One New York: An Agenda for Shared Prosperity

November 20, 2006. One New York: An Agenda for Shared Prosperity is a comprehensive look at the economic and fiscal policy recommendations New York needs to strengthen the economy in each region of the state and to strengthen the middle class.

One New York: full report, executive summary, press release (also below)

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Press release
Group Proposes Economic Agenda for One New York – Calls for Policies to Promote Shared Prosperity

November 20, 2006 – The Fiscal Policy Institute (FPI) today released One New York: An Agenda for Shared Prosperity, a package of economic and fiscal policy recommendations for strengthening the economy in each region of the state and strengthening the middle class.

“One New York is the Fiscal Policy Institute’s contribution to what we see as a much needed reevaluation of New York State’s economic policies,”said FPI’s executive director, Frank Mauro, describing the package as a comprehensive economic policy agenda for the state. “One New York discusses the challenges facing New York State, but really focuses on the state’s opportunities.” FPI is a nonpartisan research and education organization that studies tax, budget, economic and public policy issues that affect New York State residents.

According to James Parrott, FPI’s deputy director and chief economist, the relative stagnation of most of the upstate economy is one of the most serious challenges facing the state. “The principle behind the cure for upstate’s ailments is simple take a comprehensive view and look at how all the pieces work together,” he said, referring to workforce development, economic development and business costs. “These all get better together,” said Parrott. “Businesses can thrive in an environment where government is accountable, the economic rules are clear and the skills of the entire workforce are unsurpassed.” Parrott urged state leaders to “re-think all existing economic programs, get rid of the favoritism and abuses, and put those resources to work to advance what should be an over-arching goal: good-paying jobs for highly productive workers.”

David Dyssegaard Kallick, a senior fellow at FPI, also stressed that carefully chosen solutions can address several problems at once. He said, “Our upstate cities can be vibrant again at the same time we preserve suburban quality of life and maintain New York’s farms and open space. Here, the key is changing state policies that have fostered sprawl and that put undue fiscal pressure on the central cities.”

Mauro said that New York State relies far too heavily on local property taxes, which are not consistently related to the ability to pay. “The governor and legislature should shift the balance, so we rely more on the fairest of taxes, the state income tax, and less on local taxes,” he said.

One New York lays out a multi-pronged approach to reducing pressure on property taxes:  adopt a statewide solution to the Campaign for Fiscal Equity lawsuit, restore the state’s commitment to revenue sharing, base each county’s share of Medicaid costs on its ability to pay and reform the STAR program.

FPI senior economist Trudi Renwick pointed out that the economy is increasingly polarized between rich and poor, with a shrinking middle class. She said, “For decades we’ve thought of ourselves as a middle-class economy, but that’s less and less true, particularly in New York State.” The One New York agenda suggests policies to narrow the widening income gap and relieve the pressures on the middle class that have been created as the cost of living outpaces wage increases. “Quality education for all New Yorkers is the single most important tonic for a stronger middle class and broadly shared prosperity,” Renwick said, emphasizing not only a sound basic education for all the state’s schoolchildren but also higher education and lifelong learning opportunities.

Parrott concluded, “We’re calling this agenda One New York because our state can achieve so much more if upstate and downstate work together toward a common vision.  It won’t be completed in 100 days or even 1,000 days, but the possibilities resonate with people from Buffalo to Bushwick who want to see what one New York together can do.”

Increasing access to food stamps would boost the New York City Economy

October 17, 2006. Currently, the flow of federal food stamps into New York City – about $1.4 billion annually to nearly 1.1 million people at an average benefit of $110 per person per month – supports 9,600 jobs and $850 million of annual economic activity. This issue of Fiscal Policy Note$ finds that if access to the program were expanded so that all those eligible were participating, food stamp spending would increase by $355 million. This spending would create 2,300 more jobs and $210 million in additional economic activity each year, pushing the economic impact of food stamps well over the billion dollar mark. Press release and report.

Financing of the Hudson Yards Project and the Rail Yards Agreement with the Metropolitan Transportation Authority

October 10, 2006. Testimony of FPI Deputy Director and Chief Economist James Parrott before the NYC Council Committees on Finance and Transportation. Testimony >>

New York Makes Real Progress on Health Care Coverage

September 27, 2006. This issue of Fiscal Policy Note$ presents data showing that the portion of the state population without health insurance has fallen from 16.3% in 2000 to 13.5% in 2005. Nevertheless, there are still 2.6 million people in the state who have no health insurance. The share of private sector employees covered by health insurance continued to fall while the portion of the population covered by government programs in New York rose from 27% to 31%. Press release below.

Two national reports were also released on health care issues today:

New York Makes Real Progress on Health Care Coverage
Significant Decrease in the Number of Uninsured, but Fiscal and Economic Burdens Must Be Addressed

New reports by the Fiscal Policy Institute and the Economic Policy institute have revealed important changes in health insurance coverage since 2000.

According to Fiscal Policy Institute’s report, New York was the only state in the U.S. to make significant inroads in reducing the portion of its population without health insurance. This is in stark contrast to a national trend toward a larger share of the population without coverage, as reported in the Economic Policy Institute report.

Nationally, the number of people without health insurance coverage increased by 1.7 percentage points over a five-year period, reaching 15.9% in 2005. The EPI report also shows a significant drop in employer-provided coverage.

In New York, however, a parallel analysis by the Albany- and New York City-based Fiscal Policy Institute shows that the overall rate of uninsured New Yorkers decreased by 2.8 percentage points over the same five years, to 13.5% in 2005.

The improvements in New York were due to two kinds of government action.

First, employer-provided coverage, which dropped in the U.S. as a whole, remained stable in New York. Employer-provided coverage in New York declined among private sector employees between 2000 and 2005 by 2.5 percentage points, so that in 2005 just 52.5% of people working in the private sector had employer-provided coverage. But these private-sector losses were offset by an increase of 3.8 percentage points in the portion of public employees who receive health care benefits with their jobs, bringing that figure to 78.8%. Thus, the overall rate of employer-provided health care – for public and private sector employees and dependents combined – remained at 60.2%.

Second, with employer-provided coverage remaining stable in New York, what allowed overall health care coverage to increase was the portion of the population covered by government-sponsored health care programs. Between 2000 and 2005, the portion of the population covered by government programs went from 27.0% to 30.8%.

“Today, just about the same number of people in New York State get their health insurance through government as through the private sector,” said James Parrott, chief economist for Fiscal Policy Institute. “That’s a remarkable development.”

As the cost of health insurance premiums skyrocket – increasing by 73% from 2000 to 2005 – there is increasing pressure on our health-care system.

“What’s happening in New York,” according to Fiscal Policy executive director Frank Mauro, “is that the government is stepping in where the market is failing. State programs such as Child Health Plus (introduced in 1991) and Family Health Plus (introduced in 2000) have been literal life-savers, allowing a broader spectrum of the population to qualify for government-provided health care.”

“Yet, this solution is far from ideal,” Mauro stressed. “Some private-sector employers wind up with an unequal burden, while others ride on the back of public insurance. What’s clearly needed is a comprehensive solution that increases health care coverage while reducing health care costs.”

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State of Working New York 2006: An Uneven Recovery

September 2, 2006. New York’s recovery has been uneven, with wages yet to rise while worker productivity climbs. Economic and fiscal pressures restrain the rebound for most of upstate; in particular, western New York lags.

  1. Population of New York’s super-regions and region definitions
  2. Population, employment, wages, and per capita income, New York State and “super-regions,” 1995-2005
  3. Employment in New York’s regions, first half 2001 to first half 2006 (2 sheets)
  4. Manufacturing share of wages and employment, New York State and regions, 2005
  5. Employment trends in manufacturing, New York State and metropolitan areas, 1995 to 2000 to 2005
  6. Manufacturing output per worker, New York and the US
  7. Real median hourly wages, 1999 to first half 2006
  8. Productivity and wages, New York State, 1995 – 2005
  9. Cumulative growth in real wage income, New York State, 1995 – 2003
  10. Private-employer health coverage rates, 1980 – 2005
  11. People without health insurance coverage for the full year, 1990-2005
  12. Health insurance coverage for New York State residents, 2003-2004
  13. New York State Top Personal Income Tax Rates: 1976-2007
  14. Average Effective Tax Rates for State and Local Taxes for Non-Elderly New York Taxpayers, 2002
  15. New York State has cut its revenue sharing with local governments to help balance its own budget
  16. Revenues from State Sources Compared to Total General and Special Aid Fund Expenditures: NYS Public School Districts 1944-45 to 2004-05
  17. Tax Rate per $1000 Full Value Necessary to Cover Local Share of Medicaid Costs: 2003
  18. 2005 STAR (School Tax Relief Payments) per Pupil by Combined Wealth Ratio Deciles

New York’s recovery uneven with wages yet to rise while worker productivity climbs
Economic and fiscal pressures restrain rebound for most of upstate NY

Real wages for most workers are not yet back to where they were in 2002, even with reasonably strong growth in total output and worker productivity. That’s the conclusion of The State of Working New York, 2006, a new report by the Fiscal Policy Institute (FPI), that shows New York’s economy paralleling the economic troubles of the nation. The report also finds that the recovery of jobs and wages since mid-2003 has been very uneven across the state’s three “super-regions”: New York City; Eastern New York (the downstate suburbs, the Hudson Valley and the Capital Region); and Western and Northern New York (the upstate area that extends from Utica west to Buffalo, including the Southern Tier and North Country).

“What’s most striking about New York State’s economy over the last five years is the emergence since 2000 of a pronounced gap between the relatively strong growth in productivity and the stagnation of wages for most New York workers,” said James Parrott, FPI’s Deputy Director and Chief Economist. “Many parts of New York’s economy have rebounded from the downturn a few years ago but the data all point to the concentration of economic gains at the very top,” Parrott continued. “Meanwhile, middle income families are being squeezed by stagnant incomes and rising prices, and poverty remains staggeringly high in cities across the state.”

Frank Mauro, FPI’s Executive Director, stated: “The upstate metropolitan areas in central and western New York, which saw only tepid growth during the late 1990s expansion, have been socked with the steep 25% decline in manufacturing jobs since 2000. The economic travails of central and western New York have been compounded by suburban sprawl and State fiscal policies that have pushed up local property taxes and severely strained local government budgets, hindering upstate’s recovery.”

The Fiscal Policy Institute, based in Albany and New York City, is releasing its State of Working New York report at the same time as the Washington-based Economic Policy Institute (EPI) is releasing the 10th edition of its definitive volume, The State of Working America.1 EPI’s comprehensive analysis details an economic picture centered around a seeming contradiction. On the one hand, the economy is frequently characterized as robust in terms of big-picture indicators such as gross domestic product. On the other hand, the wages and incomes that shape most Americans’ living standards continue to fall behind expectations.

Other highlights of FPI’s State of Working New York include:

  • Productivity-wage gap. While the productivity of New York workers and their average wages grew in tandem in the late 1990s, a significant productivity-wage gap emerged, beginning in 2000. Since then, productivity (output per worker) in New York grew by 9.3% while the real average wage inched up by only 1.6% over those five years.
  • Stagnant median wages during recovery. Momentum from the late 1990s expansion continued to increase New York wages through 2002, but over the next three years, real median hourly wages fell by 3.6%. While it now appears that median wages in New York state are beginning to level off, they remain well below the 2002 level.
  • Wage gains concentrated at the top. The trend in average wages in New York is misleading since the highest-paid workers tend to receive disproportionately faster increases. From 1995 to 2005, while the real hourly median wage in New York increased by 3.2%, the 95th percentile real hourly wage rose by 11.3%.
  • Minimum wage hikes lift wages at the bottom. In an otherwise somber wage picture, workers with less than a high school education outside of New York City appear to be benefiting from the two increases in 2005 and 2006 in the New York state minimum wage: their wages have increased by 7.2% in the 12 months through June 2006.
  • Income polarization intensifies since 2003. According to State budget office projections, the less than 5% of households with incomes of $200,000 or more will increase their share of total state income from 33.5% in 2003 to 43.1% in 2006, while the aggregate income share of households with incomes of $100,000 or less will decline from 48.8% to 39.1%.
  • Particularly weak job growth in Western and Northern New York. In the three years since the recovery began in mid-2003, New York City has experienced a 2.9% job gain and the Eastern region had 2.4% employment growth. On the other hand, the Western and Northern New York region has seen very weak job growth of only 0.5% over three years. The Rochester, Binghamton and Elmira MSAs have all lost jobs in this recovery.
  • Manufacturing lost a lot of jobs but remains vibrant. While western and central New York metro areas lost 25% of their manufacturing jobs from 2000 to 2005, manufacturing still accounts for nearly 20% of total wages in these upstate areas and there are signs that the remaining manufacturing is vibrant. Manufacturing productivity grew faster in New York than nationally since 2000 and New York has the second highest share of high-skilled manufacturing workers among the 12 largest industrial states.
  • Poverty rates high for New York’s cities. New York has the unenviable distinction of being the only high-income state that ranks among the highest in terms of poverty. With 54% of the state’s poor, New York City’s poverty rate was 19.1% in 2005. But upstate cities face even higher rates: Syracuse had a poverty rate of 31.3%, Rochester 30.0%, Buffalo 26.9% and Albany 26.5%.
  • Good news and bad news on the health coverage front. In a period when 6 million more people nationally lost health insurance coverage, New York State is the only state to show a statistically significant reduction over the past four years in the portion of its population without health insurance. On the other hand, rising costs for private and publicly-funded health care are putting increasing strains on private employers, taxpayers and the insured, and New York still has 2.6 million people without health coverage.
  • State fiscal policies put needy cities, counties and school districts in a fiscal bind. Changes in New York State’s personal income tax since the 1970s have sharply reduced its progressivity and resulted in greater use of more regressive state and local taxes and fees. One result has been that since the early 1980s, New York has substantially reduced state revenue-sharing with its general purpose local governments. And, the share of school district budgets covered by state aid has now fallen to a 50-year low. These trends have combined to put much greater pressure on regressive property and sales taxes, while severely limiting the ability of the state’s neediest localities and school districts to provide the services that are essential to their continued viability.

FPI’s Parrott stated, “As New York approaches the 2006 elections, it faces the considerable challenge of reversing these trends. The key economic questions for the next governor and legislature are: how can we knit the state back together so that we have strong growth that expands the pie for all of New York’s regions and communities?”

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Poverty in New York Fails to Decline Despite Four Years of Economic “Growth”

August 29, 2006. New data suggests the need to reinvigorate efforts to combat poverty: FPI’s analysis of the new poverty, income and health insurance data released today by the U.S. Census Bureau. Press release with supporting tables >>

New York’s Big Picture: A Report to the New York Film, Television and Commercial Initiative

August 8, 2006. FPI worked with researchers from Cornell University’s School of Industrial and Labor Relations and City and Regional Planning Department on this study of New York’s film, television and commercial production industries. Among the findings: Including direct, indirect and induced effects, the total value added by these industries in New York was an estimated $13.1 billion in 2005, considerably higher than previous estimates of the film sector’s impact. Report >>

The New York City Industrial Development Agency’s proposal to provide special additional tax breaks to all commercial construction projects in the Hudson Yards area of Manhattan

August 3, 2006.  Testimony presented by James A. Parrott, FPI’s Deputy Director and Chief Economist.

State Policies and Their Impact on Local Property Tax Rates, with a Critique of the STAR Program

July 7, 2006. An excerpt from FPI’s 2006-2007 budget briefing book. Read the brief >>

99 Percent of New Yorkers Lose Under Bush “Tax and Borrow” Fiscal Policies

June 28, 2006. FPI’s release of a new report by Citizens for Tax Justice with state-specific data.

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