Opportunity UpstateFocus on Taxes & Tax Climate

Profile of the Upstate EconomyKent Gardner, Ph.D.

Chief EconomistCenter for Governmental Research

Center for Governmental Research

Founded in 1915 by George Eastman

Project-oriented 501(c)(3) serving state & local government primarily in NYS

16 staff members Public sector management

consulting, economics & public finance, human services restructuring, education reform, health care

U.S.

NYS

-4%

-2%

0%

2%

4%

6%

8%

10%

00 02 04 06 08 10 12 13Q2 13Q4

Real GDP (% chg from prior period, annualized)

GDP growth slows;pos territory since 09Q3

NYS

8,100

8,200

8,300

8,400

8,500

8,600

8,700

8,800

8,900

9,000

115,000

120,000

125,000

130,000

135,000

140,000

00 02 04 06 08 10 12 F13 A13 J13 A13 O13 D13

1000

Job

s

Monthly figures are seasonally adjusted

U.S. Employment, All Industries

Employment regains pre-recession levels

200

300

400

500

600

700

800

8,0009,000

10,00011,00012,00013,00014,00015,00016,00017,00018,000

00 02 04 06 08 10 12 F13 A13 J13 A13 O13 D13

1000

Job

s

monthly seasonally adjusted

U.S. Employment, SA

No rebound in manufacturing (no surprise)

NYS

280.0

290.0

300.0

310.0

320.0

330.0

340.0

350.0

360.0

370.0

4,000

4,500

5,000

5,500

6,000

6,500

7,000

7,500

8,000

00 02 04 06 08 10 12 F13 A13 J13 A13 O13 D13

1000

Job

s

Monthly: seasonally adjusted

Construction stuck far below peak

U.S.

NYS

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

00 01 02 03 04 05 06 07 08 09 10 11 12 13

% o

f Lab

or F

orce

Unemployment Rate

UE Rate Declining Steadily

Labor Force Participation Recovers

U.S.

NYS

87%88%89%90%91%92%93%94%95%96%97%

00 01 02 03 04 05 06 07 08 09 10 11 12 13

% o

f Pop

ulat

ion

Monthly: seasonally adjusted

Labor Force Participation Rate

Share of pop in labor force roughly constant:

54% Downstate43% Upstate

Loan to Value Ratio 13Q3

Loan to Value Ratio 13Q3NYS Equity Share 94%

Downstate ~92%(87% nationally)

NYS Neg Equity Share 6%; Downstate ~8%(13% nationally)

Source: CoreLogic

3%

17%

-10% 0% 10% 20% 30% 40%

MichiganOhio

IllinoisIndiana

MissouriUpstate

New JerseyWisconsin

TennesseeMassachusetts

PennsylvaniaNorth Carolina

GeorgiaCalifornia

MinnesotaMaryland

VirginiaWashington

DownstateFloridaTexas

Largest 21 “States”

Source: U.S. Department of Labor, BLS

Total Private Job Growth ‘97-’13

-1.0%

5.2%

-6% -1% 4% 9%

FloridaMichigan

OhioMissouriGeorgia

CaliforniaIllinois

New JerseyNorth Carolina

WisconsinTennessee

IndianaMaryland

VirginiaUpstate

WashingtonPennsylvania

MinnesotaMassachusetts

DownstateTexas

Largest 21 “States”

Source: U.S. Department of Labor, BLS

Total Private Job Growth ‘07-’13

Downstate

U.S.

Upstate

-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

2007 2008 2009 2010 2011 2012 2013

Source: U.S. Department of Labor, BLS

Annual Private Jobs Change ‘07-’13

New York City

Long Island

Binghamton

Rochester

Buffalo & Albany

93%

95%

97%

99%

101%

103%

105%

107%

2007 2008 2009 2010 2011 2012 2013

New York City Long Island West-Roc-Put AlbanyPoughkeepsie Binghamton Utica SyracuseRochester Buffalo

Job Growth Since 2007

Private JobsAnnual Avg Comparison

-1.7%

1.3%2.3%

-3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0%Poughkeepsie

Vero BeachBinghamton

ClevelandMilwaukee

AlbanyNew Orleans

St. LouisRochester

UticaSyracuseMemphis

ColumbusWashington

RiversideBuffalo

New York CityDetroitAtlantaDenverAustinDallas

OrlandoSan JoseNashvilleHouston

Tampa

Top & Bottom 10 + NYS of largest

50 MSAs+1.8% avg

Source: U.S. Department of Labor, BLS

Change in Nonag Jobs Nov12-Nov13

-1.7%

1.3%2.3%

-3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0%Poughkeepsie

Vero BeachBinghamton

ClevelandMilwaukee

AlbanyNew Orleans

St. LouisRochester

UticaSyracuseMemphis

ColumbusWashington

RiversideBuffalo

New York CityDetroitAtlantaDenverAustinDallas

OrlandoSan JoseNashvilleHouston

Tampa

Top & Bottom 10 + NYS of largest

50 MSAs+1.8% avg

Source: U.S. Department of Labor, BLS

Change in Nonag Jobs Nov12-Nov13MSAJob growth rank Nov 12-Nov

13 (of 374)New York 65

Buffalo 166

Glens Falls 168

Syracuse 243

Utica 245

Rochester 255

Albany 260

Kingston 284

Elmira 335

Binghamton 343

Poughkeepsie 366

Manufacturing to service is too simplistic• “Return to manufacturing” is the result of labor’s

declining share of value added• Convergence across “sectors”

Shift to smaller firmsRise of eds & meds—geographically sticky

businessesRochester as case study

Composition of Employment

Rochester’s Largest Employers: 1980EMPLOYER 1980 2010Kodak 53,387  5,909 Xerox 15,470  7,014 U of R/Strong Memorial/Highland Total 14,000  18,028 Delphi (General Motors‐‐including Delco, AC 

Rochester Products) 8,951  1,350 Rochester General Hospital System (incl Genesee) 5,100  6,072 Gleason Corporation 4,928  575 Bausch + Lomb 4,800  1,500 Nalge Nunc (part of Sybron in 1980) 4,643  1,013 Wegmans 4,490  9,726 Rochester Gas & Electric (now part of Iberdrola) 2,701  865 Pactiv (Mobil Chemical‐>Tenneco Packaging    

‐>Reynolds) 2,700  840 Frontier/Global Crossing (Rochester Telephone) 2,254  1,255 Rochester Institute of Technology 2,249  3,085 Chase (Lincoln First) 1,895  1,550 

Rochester’s Largest Employers: 2010EMPLOYER 1980 2010U of R/Strong Memorial/Highland Total 14,000  18,028 Wegmans 4,490  9,726 Kodak 53,387  7,400 Xerox 15,470  7,014 Rochester General Hospital System (incl Genesee) 5,100  6,072 Excellus BCBS 1,200  3,473 Paychex <100 3,386 Rochester Institute of Technology 2,249  3,085 Harris RF Communications 1,000  2,300 Sutherland Group est 1986 2,194 ITT Exelis Geospatial (bought from Kodak in 2004) part of EK 1,661 Chase (Lincoln First) 1,895  1,550 Ortho‐Clinical Diagnostics (purchased by J&J from Kodak in 1994) part of EK 1,500 Bausch + Lomb 4,800  1,500 

Syracuse Upstate University Health System

Syracuse Syracuse University

Buffalo Kaleida Health

Buffalo University at Buffalo

Binghamton Binghamton University

Binghamton United Health Services

Rochester University of Rochester Medical Center

Eds & Meds: Upstate’s Largest Employers

Eds: Degrees Conferred Per Capita2010-11

Field of Study & Rank (of 51 largest metros)

All FieldsBuffalo: 2

Rochester: 3

Biological & Life SciencesRochester: 2

Buffalo: 9

Physical SciencesRochester: 1Buffalo: 14

MathematicsRochester: 1

Buffalo: 10

Engineering & Related DegreesRochester: 3

Buffalo: 8

Computer & Info SciencesRochester: 6Buffalo: 10

Visual & Performing Arts Rochester: 1Music Rochester: 1

Voting with Their Feet

-10.1%-15% -5% 5% 15%

New YorkLouisiana

New JerseyMichigan

IllinoisRhode Island

CaliforniaMassachusetts

OhioConnecticut

OregonColoradoDelaware

GeorgiaIdaho

FloridaSouth CarolinaNorth Carolina

ArizonaNevada

Migration to Other States 2000-12 as % of 2000 Population

Source: U.S. Census

Top 10, Bottom 10

Questions?