak of 15.5% in 1997. During the same time period, the share of American children without health insurance for the full year fluctuated from 12.9% to 9.4% after a peak of 15.4% in 1998.

From 1987 to 1997, the share of New York children without health insurance for the full year increased from 10.1% to 15.5% in 1997. Although the rate has dropped somewhat since 1997, in 2002 there were still nearly 10% of children without health insurance. The nation followed a similar trend, and in 2002 11.6% of children didn’t have health insurance.

Pension Coverage (See Figure 10 of PDF.)

New York has shown a steep decline in pension coverage, going from being the 12th to 35th among the states. And over the last two decades only West Virginia declined more than New York in pension coverage.

The proportion of New York workers covered by pension benefits fell from 52.9% in the 1979-81 period to 45.3% in the 200-02 period. In 1981, New York ranked 12th among states in pension coverage for its workers, but a dramatic decline in pension coverage of New York workers occurred in the 1980s and by 2002 New York ranked 35th.

From the 1989-91 period to the 2000-02 period, New York was one of only four states that showed a decline in pension coverage of its workers. New York ranked 49th among states in this regard with only West Virginia doing worse.

Poverty (See Figures 12, 13 and 14 of PDF.)

New York continues to have a higher poverty rate than the nation or the region, and the highest poverty rate of all the Northern states.

Although the poverty rate in New York has remained stagnant over the last several years, it is significantly higher than the nation’s. On a regional basis, New York (14.3%) had a higher poverty rate than all the other Northern states.

From 1980 to 2003, the share of New Yorkers living in poverty increased from 13.8% to 14.3% with a peak of 17.0% in 1994. From 1984 to 2003, the share of New York children living in poverty fluctuated from 25.2% to 18.9% with a peak of 26.4% in 1998. During the same time period, the share of American children living in poverty fluctuated from 21.5% to 17.6% after a peak of 22.7% in 1993.

In 2003, a family of four was only considered “in poverty” if its annual income was less than $18,810 per year. Although it is difficult for any family to make ends meet on $1567 a month, it is a particular struggle for families in areas where the cost of living is higher than the national average, such as New York State.

From 1984 to 2003, the share of New Yorkers living at twice the poverty rate fluctuated from 34.2% to 32.2% with a peak of 35.1% in 1995. During the same time period, the share of Americans living at twice the poverty level fluctuated from 34.6% to 31.1% after a peak of 35.2% in 1993.