BCW study: White Plains has appeal for young adults, but more affordable housing needed

A study released last week by the Business Council of Westchester and its Westchester Coalition for Business Development looked into one of the most critical questions facing county businesses: Why are young adults leaving en masse?

The answer is that, while areas such as White Plains, Katonah, Purchase, Scarsdale, Rye, Port Chester and Yonkers all have unique characteristics that make them strong candidates for young professionals, the cost of living is simply too high to justify living in Westchester instead of living in NYC.

(See Bureau Chief John Golden’s article here on Westfair Online.)

Kudos to both the Business Council and the Westchester County Association for making multi-use developments and the re-development of some of the county’s defunct commercial office space as affordable housing units priorities as part of their respective economic development initiatives. Now, the challenge is convincing property owners, developers, and municipal zoning boards of the validity of their conclusions.

It is now up to economic development advocates to work alongside all of the crucial parties to implement a strategy that can yield action, and not just studies and words of encouragement.

As national jobs recovery continues, Hudson Valley hiring slows

First the good news: U.S. employers added 227,000 net new jobs in February, making it the third straight month of 200,000+ new jobs. Additionally, the Commerce Dept. reported wages were up ever-so-slightly, another positive sign.

Perhaps the most important signal, though, was news that the unemployment rate held steady at 8.3 percent despite an influx of workers into the labor force. (Quick primer: The unemployment rate is the percentage of job-seekers who are unemployed; if you are unemployed but not actively seeking work, you are not counted as ‘unemployed’ according to Commerce. With the rebounding economy, more and more unemployed Americans who previously might have been too discouraged to even look for work are re-entering the job market. In a nutshell, today’s news means that the economy is adding enough jobs to match the number of people entering the labor force – a very good sign.)

IHS Global Insight Chief U.S. Economist Nigel Gault says as much: “The unemployment rate remained stuck at 8.3%, after five successive declines, but that wasn’t bad news, because both employment and the labor force jumped higher.”

Now for the not-so-good news. Yesterday, the state released its January employment report, showing that the unemployment rate actually increased from 8.2% in December to 8.3% in January (note that in January, the U.S. unemployment rate dropped from 8.5% to 8.3%). Folks, this is the first time in months that the Empire State’s unemployment rate has been equal to the national rate.

In the Hudson Valley, the private sector added 13,100 jobs from Jan. 2011 to Jan. 2012, increasing at a modest 1.9 percent clip. During that same period (Jan. 2011 to Jan. 2012) the private sector nationally added jobs at a 2.1 percent rate. That slowdown in the Hudson Valley came despite a mild winter, which helped the construction and real estate industries.

Heard in the news: $6 gas a possibility?

Before we get too carried away, let me give some context:

On Thursday morning, New Jersey Governor Chris Christie was on MSNBC’s Morning Joe to talk about the presidential election, when he brought up the issue of rising gas prices and how it would play as the primary season heats up. Christie’s argument was that if gas hits $6 a gallon, it would have a huge effect on the general election because gas prices affect consumers and businesses at all levels.

Granted, one can never be sure about the validity of a statement that’s political in nature. But, adding credibility to the fear of rising gas prices, a AAA spokesperson recently told the Los Angeles Times isolated parts of the country could be seeing $5-a-gallon gas “by April or May.”

Today, the Reuters/University of Michigan consumer sentiment index for February was just barely higher than the previous month – making it the slowest consumer confidence increase in months. IHS Global Insight economists contributed the minimal gains to rising gas prices:

“Americans are going to feel pain at the pump, since given the current state of affairs it is relatively safe to say that gasoline prices will surpass $4/gallon by Memorial Day. The recent news on the jobs front is cause for some hope that the future will look brighter, but as gasoline prices rise consumer confidence takes a beating,” said IHS economist Chris Christopher in an email.

While several gas stations here in Westchester already feature $4/gallon gas, for the national average to top that bar before Memorial Day weekend would be a significant blow to the economy. Currently, the national average for a gallon of unleaded gas is $3.647 – good for a 13 percent increase compared to exactly a year ago. In New York, the statewide average is even higher, at $3.910/gallon. That’s nearly 6 percent higher than just a month ago and 13.5 percent higher than a year ago.

The other Indian Point debate: the cost of energy

Few issues are as divisive for Hudson Valley residents as the fate of Indian Point Energy Center in Buchanan. Located within a 50 mile radius of the country’s most vibrant city and millions of residents, there are environmental and safety issues to consider. Here, though, I will touch on the Indian Point debate only as it relates to local energy costs.

I wrote in today’s Westchester County Business Journal about two separate setbacks that Indian Point owner Entergy Nuclear has experienced over the past couple of weeks in the company’s efforts to re-license the plants (the current licenses for IP2 and IP3, the two active reactors, expire in 2013 and 2015, respectively).

One of those two items I reference was a joint statement released by state Assemblymen Kevin Cahill and James Brennan, chairmen of the Committee on Energy and of the Committee on Corporations, Authorities and Commissions, in which the two conclude that based on testimony at a Jan. 12 hearing, Indian Point could be shut down “without unduly burdening New York’s ratepayers or the electric system,” in Cahill’s words.

The problem: that might not be the case. Jerry Kremer, chairman of the New York Affordable Reliable Electricity Alliance, said in response to Cahill and Brennan’s statement:

“I testified at the January 12 hearing and heard compelling evidence throughout that day from the New York Independent System Operator, Con Edison, and Charles River Associates (an independent energy consulting firm) that the loss of Indian Point would have serious ramifications on the City’s electric costs and reliability…

“It seems the committees, both chaired by known opponents of Indian Point, were using the January 12 hearing to justify pre-established positions rather than to look informatively at this important issue.”

Kremer is absolutely right and justified in saying that several experts who testified at the hearing spoke to the importance of Indian Point as a major provider of electricity to the region and as a vital link in the state’s electric grid between the upstate power generating sources and downstate consumers. It seems that in their conclusion, Cahill and Brennan chose to ignore this particular testimony.

The bottom line is this: whether or not you are a fan of Indian Point, there have been credible studies and evidence to support the theory that electricity costs would go up significantly if the plants are shut down without a source (or sources) of replacement power already in operation. Those replacement power sources, let me remind you, will not appear overnight. It is extremely difficult to secure the permits and approvals necessary to build a power plant; not to mention the time and financing that would be inherent in any such project.

Turning a blind eye to safety issues is reprehensible, agreed. But turning a blind ear to the economic facts – which Assemblymen Cahill and Brennan apparently did – is disturbing in its own right.

Tappan Zee Bridge plans move ahead but where’s the money?

It’s hump-day, which means it’s production day at the Westchester County Business Journal, so I will keep this one short and sweet.

Yesterday the New York State Thruway Authority announced the four finalists selected to bid on the Tappan Zee Bridge rebuilding contract. The announcement comes just over a week after the state released its draft Environmental Impact Statement.

With these new developments, the Thruway Authority (which owns the bridge) and its state and federal partners have accomplished something that eluded previous administrations: that is, they have kept their promise – so far. As it stands, project coordinators still expect to award a contract by July or August and still expect construction to begin on a new bridge by the end of this year, which would be a major achievement given the length of time we have had to wait so far to see any progress whatsoever.

Now, it is time for the governor to let the public know how the bridge will be financed. With an expected price tag of $5.2 billion, the public and the four finalists are entitled to know the nitty-gritty details. In his budget address, Gov. Cuomo said funding for a new bridge would come from “authorities.” Which authorities? State or federal? Will the funding be new or will it come out of existing budgets?

Until we hear those details, I will continue to be skeptical of the governor’s plan. A new bridge is necessary and will be a huge boost to the entire region’s economy. But money doesn’t grow on trees and even the popular Mr. Cuomo can’t pull $5.2 billion out of a magic hat.

A bipartisan vote for job creation

In today’s Wall Street Journal, Senators Jerry Moran (R-KS) and Mark Warner (D-VA) published an op-ed in which they tout a new bipartisan plan to boost job creating among small businesses, called the Startup Act.

Among the Startup Act’s proposals are:

  • To permanently exempt capital gains taxes on the sale of certain small business stock held for at least five years, which will, in the authors’ words, give “investors an incentive to partner with entrepreneurs and provide financial stability at a critical juncture of firm growth.”
  • To reduce the corporate income tax on certain new businesses during the first three taxable years of profit;
  • To require all government agencies to conduct a cost-benefit analysis of all proposed new regulations that have an economic impact of $100M+, so as to determine the potential effects of those regs on the formation and growth of new businesses;
  • To make it easier for foreign-born students who graduate from U.S. universities with advanced degrees in STEM areas (science, tech, engineering, math) to get a green card;
  • To expand taxpayer-funded research at U.S. universities;
  • To assess state and local policies that aid in the development of new businesses.

I’m not fully on-board with a couple of the above proposals and am skeptical of how they might be received in Washington, but am otherwise glad to see that some in government are embracing the plight of Americans and Westchester residents alike: that is, a dire need for a more small-business-friendly environment. Count me in.

Role reversal: National job market posts major gains as Hudson Valley growth halts

TGIF. I am convinced that the groundhog jinxed us – what other explanation could there possibly be for my thermometer displaying a below-freezing temperature this morning for the first time in several days?

On the jobs report, I’ll cut right to the chase: this one caught everyone off-guard, and in the best way possible. As of 8 a.m. this morning, a half hour before the scheduled release of the January employment report, the experts were calling for anywhere from 95,000 to 180,000 net jobs added last month. At the low end, that would have represented a major setback; at the higher end, it would have been encouraging but still not the number we were hoping for.

It turns out everyone (except the groundhog) was wrong. The U.S. economy added a whopping 243,000 jobs in January, bringing the employment rate down to 8.3% from 8.5% last month and 8.7% in November. The private sector job count was 257,000. Gains were spread across manufacturing, professional and business services, and leisure and hospitality. The Labor Department also revised the November and December jobs numbers, saying the economy added 60,000 more jobs in those two months than was initially thought.

This, folks, is very big. The last time this few people were unemployed, it was February of 2009 and President Obama had just taken office. That’s not to say we’re back to operating at full-steam: underemployment – or the measure of people who are working less and earning less than they would ideally like to be – is still high (18.8%, according to Gallup’s daily polls).

Closer to home there is reason to be concerned as well. In the Hudson Valley, the unemployment rate actually increased in December, and while January jobs numbers won’t come out for another couple of weeks, the signs are not looking good. The job recovery has slowed in our neighborhood – and for a crystal-clear (and unavoidable) reason: because we put most of our eggs in a rotten basket.

Health care and biotech have been huge in Westchester and the Hudson Valley. The leisure and hospitality industry is doing better than it has in years. But the beating heart of the Westchester economy is the securities industry and those it employs. And therein lies the problem.

According to a report from New York State Comptroller Thomas DiNapoli, the securities industry lost $3 billion in the third quarter and posted similarly weak earnings in the fourth quarter. There have been 4,300 jobs lost in the industry since last April.

New York has posted a net loss of 11,200 private sector jobs since July, according to the report, and the average salaries of the jobs created in the past two years is more than 40% lower than the average salaries of the jobs lost in the state during the recession. The government sector has shed 29,300 jobs over the last two years, and the state’s GDP is expected to grow by just 1.7% in 2012 – below the expected 2%+ national GDP growth.

So while today’s job report is something to celebrate, know that here in New York, there is still a long recovery ahead.

Positive signs for U.S. recovery

In a recap of some of this week’s economic data heading into the holidays, there is reason for optimism as businesses round out the year:

  • Unemployment claims fell by 4,000 to 364,000 for the week ended Dec. 17, marking the fewest claims since April 2008.
  • Thompson Reuters/U. of Michigan consumer sentiment index hit 69.9 for December from 64.1 in November, marking a 6-month high.
  • Fuel prices are down to an average of $3.21 a gallon for regular unleaded gasoline as of Dec. 20, its lowest level since February.
  • Housing starts jumped by 9.3% in November and the National Assoc. of Home Builders/Wells Fargo Housing Market index rose in Dec. for the third straight month.