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Rapid job losses stun region, cloud outlook

Friday, July 24, 2009

The Business Review ( Albany ) – by Adam Sichko

The recession has now wiped out any job gains the Capital Region had made in the past eight years.

New state data reveal that startling, atypical development in the area’s labor market, which surprised area economists. If the national recession ended today, it would be well into next year before the local labor market started to rebound, the economists said.

And even then, the state could still be stuck in its own recession.

“That’s really something, for Albany ,” said Kajal Lahiri, an economist at the University at Albany . “That has not happened here for a long, long time. We look as bad as Binghamton and Syracuse and Buffalo and Utica , which was really not true of the past two or three recessions.”

From June 2001 to June 2008, the 11-county Capital Region had a net gain of 15,500 jobs. Since then, that number of job—plus 300 others—have disappeared.

The deficit is larger in the core Albany-Schenectady-Troy area, which is losing jobs faster than the state.

From 2001-08, the Albany area had a net gain of 10,500 jobs, a growth of 2.4 percent. Today, the area is now 1,400 jobs behind its 2001 count.

Unemployment rates will continue to rise through the rest of this year, economists said. The rates are seen as low-end estimates, because they do not count people who are working part-time jobs or who have not looked for work in the past month.

“Any gains we had this decade, pretty much, have been eliminated,” said James Ross, an analyst with the state Department of Labor who studies Albany . “And it will continue. There’s no reason to think the labor markets will turn around any time soon.”

Not all the data are bad, relative to the rest of the nation.

New York had the fourth-smallest rate of job losses (-2.3 percent) in the nation from April to June this year, compared with the same time a year ago.

Part of that is because many cities and counties upstate never climbed out of the previous recession, so they had fewer jobs to lose when this downturn arrived. Economists also said upstate’s traditionally slow and steady economy has buffered it from the blow this recession has delivered to other areas of the country.

“It’s acting as a shock-absorber. We didn’t boom, so we’re not busting,” said Gary Keith, upstate regional economist for Buffalo-based M&T Bank.

The only states with a smaller rate of losses were South Dakota , Louisiana and Alaska . Following New York on the rankings are Nebraska and Montana .

Keith is bullish on upstate. He noted that three places upstate— Albany , Syracuse and Rochester —were among the 20 metro areas nationwide with the smallest private-sector job losses from last year’s second quarter to this year’s quarter.

“We’re only losing less than elsewhere, so you can’t take a lot of joy in that,” Keith said.

Still, he added, “if I had to pick a place I’d want to be, it’s upstate. And in my 20-plus-year career, I’ve never been able to say that before.”

Keith and Lahiri said the economy is close to bottoming out, and that many measures, such as GDP, will show improvement over the rest of this year. Keith added that manufacturers have finally slowed their output enough to match demand from consumers, who are trimming spending across the nation.

Yet unemployment is expected to rise at least six months after the recession ends.

Worse, New York often lags in its recovery—over the past three downturns, state recessions have lasted an average of 20 months longer than national ones.

“Next year at this time, I think we’ll be talking that the worst in the labor markets is behind us, and we’ll be seeing that hiring activity,” Keith said.

AngioDynamics Inc. is hiring right now. The Queensbury-based company manufactures medical devices. It is benefiting from the recession as it adds accounting, IT and engineering jobs.

“We’ve definitely gotten a higher caliber of applicants, in many cases, than we’d otherwise see,” said Joseph Gersuk, the company’s chief financial officer. “It’s very much an employer’s market today.”

AngioDynamics expects its local work force of 325 people to grow by 5 percent to 10 percent this year. Gersuk said many candidates are overqualified for the positions they’re seeking.

“It’s indicative of the abundance of unemployed labor,” Gersuk said.

Some unemployed workers move elsewhere in the country, where other markets are growing. This time is different.

“The old adage was, ‘Let’s go to the South.’ But now, the South is hurting more than our own region,” Keith said.

The big question remains: When will the economy recover? It’s impossible to tell, although economists see signs of hope.