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The Upstate Economy
New York in the World: Interview with Jonathan Bowles
The SUNY Levin Institute’s New York in the World report was prepared by the Center for an Urban Future headed by Jonathan Bowles. Bowles sat down with Garrick Utley to discuss the current state of New York's economy, and its future.
Garrick Utley: Jonathan Bowles, you and your team worked on this report New York and the World for a long time. You examined the state of New York, the city of New York. What impression did you come away with in terms of the state of New York in the world today?
Jonathan Bowles: Well, I mean I think that what we found was that globalization has been the major economic force of our time and there’s really no part of New York state that hasn’t been impacted by global trends. And you could probably say the same thing about the country overall but it’s really fascinating how different the impacts have been in different parts of the state. One the one hand, New York City has greatly benefited from globalization. There’s been negative impacts, too. The apparel manufacturing sector has lost a few hundred thousand jobs in New York City, but by in large New York City has benefitted from globalization. At the same time, much of the rest of the state, particularly a number of upstate cities, have really struggled to find their way in today’s global economy. Many of those regions continue to try to figure out how to jump start their economies, how to transform their economies in a totally new age where it’s all about services and a knowledge economy and much less about manufacturing, which was what was really the strength of New York state for so long.
Garrick Utley: So, let’s drill down into some of the specifics here, Jonathan. We know New York State was a major manufacturing state for decades, for the latter part of the 19th century and most of the 20th century. Alright, let’s drill down on the findings of New York in the World. What happened to manufacturing in New York state and what happened to the manufacturing jobs in New York state?
Jonathan Bowles: Well, just like the rest of the country because America really was a manufacturing hub as well and New York state was one of the leaders. I think that New York has had more struggles in this global age as we’ve seen so many economies around the world, China, Eastern Europe, come on to the global labor pool that has decreased the cost of production and so many other parts of the world that has led to increasing competition for manufacturers here in the United States. But what’s troubling about New York is that so much of the jobs in this state depended on the manufacturing sector. Three of the six major metro areas upstate had more than 40 percent of their jobs in manufacturing in 1975.
Garrick Utley: Which ones were those?
Jonathan Bowles: Syracuse, Buffalo and Binghamton.
Garrick Utley: More than 40% of the jobs were in the manufacturing sector. And what happened then?
Jonathan Bowles: Well, with all this competition from overseas production, local manufacturers in upstate New York really struggled, just like they did in New York City and other parts of the country, they couldn’t compete. At the same time, New York based manufacturers steadily began moving some of their production work overseas where it was far cheaper to produce goods. There were other factors as well. So, for instance, in Rochester, Kodak was such a powerhouse in manufacturing and technological changes occurred which also sped the decline of manufacturing and you just think of digital film today, you know, that didn’t use to happen years ago so the technological change towards digital film meant that fewer people were needed. And car manufacturing. You can now, because of productivity increases, build a car with far fewer employees. So all that’s happening but at the same time so many things are being manufactured in China and east Asia and other places around the world for far cheaper than in New York.
Garrick Utley: Let’s look at two aspects of the manufacturing job losses over the last 30 years, 40 years. A. Some examples of the cities. How many jobs were lost? How many jobs just went away in these principle manufacturing centers?
Jonathan Bowles: We’re talking about, you know, over 100,000 jobs overall, but those three upstate metro regions: Binghamton, Syracuse and Buffalo all had over 40 percent of their jobs in manufacturing. Today it’s between 10 and 15 percent of their jobs in manufacturing. So we’ve seen just a fundamental shift in those economies and that’s not coming back; those jobs are gone. And so it’s been hard for those cities and those regions to replace, you know, literally hundreds of thousands of lost jobs.
Garrick Utley: So those jobs went away, they are no longer there. What is that meant in terms of the impact on the communities?
Jonathan Bowles: I mean it’s been devastating. I think the upstate economies are still trying to figure out what’s their place in the global economy. What are strategies to get their economies rolling again? There have been increases in services jobs and retail. A lot of low end jobs. But manufacturing really provided an outlet to the middle class for so many people in these communities. They were decent paying jobs, they paid well frankly, and what’s been replacing them so far has been mostly low skilled jobs. And the jobs that are being created even in manufacturing today are very high skilled, advanced manufacturing type of jobs. And a lot of upstate employers are finding that the folks in these upstate communities don’t have the skills. There’s actually some manufacturing jobs upstate that are going unfilled right now because there’s a gap in the skills that are needed in today’s global economy and the skills that the population has.
Garrick Utley: The jobs that do exist upstate, throughout the state and many areas in the nation, for those who may have worked in manufacturing in the past are in totally different sectors. One example of where the jobs are today and in the future is in the healthcare industry. Now, that’s an industry that is growing driven to in a large extent by the demographics, the aging population in New York and in the nation. But what does that offer as a job future? Aside from, perhaps, a certain security.
Jonathan Bowles: Well, healthcare is a fairly steady job generator for New York state. The challenge is that healthcare is also dependent on the size of the population. And a lot of upstate communities, although they are aging and creating some healthcare jobs in that respect, because the overall populations are either stagnant or going down in a lot of upstate cities, we’re not seeing the same increase in healthcare jobs that we are seeing in cities that are growing in population. So, the other thing is that healthcare jobs, a lot of them are really low paying jobs. Home health aide and community based healthcare is where the growth is in healthcare today and they pay far less than let’s say a nursing job. And so there’s some opportunity there but not anywhere nearly as good paying as the manufacturing sector.
Garrick Utley: So when we’re talking about these new jobs that are available, what does that mean in terms of pay, wage levels, standard of living? Not just in New York, but this is true for the entire nation.
Jonathan Bowles: Well, we’ve seen either stagnant or declining personal income levels across the state and people are really struggling to make ends meet. The jobs that are being created right now pay very low wages, often don’t offer benefits and I should say that it’s not just these low end jobs, there’s a growth in the low end jobs but also a growth in very high end jobs. But there’s also a limited growth in jobs in the middle, the kind of place where manufacturing really sat. Jobs that someone with a high school degree or maybe a two year community college degree could get, but gave them that lift up into the middle class. Those jobs are fewer and fewer today.
Garrick Utley: Anyone who looks at New York in the world today and looks at our future sees, in many ways, two worlds in one state. There is the Empire State, there’s also this urban area known as New York City and its metro area. What has been the impact in the city?
Jonathan Bowles: Well, it’s been positive and negative. I think that on the one hand, New York City has fewer manufacturing jobs today than any other major American city. But in some respects, that’s been a benefit to New York City. New York City has managed to greatly diversify its economy. It has probably benefited most from globalization more than any other city in this country, in part because the global economy is all about talent today and New York City has been remarkly successful in attracting the best and brightest from around the world and across the United States. And so, because of that talent base, companies in all sorts of industries want to be here. That’s one thing. Another thing is that New York City has so many major industries that are globally competitive today, whereas upstate cities, many of them have struggled to develop sectors or grow sectors that are globally competitive. But New York City with finance, with legal services, with design and architecture, with fashion, with so many other things that really are globally competitive that people are exporting goods and services across the world and New York City has become the epicenter for so many of those things.
Garrick Utley: To what extent is this the case for and in New York City and what simply is the trend that’s happening worldwide that is part of globalization, the urbanization of the world?
Jonathan Bowles: It really the urbanization of the world. There’ve been a lot more losers in globalization than there are winners. There’s many, many cities that are kind of facing the same kind of challenges that the Buffalo’s and Binghamton’s and Syracuse are facing today. I think New York City, just like London or Shanghai, has become one of those few global hubs that really are built around talent and so it bodes very well for New York City going forward because it continues to attract people from around the world.
Garrick Utley: New York City is a global city, par excellence. What are the problems in the city? You have studied the city. The Center for an Urban Future focuses a lot on New York City. So as you look to the future, New York City has these key industries, high paid, high skilled global reach. But there’s the other New York City. So what should New York City and its citizens and its present and future mayor worry about New York City?
Jonathan Bowles: A few things, the first is that the world is not standing still. That so many other global centers are growing. You used to be that in finance it was just New York City and London. Today, Dubai, Singapore, Shanghai so many other global cities are emerging around the world and are really competing with New York City and that’s only going to continue. It used to be that if you were the best in finance or the top lawyer, you would come to New York City. That’s no longer the case. There’s more places of people to go. On the other side, globalization I think it’s been less clear of a benefit for a lot of low income people. We’ve seen tremendous growth in New York City in low wage jobs. Jobs that are often supporting the high end population, the wealthy that are here and we’ve seen declining levels of personal income in the four boroughs outside of Manhattan. So going forward we have to make sure that people that live in the Bronx, in Brooklyn and Queens full develop their skills so they can fully participate in the global economy. Right now, too few New Yorkers really have the skills to compete in this global age so they end up being stuck in low wage jobs that don’t have a lot of room for advancement.
Garrick Utley: Well, let’s just continue on this topic because it’s very a very important one, for a second. You can talk about New York and the growing disparity in income wage levels and skills, or lack thereof. You can say exactly the same about Buffalo, much of Rochester, the inner city of Syracuse, Utica, Binghamton. This is everywhere and everybody knows what the problems are. We have to improve education, K through 12. What’s the future of higher education going to be? How do we get these skill levels up? That’s not going to happen tomorrow. That’s not going to happen, perhaps, in 10 years. So, what does this mean, first off, for New York City; we’ll talk about the other cities later? What does this mean for a New York City if this disconnect, or disparity, is growing even here in this very successful city as to whether the future of this city depends on a few industries carrying the ball?
Jonathan Bowles: Well I think for a city like New York, you know, any efforts to continue diversify the economy are a good thing. So for instance, the recent growth of the tech sector is good because New York City can’t be dependent on Wall Street or a couple of industries and that’s a good thing. I think that in some ways, upstate New York is hungrier about solving the education challenges. They need to depend on their local workforce and so we’re seeing more efforts that are focused in on community colleges and K through 12 education upstate. New York City really needs to face those issues at the same time because it’s facing more competition from these global cities outside of the U.S. , New York may have to depend on its local work force in the years ahead and right now that work force just isn’t prepared, and so I think that the business leaders, the community development practitioners and policy makers have really got to focus on raising the standards, making sure more people are ready when they go into colleges and there’s just a lot of work to do.
Garrick Utley: How confident are you, or should a New York City resident who is benefitting from the global economy, how confident should they/we be about New York City’s future in the global economy?
Jonathan Bowles: Well, I don’t think there’s any city that has benefitted as much as New York and frankly New York is outpacing the rest of the nation. Right now and in the last fewer years, New York has doing better than any American city in the last few years, even after the collapse of Lehman Brothers, even as Wall Street has been having a rough patch right now. And so I think it shows that New York’s fundamentals are pretty strong right now. I think that more people today continue to come to New York City from across the country; it is seen as a city of opportunity. All of these things are good, but there clearly are challenges under the hood. We’ve also got to make sure that New York City is affordable. If the economy is really dependent upon getting these people, whether it’s in technology or creative industries, the kind of things that New York has, you know, these are not the type of people that are getting six figure salaries, but increasingly that’s what it takes to live in this city. And so addressing the affordability issues are some of the things that New York City has to work on. There are very different issues upstate. Upstate cities are actually much more affordable. You’d think that a lot of companies would be interested in getting cheaper places in some of these upstate cities, but companies are paying more to be in the city of New York because they’re around companies like them. They’re in a place where in a global age you can have meetings with board members and stakeholders from around the world because of all the flights that come in and out of here. It’s such a great and convenient global destination.
Garrick Utley: In today’s digital Internet age, the face-to-face contact is still important?
Jonathan Bowles: More than ever.
Garrick Utley: Why more than ever?
Jonathan Bowles: Well, I think that it’s all about talent and it’s all about innovation, and so people connecting with each other is important for innovation, it’s important for new ideas and I think that people also want to be around people like themselves. They want to be in a place where they can actually go out and eat at a good restaurant, go to the theater and interact with people and that’s where I think good things happen.
Garrick Utley: So, this is a dynamic that is just as important in the digital age, the 21st century as it was in the past, the human connection and what a community, what a city can offer as an attraction. It also underlines the importance of critical mass, of density, of size of talent pool of the city, etc. Let’s look at some of the upstate cities just for a thumbnail sketch. Ok, New York City is here. Buffalo, what does Buffalo say to you?
Jonathan Bowles: Buffalo says to me that if not for Detroit, people would be focusing attention on Buffalo as one of the worst cases for urban America in the last 50 years because Buffalo has really had a hard time of it. So much job loss. So much population loss. There’s really serious issues that Buffalo is trying to figure out right now that they had to really restart their economy. I think like a lot of upstate cities, it’s not just about educating the work force. I think part of it is how do you get people that actually graduate from the good colleges and universities we have in places like Buffalo to stay there? Because, I think too many upstate cities like Buffalo lose people. If you graduate as a design student from New York City, chances are you’re going to come down in New York City or San Francisco or Austin or Chicago to apply your trade and I think that we’ve got to improve the downtowns in a lot of these upstate cities. Make them more attractive. Right now, the upstate downtowns are hallowed out, they’re not appealing, and there are no amenities. And today people more than ever want to live in cities, at least more than recent decades but they want to live in an interesting place where there is that critical mass where people can get together randomly and I think in a lot of these upstate cities there’s not enough opportunity for that.
Garrick Utley: Syracuse, similar problems?
Jonathan Bowles: Similar problems. I think that Syracuse is making some headway in diversifying its economy with the tech companies that are being created there, they’ve got a good base of organization and business leaders that are trying to jump things there but you know I think it’s slightly better off than Buffalo, but it’s facing similar challenges.
Garrick Utley: Binghamton?
Jonathan Bowles: Yeah Binghamton has had some of the biggest technology companies historically.
Garrick Utley: Beginning with IBM
Jonathan Bowles: Beginning with IBM. But there’s been massive job losses there and I think that much of it is in the manufacturing sector. But they’re coping with job loss as well. Companies trying to see if they can attract the sort of workforce they need in a place like Binghamton and you know, it’s struggling.
Garrick Utley: Albany of course is the state capitol so is has the state government industry to keep it going to a large extent. In recent years in Albany, we’ve also seen the growth of the tech sector, the nanotech sector. Massive investment from the state, the state university is involved with it, IBM is involved with it. Companies have come in and invested, they do have traction. The nano sector in and around Albany is almost a case study of how you start or create a whole new sector with the vision of this high tech future. How do you assess what’s happened there?
Jonathan Bowles: I think it’s pretty remarkable. You know, Albany really has benefitted from globalization in this respect. It’s not just IBM; there’s a bunch of global companies. Global Foundries is one of the nanotech companies that are there and you know there is a mix of public and private investment there that in combination with the academic research assets that Albany already had has really been a major catalyst. It diversified an economy that’s dependent on manufacturing but it’s got that government base that you spoke of and Albany’s fared much better than some of the upstate cities that we’ve talked about. I think also Rochester because of its base of academic research institutions…
Garrick Utley: Let’s talk about that. What does the report show about Rochester?
Jonathan Bowles: Well I think Rochester, like Albany has benefitted in ways that some of the other upstate cities have not. There is this base of engineering and applied sciences in Rochester that you don’t see in some of the other places. Also some of the high tech jobs that were available at Kodak and other optics manufacturing companies, that highly skilled workforce has been really valuable. A lot of people that have gotten downsized from companies like Kodak have left to start other things. And I think a place like Rochester, just like Albany, has maybe a few more assets that are globally competitive today.
Garrick Utley: Alright, because we have taken a look at Rochester in that report. Let’s talk about people, not just jobs and people migrating and people moving. If we were to look at New York state as a big board with lots of marbles on it, marbles that can roll around from one part of the state to another. Some marbles go off the board to leave the state. But how many marbles have been rolling to the extreme southeast corner, namely into New York City the metro area. Why is this and to what extent is this a serious problem?
Jonathan Bowles: You know, I think people go where opportunity is. And right now, let’s say you graduate from a university in Rochester or in Binghamton. Chances are, there’s going to be multiple job opportunities in the industry you want in New York City. If you’re somebody that’s been living in an upstate city and you and your spouse and your family are looking to move, you not only have to get one job, you have to look for two jobs. And maybe upstate you’ll be able to find a decent job for yourself but in a place New York City there’s going to be opportunities for both of you. There’s just so many more opportunities in New York City or in the downstate region than there are in these upstate cities and that’s what’s driving a lot of the movement. It’s why people are uprooting themselves from these upstate cities and going to the southwest, going to the American south. You know, between 1970 and 2000, New York state’s population increase was only about six percent which was a smaller percentage growth than any other neighboring state in the Northeast or the Midwest. That includes states like Michigan, which actually has struggled in this global economy as well and New York’s population increase overall, even including New York City, which has done well. And it just shows how badly a lot of the upstate cities have really done.
Garrick Utley: Again, this is part of a dynamic of today’s global economy. People will go where the opportunities are; they tend to go to urban areas. The bigger the urban area, in most cases, if it is affordable for the individual, that becomes the goal. And so they move. Can anything, should anything, be done about this, aside from creating opportunities back home?
Jonathan Bowles: Yeah, I mean, I think one, there are some great universities across the state. Efforts to get more people to stay when they graduate is something that should be done and I think part of this is improving the downtowns, making more appeal. Part of it might be to get universities to interact with the business community there. Other cities, like Philadelphia, have done some of the same things. They struggle with some of the same issues and one of the things they do, for instance, they’ve really got great internship programs where the business community is really active in offering internships. The chances of someone staying in your local community after they’ve had an internship with a local business becomes a little bit greater. And at the same time, to have mixers and things in local arts institutions or restaurants and bars in downtown areas. Things to kind of get people connected to their local community. To get them talking to other people like them in those communities. Those are some very small efforts that I think upstate communities could be doing more of. I think also, there are some really great small and midsize manufacturers still in New York today in a lot of these upstate cities. We’ve got to make sure more of them have the capacity and the ability to export their goods overseas. That’s where we’re going to see growth in these companies going forward. That’s where we’re going to have job creation when we get more of these companies to export overseas and right now not enough of them are doing that.
Garrick Utley: That is true, partially because too many of them don’t have experience in the international, global market and sales and networking. Part of it is because if you’re a small company starting up with 20 or 30 employees making a good, competitive product or offering a competitive service, you don’t have the staff to send around the world, you don’t have the means to send around the world. For all the talk about importance of entrepreneurial start-up companies, they do start at a certain disadvantage, don’t they, in the global stage?
Jonathan Bowles: Yeah it’s incredibly complex to build the capacity to be able export your goods or services but I think that’s where the city or the state of New York could really be investing in programs, they could make it easy for companies to do so. I mean, the good thing is that in this Internet age, it’s actually easier than ever for a small company to get a contract or to compete with a contract overseas. In New York City, for instance, we’re seeing all these designers and architects with like 10 employees getting work in China and in the Middle East today. And it’s because the Internet has been this great leveler and has given us opportunity. But you do have to ramp up. You do have to have technical assistance so you know what paperwork is needed and to get to that point.
Garrick Utley: Let’s come back to that point you just mentioned about the university’s research. New York state is rich in intellectual fire power across the state. We have universities in Buffalo and in Rochester and in Albany and in Binghamton and there’s Cornell and there’s a tremendous amount of private institutions in higher education. The brains are there, the brains are here in New York and that’s a critical element in being competitive in today’s global economy. And these intellectual centers of research, etc. and learning are right in these worst hit areas at the same time. So how do you look at this when you have a Buffalo or a Syracuse with all the problems due to the global economy, and yet there’s no shortage of intellectual capacity there, or throughout the state? How do you connect the two or are they just two totally separate areas?
Jonathan Bowles: Well, I mean, I think this is the seeds of future success. I think that universities and academic research in today’s global economy are critical assets. We’ve seen New York City, we’ve seen Boston, the bay area, really make a lot of use out of these institutions. They’re great natural assets to growth. I think what we haven’t seen in New York is the commercialization of some of the great basic research that’s been happening at our universities. When you take basic research that’s been done in the labs in local universities and make something, apply it, start a company with some of the research, develop technology out of it locally, sometimes you get really fast growth, major job creation. But too few of the technologies that are being discovered at our universities are being developed into local companies. And so, I think that the universities, you know, they have a role, they have a responsibility to promote entrepreneurship maybe more than they have been. The state has formed task forces, the university presidents are aware of this and I think we need to make sure that we get more out of it so they actually become the local economic development catalyst they can be.
Garrick Utley: When we look at New York state’s capacity to compete in the local economy there are many key elements. One is the intellectual ability, the engineering, the research development that comes out of our intellectual university research centers. A second in the skilled work force that is required. A third is investment, that people are going to want to invest in these new companies that are going to create jobs. And then there is the question about the role of the state government. Governments going back to Nelson Rockefeller and before have always been saying “New York is open for business.” Big campaign underway currently. What is the proper role of the state government in economic development and aside from the political implications and necessities or desirability of this among, which cannot be ignored, what is the efficacy? What is the impact? What is the bottom line of what the state is doing?
Jonathan Bowles: You know this is a tricky one because state government is, or really a succession of governors, has really focused on the upstate economic troubles. There’ve been initiatives to try and get the upstate economy going. I think that one of the challenges is that government often migrates towards incentives or subsidies for big corporations. It’s like they’re trying to stop the change that’s really inexcusable. Giving away subsidies to keep Kodak and other major corporations, it might buy you a few extra years, but the reality is that the biggest manufacturing companies are going to continue to find it much cheaper to produce overseas. And so while I understand the interest in doing some of that, I believe that the state government has to take a much more structural approach. How do we really restructure some of these upstate economies? How do we build on the natural assets that cities like Buffalo and Binghamton and Syracuse have? I think that the state government and the state economic development officials should really be looking at things like the universities and harness those assets. I think there also should be broad based efforts to support entrepreneurship. I think that given the affordability of commercial space in a lot of these areas, we really need to unleash the entrepreneurial spirit. And we found that in our report that there’s actually much lower levels of entrepreneurship upstate. I’m not talking just about technology entrepreneurship or innovation, major innovation companies. Just basic entrepreneurship from neighborhood-based retail and services companies. There could be a lot more of that. I’d love to see major incentives for residents of these cities, folks that have fewer opportunities in the work place today to start businesses. I think they could do wonders for upstate communities.
Garrick Utley: This brings us to another topic: immigration. Thirty-seven, 38 percent of the New York City population is foreign born, not the children of immigrants, but foreign born, and that’s likely to grow. Immigration and immigrants are growing as a factor in much of the state, but not nearly to the level that it is in New York City. What do immigrants do in terms of economic impact, the creation of jobs, not just for themselves but for a community?
Jonathan Bowles: I mean, we have found especially in New York City, but really across the country, immigrants are a hugely positive force for economic growth. In New York City, they have kicked started economic growth. They are starting businesses at a very high rate. They have transformed once depressed neighborhoods. A lot of people point to a place like Fleshing and Queens. In the 1970s and early 80s it was a depressed neighborhood. People moved out in the 70s. There were boarded-up store fronts. Today, look at it. It is a thriving, bustling, metropolis, one of the major business destinations in the city and it’s almost exclusively because of the kind of entrepreneurship and enterprising immigrants that we’ve seen there. There’s so much power for this to happen in upstate cities, as well, but when we did research across the state and we had focus groups, we heard that a lot of upstate communities have been parochial and haven’t been that welcoming towards immigrants. I think that needs to change. I’m really heartened that Governor Cuomo and his administration have created an Office of New Americans that is trying to be welcoming towards immigrants and seeing the positive value of immigrants across the state. I think that business groups, chambers of commerce really need to roll out the welcome cart to immigrants, as well. As we’ve noted in the report, we’ve seen cities like Detroit, Cleveland, Pittsburgh, cities that are really in the same boat as upstate New York cities that are also embracing immigration. They see that as a way to replenish a lost population and promoting entrepreneurship and economic opportunity.
Garrick Utley: So it’s a big factor?
Jonathan Bowles: It’s huge.
Garrick Utley: That’s a big political factor. That’s a big social and psychological factor, views towards immigration, but that is happening. And that’s, again, the human bottom line here. Let’s talk a little bit about where we are right now and what you found in this report. Upstate, downstate New York. Always been divisions, politically, distinctly, socially, economically. How do you see it today? Is there one state or are there two worlds in one state? Let me ease the question in a way, only to say that you can answer the same thing of New York City. It isn’t all Manhattan. It isn’t all global law firms and architects. We have many of the same issues any city upstate has. New York City itself is a city of extremes. Manhattan is a county. I believe it’s the highest median income urban county in the United States. The Bronx, right next door to the north, I believe is the lowest urban county in terms of median per capita income. So what does this say, not just about New York, but what does it say about the state itself in terms of are there two states or are there two worlds in one state, New York state or is there a New York state?
Jonathan Bowles: I mean, I think there is a New York state. I mean, this was the Empire State. There’s such much opportunity and assets around this state. There’s a lot of great things happening. But I do think there has been significant differing outcomes as a result of globalization around the state. There’s also probably a very different way of resolving some of the challenges of upstate New York and in New York City. For instance, companies of all stripes are willing to pay extra to be in the New York City area because they can attract the talent they need. There’s also this huge market where they can sell their goods and services. But in a lot of upstate cities, they’re really competing more with Midwestern states than they are with global competitors. They’re struggling to get talent to stay or to come there. They don’t have the same international air connections that New York City does. And so, for instance, on the tax base and tax rates, it’s really hard for a place like Buffalo or Binghamton, for companies and individuals to pay the same tax rates that they did in New York City because people won’t pay extra to be in a place like Binghamton. They’re competing with Ohio and Pennsylvania where taxes are a lot lower. And so it becomes very challenging for New York state economic development officials to have one policy for New York state.
Garrick Utley: New York state, its leaders say New York open for business, a big push to bring their business leaders here to support businesses already starting here. And yet, we hear again and again that this is not the best business climate starting with taxes. What do you do?
Jonathan Bowles: I don’t think New York state has the revenue base right now to lower taxes. I think that Gov. Cuomo has tinkered with the tax system a little bit, I think that he has lowered middle class taxes in a couple of places, but especially given that there have been revenue losses coming from Wall Street companies, their bonuses are down in recent years. You know, without taking a chisel to education to services, to education, to colleges and universities across the state, I don’t think we can cut taxes in a big way across the state. But I think that this is a time where it’s really all about talent and innovation and I think that we need to be investing in communities, we need to be investing in people. And so, I think the days of just giving away multimillion dollar tax breaks and subsidies to keep corporations happy in a lot of these upstate cities, I think we need to be going well beyond that. We really need to be making sure that these upstate cities have the best local workforce that they could possibly have. That’s what makes them competitive. We need to make sure that they have attractive and appealing downtowns so that people do want to stay after they graduate from local universities. Those are the things that haven’t really been a part of economic development. Attracting immigrants to help replenish the lost population in some of these neighborhoods. Those are strategies that aren’t typical of economic development. I think that’s some of the things I think we need to be doing more of.
Garrick Utley: These are the specifics of the to do list but you prepare this report paid for by the SUNY Levin institute where we are for the first time backed up by statistics, evidence both in terms of economic regions of the state but let’s look down the road. Let’s look down the road as to where we’re headed, not just in New York but you can look the nation, at the world, what are wage levels going to be like in this world, including, or led by the United States? What are people going to be able to expect if they no longer have the manufacturing job or prospect one of high levels at like $20 an hour or whatever it might be. What’s your vision of the future? The new normal, the new economy, the new reality.
Jonathan Bowles: You know, I think globalization is the new reality. I think technological advancement is the new reality. I don’t see that changing. And I think that we’re in a knowledge age where it’s all about education and innovation. So I think that if you don’t improve your workforce, if you don’t improve your own skills if you don’t have a two or a four year degree, then I think it’s going to be hard for individuals to get ahead and climb up and get to the middle class. But I think that the cities we have around the state, including New York City, are going to struggle to compete. The most competitive cities in today’s global age are the ones with the best human capital and that’s where we need to invest.
Garrick Utley: Ok we need to invest. No argument, no question about that but if looking out 20 years, another generation and too many people don’t finish high school or don’t have a higher education degree and they don’t have the skills and they aren’t able to adapt. Perhaps of no fault of their own but through globalization, global competitiveness, technology etc. And let’s face it that’s likely to be the scenario. No one’s going to wave a magic wand and cure these problems in the next 20 years or so. Where does that leave us? Where does it leave New York, Buffalo, Utica, Binghamton, elsewhere or anywhere in the nation?
Jonathan Bowles: This is not unique to Buffalo or Binghamton. The reality is that most cities, most states, are experiencing similar challenges. New York hasn’t done worse than more other states right now. I think that for those states and or cities. For upstate cities like Binghamton and Syracuse and Buffalo, if they can’t get they can’t get local workforce up with higher levels of educational attainment I think heave really got to look inwards to help their own economies and really kick start entrepreneurship. Get the most of their local assets, like their educational institutions. Attract more immigrants that might be more entrepreneurial. There have been efforts in some cities are the country to promote localization. In this kind of backlash to globalization, let’s make sure people in those cities are buying locally. Let’s extensively market local goods and services so that people not only in those cities know to buy those goods but people across New York state are really buying local goods. That’s got some potential. So I think there are strategies that can be done for these upstate cities. I would still say number one is let’s investing in the human capital, but I think that entrepreneurship and innovation and tapping the local things in these cities is a major strategy.
Garrick Utley: You spent much of your adult professional life focusing on these issues. The economy, the society, communities, technology, how they all come together or don’t come together. After you finish this report new York and the world on the impact of the global economy in the state and city, were there any surprises in the results and what you found? Anything that made you says hey Jonathan I wasn’t really aware of that or I see New York in a different light?
Jonathan Bowles: You know we did focus groups and town halls between the Center for an Urban Future, the SUNY Levin institute and around the state. I really struck by the optimism that still exists in a lot of places. I think that there is a level of hunger about making right and improving some of these upstate cities that have struggled so long. That’s important. We found more local leaders who are really interested in figuring out new solutions and figuring out new strategies today. I think that’s important. It’s like when places like Southern California lost the defense industry we saw a real hunger to do something very different. In New York we’re starting to see a lot of stakeholders get to that point where what’s worked in the past is not going to work in the future and we need to do something different. I think we’re starting to get there in New York and I think that’s really healthy.
Garrick Utley: In the end to the extent that there are solutions are they going to come from the top down or bottom up?
Jonathan Bowles: You know I think it’s a little of both.
Garrick Utley: Or a lot of both
Jonathan Bowles: I think that it’s a lot of both. But I think there has to be a role for the state and state government. But the state has tried to do this for 20 years. There have been a lot of different efforts and most of them have not been working. I think that local leaders, local individuals have got to do things on their own and I think that’s why I really support things like entrepreneurship. We need to be making a challenge to our local communities to greatly increase the number of people who go into entrepreneurship. We should be challenging local communities to increase the percentage of their population that have a two or a four year degree by 10 percent over the next several years, We should be challenging the local communities to roll out the red carpet for immigrants and see if they see a five or seven percent increase in the coming years. Of the things that are really going to support growth in the economy. These upstate cities is that they have to do things to get there. And I’d love to see some kind of metrics that show us how we’re moving in the right direction in the coming years so we know how we’re getting there.
Garrick Utley: And a number of these items are on the to do list in the report and there are others out there. Skills. Everybody talks about skills. Upgrading skills, skills for the next technological future or generation. How do we define skills? What are the skills that are important to you in this big picture going forward?
Jonathan Bowles: One thing is when I speak of skills, often I’m thinking of educational attainment. Today the associate’s degree has really become the new high school diploma. This is really the kind of floor of what all these companies in almost every industry require today. You can’t be an auto mechanic today without having an associate’s degree in many places. You can’t get a certain amount of technological skills with a high school degree. I think that we’re seeing highly specialize skills in a lot of industries. For instance, in healthcare the movement towards electronic health records has just created new levels of skills and specificity that a lot of people that have gone into healthcare in the past didn’t have and still don’t have. So there are kind of these changes in all these industries, much of it which is driven by technology that people just don’t have those skills for, There’s just so few industries where you can get by with a GED today.
Garrick Utley: And that’s part of the new reality. Population moving, people moving. We’ve talked about the big population move from upstate cities. How much of that is the city losing population the suburb or the metro area itself losing population as people move away? What did you find about that?
Jonathan Bowles: Well both things are happening people have been moving out of the cities and to the greater suburban area for years and for decades. But I think that the challenge for these upstate cities is that we’re just seeing people moving out of the region entirely. We’re seeing people moving out of the state entirely and there’s be a real significant population loss in a lot of the upstate regions. And where there isn’t a population loss, there’s been extremely slow growth. Over the last 30 years or so, very few states have seen lower levels of population growth than New York state has and that’s because a lot of the upstate regions and not just the city but the region has lost population to places like Arizona and Texas and Florida and that continues. Those are places where there’s a lot more opportunity and there’s a lot more jobs and frankly your money goes further.
Garrick Utley: Manufacturing. We hear some voices now, some experts, some elected officials talking about the return of manufacturing jobs to the united states from abroad. To what extent do you think this is going to be true and if it is true what does it mean? What kind of jobs and at what wage levels?
Jonathan Bowles: you know I think that as production costs in places like China continue to go up there is some real potential for New York and this country as a whole to reseize some of those manufacturing jobs. I think just in the past few months there’s been major manufacturing growth in America and I think there’s potential there and I think that as we’ve seen more advanced manufacturing, there’s real growth happening even in New York state in advanced manufacturing. I just wouldn’t put all of our bets on this. I think that for too long, New York state economic development officials have been trying to prop up the manufacturing development center and to try and limit the losses but we can’t let this take away from entrepreneurship from harnessing the innovation capacities of our universities from trying to create new emerging growth areas of the economy. So I think that we certainly should try and develop as much manufacturing growth as we can in New York state and there is some potential there, especially as this backlash from globalization happens but I wouldn’t make that the center piece of an economic development strategy.
Garrick Utley: It’s understandable that elected officials and others want to do that which can hold on to what has been rather than let’s say ‘alright fellow New Yorkers that have gone that’s off the table. What lies ahead is going to be painful.’ Really painful. Elected officials don’t want to say that. They want to paint a rosier picture. Do you think the public, the people of New York fully understand what we are in this storm?
Jonathan Bowles: I think that there’s more recognition of this that ever. Particularly upstate New York has faced a troubling economic situation for more than a couple decades now. So I think there’s been a growing recognition that’s what’s worked in the past is no longer working or is not going to work in the future and that we need to develop new strategies and economic development opportunities. So I do feel optimistic in that way and we heard that optimism across the state I think that people were willing to think differently about this and I think that people want new ideas more than ever. We’ve seen in New York City that Mayor Bloomberg has really benefited from all sorts of innovative policies. Things like creating an incubator for growing emerging tech companies. Bike lanes which rangles a lot of people in New York but those attract and keep young professionals in the city. And so I think to the extent that Mayor Bloomberg has looked differently or thought differently about all these strategies, I think we have to apply that to the rest of this state.
Garrick Utley: Jonathan, we look at the population of cities. Cities have metro regions. If we look at major cities across the state, the cities themselves have lost, not only jobs, but people. How bad has it been?
Jonathan Bowles: Most of the upstate cities we’ve been looking at have lost 25 percent of their population in the last 30 years. From 1970 to 2010 the population declined by 44 percent in Buffalo, by 32 percent in Utica, 29 percent in Rochester and 26 percent in Syracuse and 26 percent in Binghamton.
Garrick Utley: And that’s a message that’s been sent by people.
Jonathan Bowles: People are voting with their feet. And this is really devastating to an economy. Many of the people that are leaving are young people, people with talent with higher education, with skills and they’re moving elsewhere so that’s really hurting the job base. These are people that have the entrepreneurial spirit and upstate economies will have to make do without their talents.
Garrick Utley: When we talk about New York in the world and jobs and the disappearance of manufacturing and we’re not just talking about New York state but we’re talking about Ohio and Pennsylvania and Michigan, the old industrial regions. How bad or how well did New York stack up to what happened in these neighboring states?
Jonathan Bowles: Between 1970 and 2000 New York actually lost more manufacturing jobs or a greater percentage of its manufacturing jobs that Michigan, Ohio, Pennsylvania, Massachusetts, New Jersey and every other Northeastern and Midwestern state. These are states that have really struggled as well in the global economy, they’ve lost tons of manufacturing jobs but New York actually saw a 50 percent decline in manufacturing jobs during this period, worse than any other local or neighboring state. Between 2000 and 2010, only one state had a larger percentage of manufacturing job losses than New York and that was Michigan.
Garrick Utley: Any particular reason for this?
Jonathan Bowles: I think New York started at a higher level where manufacturing was a bigger percentage of the overall economy than it was in these other states but at the same time costs. A lot of these states have lower taxes, lower labor costs and so that’s why I think that we’ve seen greater losses here.
Garrick Utley: We talk about upstate and downstate. What is the connection between upstate and downstate and what is the importance of having a connection?
Jonathan Bowles: I think in today’s global economy if you aren’t one of the global centers like in New York or London or San Francisco, I think it’s so important to be connected to one. And we’ve seen in our research around the state that communities that are in a couple of hours of New York city have done much better than those that are much further away.
Garrick Utley: Long Island, for example. The Hudson Valley all the way up to Albany?
Jonathan Bowles: Yes. Long Island, Westchester, The Hudson Valley has done much better. People that work in New York City live in those places so there’s a lot greater wealth and that leads to local business creation. Immigrants are extending into those areas. The Hudson Valley has great improved due to those immigrants in recent years. Some sort of formerly depressed towns have seen improvements because of immigrants starting businesses in the Hudson Valley and on Long Island. I think that going forward it’s important to figure out how to connect parts of upstate to New York City. For instances, making sure that there are better transportation linkages between upstate and downstate. High-speed rail if we could get that going. I think would do wonders. It would basically allow for some upstate communities to be extended suburbs of New York city. I think it would allow for more business connection to New York City. We’ve got to make sure that upstate communities get connected to some of the financial assets. For instance, there are some great technology entrepreneurs and some great things happening at universities that need to benefit from New York City. Venture capital firms and people that want to invest in new growth companies. We’ve got to make sure there’s a connection between the financial strength of New York City and some of the investment capital that we have here and some of the ideas that we’re seeing upstate. I think that in this global economy it’s so critical to make the connections between upstate and downstate.
Garrick Utley: It is desirable and perhaps important to have the connection between upstate and downstate. Recently we saw a major decision being made. Cornell University, a tremendous intellectual resource for the state, is building a facility here on Roosevelt Island here in the East River dealing with technology and engineering along withal university from Israel with strong backing from the mayor and the city of New York. Cornell, in doing this, has decided to not be connected with the city but instead put research center in the heart of New York City. What does that tell us about where the action is and what a university with strong, significant roots upstate says about its future?
Jonathan Bowles: Well it’s certainly a bet in New York City. Recognizing the power of New York City. This is the place that’s going to be a global capital and has the opportunity to be a global technology capital that sees that Cornell thinks New York City is the place to invest all these resources. I think it is going to strengthen what Cornell has in Ithaca. Ithaca and Cornell’s campus there, they have been able to attract people. It’s a great institution for higher learning. But I think that the folks are Cornell are finding that to attract and keep the best faculty and, to continue to attract the best students today, having that location in New York City is so important. it gives students the opportunity to take a semester and study this new campus or at their design and architecture campus that they already have in New York City. It allows faculty to have roots in New York city have combine with some of the art and design and architecture companies in New York City. And so I think that it really does strengthen the foundation of Cornell’s Ithaca campus by being in New York City, but you know it’s an investment in New York City but it really does strengthen the connection between upstate and in New York City.