George E. Pataki, Governor April 2005

A

Linda Angello, Commissioner

numbers in thousands)

Change in Nonfarm JobsFeb. 2004 - Feb. 2005

(Data not seasonally adjusted,

At a Glance

%Net

Continued on page 3

How Jobs Create More Jobs...

Understandingthe Multiplier Effect

Total Nonfarm Jobs 81.8 1.0

Private Sector 81.1 1.2

Goods-Producing -9.1 -1.0

Nat. res. & mining 0.4 8.7

Construction 3.0 1.1

Manufacturing -12.5 -2.1

Durable gds. -2.3 -0.7

Nondurable gds. -10.2 -4.0

Service-providing 90.9 1.2

Trade, trans., & util. 18.1 1.3

Wholesale trade 0.1 0.0

Retail trade 15.5 1.9

Trans., wrhs., & util. 2.5 1.0

Information 0.5 0.2

Financial activities 9.1 1.3

Prof. & bus. svcs. 12.7 1.2

Educ. & health svcs. 25.0 1.6

Leisure & hospitality 19.6 3.2

Other services 5.2 1.5

Government 0.7 0.0

IN FEBRUARY......NYS private sector jobs increased

2005

...NYS unemployment increased2004 2005

...NYS unemployment rate inched up

Seasonally adjusted

2004

Seasonally adjusted

2005

Percent

...NYS labor force participation up2004 2005

Seasonally adjusted

In 000s

In 000s

Seasonally adjusted

2004

Percent

Number ofPrivate Sector Jobs

TotalUnemployment

UnemploymentRates

USA

NYS

Employment-Population

Ratio

mong the most powerful toolsused in regional economicanalysis are economic multi-pliers (related story on page

2). However, they are often misused ormisunderstood. Recent business newsshows these multipliers have been used toestimate the regional economic contribu-tions of everything from the Indian PointNuclear Plants to artist Christo’s exhibit“The Gates” in Central Park. Multipliers, which measure the interde-pendence or linkage between industrysectors within a region, provide an esti-mate of the “ripple effect” due to a localchange in economic activity. They con-

nect the initial effect of a change indemand—due to purchases made byhouseholds or government or due toforeign trade, but not part of an indus-trial production process—to the totaleffect of that change on the regionaleconomy. The total effect is reportedhere in terms of jobs, but it also could bemeasured in terms of output, sales,income or value added. Total effect has three main parts:direct, indirect, and induced effects.Direct effects are the immediate em-ployment impacts associated with achange in demand for a particular indus-try. For example, a $1 million increase

In February 2005, New York’s seasonallyadjusted unemployment rate was 5.1 per-cent, up from 5.0 percent in January. (Thenation’s unemployment rate was 5.4 per-cent in February.) In February 2005, thestate had 8,491,200 nonfarm jobs, includ-ing 7,009,400 private sector jobs, afterseasonal adjustment. The number of privatesector jobs in the state increased by 0.1percent from January. (The nation’s privatesector job count increased 0.2 percent overthe month.) From February 2004 to Febru-ary 2005, the number of private sector jobsincreased by 1.2 percent in the state andincreased by 2.0 percent in the nation (notseasonally adjusted.) In addition, New York’semployment-population ratio, a measure oflabor force participation, increased slightlyin February.

Focus on the Hudson ValleyEMPLOYMENT IN NEW YORK STATE

Hudson Valley Experiences Broad-based Growthby Sean MacDonald, Labor Market Analyst, Hudson Valley

2

continued on page 3

Real-World Multipliers

E

T he Hudson Valley continues toenjoy one of the strongest re-gional economies in New York

State. Contributing to this strength hasbeen the region’s burgeoning population,which grew by 122,000, or 3.4 percent,between July 1, 2000 and July 1, 2004, aspeople with jobs in the New York City areahave sought more affordable housing.

Due to redrawn metropolitan statisticalarea (MSA) boundaries from the U.S.Office of Management and Budget, theHudson Valley now has two new MSAs:Poughkeepsie–Newburgh–Middletown(Dutchess and Orange counties) andKingston (Ulster County). In addition,there is one new labor market area (Putnam-Rockland-Westchester) as well as onenon-metropolitan county (Sullivan).

Over the 12-month period ending Feb-ruary 2005, the Hudson Valley’s privatesector job count increased 16,700, or2.3 percent, to 728,100, a new recordfor the month. The region’s expansionwas broad-based with all major industrysectors, except information and manu-facturing, adding jobs over the year.

Educational and health services (+5,000)added by far the most jobs, due in largepart to expansion of a large number ofmedical facilities including Crystal RunHealth Care (Sullivan County), St. Francis

Hospital (Dutchess County), Orange Re-gional Medical Center, St. Luke’sCornwall Hospital and Wallkill MedicalArts Building in Orange County. Due toongoing and anticipated demand forhealth services, the region’s localWorkforce Investment Boards appliedfor a federal High Job Growth TrainingInitiative grant focused on increasing thesupply of nursing faculty at area colleges.This is seen as a critical first step toincreasing the number of trained nursesin the region. Moreover, White PlainsHospital Center and several other insti-tutions in Westchester County recently

received federal and state grants for recruit-ing and training nurses and physicians.

Over the year, trade, transportationand utilities added 3,000 jobs, driven inlarge part by robust population growthand the region’s close proximity to majorpopulation centers. Large chains con-tinue to open new stores throughout theregion; for example, Wal-Mart will openin the city of White Plains in the fall of2005. Overnite Transportation Co., anational trucking company, is building anew facility in the Town of Montgomery(Orange County) that will employ 150workers when completed later this year.

The region’s leisure and hospitalitysector also grew by 3,000 jobs over theyear, with both Sullivan County and thePutnam-Rockland-Westchester area add-ing 1,100 jobs due to the opening of anumber of hotels and restaurants. Whilethe sector had suffered a prolonged de-cline in Sullivan County, a newly ex-panding market for second homes, therecent opening of a ski resort and a new"racino" (video gaming center) atMonticello Race Track herald a turn-around. Additionally, the former Con-cord and Grossingers properties whichwere acquired by Empire Resorts, arebeing renovated and updated.

“Our region’s economy isvibrant. During April and May,

the Department of Labor isholding five job fairs that will

include 700 businesses trying tofill nearly 3,000 job openings.

Our job bank includes thousandsof current job opportunities.”

Frank Surdey, Regional Administrator,Hudson Valley

Employment Multipliers,Selected Private Sector Industry Groups,

New York State

3.413.163.063.042.252.242.031.781.711.641.50

Source: IMPLAN

MultiplierIndustry GroupInformationManagement of CompaniesFinancial ActivitiesManufacturingProf., Sci. & Tech. ServicesConstructionTransportation & WarehousingHealth ServicesWholesale & Retail TradeAdmin. & Support ServicesLeisure & Hospitality

conomic multipliers are used ex-tensively throughout the eco-nomic development field to assess

the potential employment impacts of achange in final demand on a regionaleconomy.

The value of multipliers vary consider-ably across industry groups and evenamong industries within the same broadgroup. The table shows statewide total(“Type II”) employment multipliers forselected private sector industry groups inNew York. These range in value from ahigh of 3.41 for information to a low of1.50 for leisure & hospitality. (Data comefrom the IMPLAN software package.)

It is instructive to look at an actualeconomic impact report to see the typesof conclusions that may be drawn usingmultipliers. One such report, recentlyreleased by Colgate University, focused on

the economic contributions of the OneidaIndian Nation's enterprises to the CentralNew York economy.

The report’s authors, economics pro-fessor Jill Tiefenthaler and senior ChrisBrown, found that in fiscal year 2004,direct employment by the Oneida Nationtotaled 4,215. Data from the CentralNew York Business Journal cited in thereport indicate that this made the Nationthe third largest employer in the three-county (Onondaga, Oneida and Madison)region, trailing only Upstate Medical Cen-ter and Syracuse University.

When a multiplier was factored in, anadditional 3,570 jobs in the three-countyregion were attributable to the Oneidas.As outlined in the report, these addi-tional jobs were specifically due to: theNation’s increased demand for goodsand services in the region; spending by

employees of the Nation at vendors inthe three-county area; and the Oneidas’capital spending budget, which totaled$175 million in fiscal year 2004.

Employment in New York State

is published 12 times a year. For achange of address, write to the Publica-tions Unit at the address below andprovide your old as well as new address.

Division of Research and StatisticsNew York State Department of LaborBuilding 12, State CampusAlbany, N.Y. 12240

Director David J. TrzaskosEditor Kevin JackDirector of Communications Robert LillpoppGraphic Design Kim HardinEditorial Advisor Christine Perham

EMPLOYMENT IN NEW YORK STATE

Multiplier Effect... from page 1

Unemployment Rates in New York StateData Not Seasonally Adjusted

3

Hudson Valley... from page 2

FEB’05

FEB’04

FEB’05

FEB’04

FEB’05

FEB’04

in computer purchases will cause manu-facturers to produce $1 million moreworth of computers, hiring extra workersin the process. Indirect effects would behiring by industries that supply goods andservices to the expanding computer in-dustry (e.g. chipmakers). Induced effectsoccur as firms in all sectors of the localeconomy add staff due to spending ofthe additional income of employees inthe directly (computer) and indirectly(chipmakers) affected industries. Multipliers based on direct, indirect andinduced effects are called total or “TypeII” multipliers, and are the ones mostoften cited in economic impact studies.They are calculated as:

(Direct+Indirect+Induced Effects)Direct Effects

Using New York data, the $1 millionincrease in final demand for the com-puter industry should generate 2.09 jobsin direct effects, 2.56 jobs in indirecteffects, and 4.04 jobs in induced effects,making for a total economic impact of8.69 jobs. Putting these data into theequation above:

(2.09+2.56+4.04) 2.09

Thus, for every direct effects job cre-ated in the computer industry due toincreased demand, we could see a total of4.16 jobs created in New York.

= 4.16

Job growth in the financial activities(+2,200) sector was fueled by expansionin the sub-prime (higher risk consumers)mortgage industry and at regional banks.The region was further boosted by the2004 relocation from Manhattan of nearly2,000 workers from Morgan Stanley and1,000 from New York Life Insurance Co.Future demand for financial services inthe region should be sustained by theHudson Valley’s continued populationgrowth and strong housing market.

The information sector lost 800 jobsover the year. Based on published re-ports, much of this loss was due to theclosing of Verizon’s call center in RocklandCounty. Despite this closing, Verizonplans to compete against cable and satelliteproviders for the high-speed Internet ac-cess market, hiring workers to expand itsfiber optic network. At the same time,Westchester-based Bridgecom Internationalhas teamed up with Broadview NetworkHoldings of New York City to increasemarket share in voice, data and Internetservices. Lightpath, a division ofCablevision, has been expanding through-out Westchester County. Additionally,Nokia is moving 300 employees into itspermanent new headquarters in Harrison.

Although manufacturing lost 700 jobsover the year, a big bright spot is theopening of IBM’s expanded chip fabrica-tion facility later this year. The projectmay result in the hiring of an additional500 workers.

New York State 6.7 5.6Capital 5.1 4.5Albany 4.6 4.0Columbia 5.3 4.5Greene 6.2 5.4Rensselaer 5.5 4.7Saratoga 4.6 4.1Schenectady 5.0 4.5Warren 6.7 5.8Washington 5.8 5.7Central 6.3 5.6Cayuga 6.4 5.5Cortland 7.3 6.7Onondaga 5.6 5.0Oswego 8.8 7.7Finger Lakes 6.6 5.8Genesee 7.3 6.5Livingston 7.9 6.7Monroe 6.1 5.3Ontario 6.7 6.4Orleans 8.5 7.6Seneca 6.8 6.0Wayne 7.5 6.7Wyoming 9.0 7.3Yates 5.9 5.6

Hudson Valley 4.9 4.2Dutchess 4.9 4.2Orange 5.2 4.5Putnam 4.1 3.6Rockland 4.5 3.9Sullivan 6.6 5.7Ulster 5.5 4.7Westchester 4.8 4.0Mohawk Valley 6.9 6.1Fulton 6.9 6.5Herkimer 7.4 6.6Madison 7.2 6.4Montgomery 8.0 7.1Oneida 6.4 5.6Schoharie 7.3 6.3North Country 8.4 7.2Clinton 7.2 6.1Essex 7.1 6.6Franklin 8.4 7.3Hamilton 8.7 7.6Jefferson 9.4 8.0Lewis 10.2 8.9St. Lawrence 8.6 7.2

Southern Tier 6.4 5.6Broome 6.4 5.6Chemung 7.3 6.4Chenango 7.3 6.2Delaware 5.7 4.9Otsego 6.2 5.4Schuyler 7.9 7.3Steuben 8.2 7.2Tioga 6.3 6.0Tompkins 4.0 3.3Western New York 6.8 6.0Allegany 7.7 6.9Cattaraugus 7.4 6.4Chautauqua 7.0 5.7Erie 6.5 5.8Niagara 7.7 6.6Long Island 5.3 4.6Nassau 5.1 4.4Suffolk 5.5 4.8New York City 7.9 6.5Bronx 10.3 8.3Kings 8.5 6.9New York 6.9 5.7Queens 7.3 6.0

Multipliers have some key limitationsand certain errors are common. Mostimportantly, multipliers only measureshort-term economic changes. They donot account for long-term impacts on anarea’s economy. In addition, multipliersassume that surplus economic resources,including labor, are in ready supply—thusnot allowing for labor shortages. A common mistake is to add the directeffect to the total effect; this results indouble-counting. Another typical prob-lem involves using the wrong multiplier;you can’t count jobs using an incomemultiplier. A less obvious problem isunrealistic direct effects estimates thatresult in total economic impacts beingoverstated.

by Kevin Jack

State of New YorkDepartment of Labor

Division of Research and StatisticsW. Averell Harriman Office Building

CampusAlbany, New York 12240

OFFICIAL BUSINESS

FIRST-CLASS MAILPOSTAGE & FEES PAIDEmployment Security

Permit No. G-12

EMPLOYMENT IN NEW YORK STATE

REGIONAL ANALYSTS’ CORNERhttp://64.106.160.140:8080/lmi/index.html

RS-2

FINGER LAKESWILLIAM RAMAGE585-258-8870

Private sector employ-ment in the Rochesterarea declined 6,000, or1.4 percent, over theyear to 416,000 in Feb-ruary 2005. Employ-ment gains in educationaland health services(+300) were outpacedby declines in manufac-turing (-4,400), leisureand hospitality (-400),and professional andbusiness services (-400).

NORTH COUNTRYALAN BEIDECK 518-891-6680

Private sector employment in the North Country region increased overthe year by 2,300, or 2.1 percent, to 109,900 in February 2005. Thelargest gains were in trade, transportation and utilities (+1,300),educational and health services (+800), and natural resources, mining,and construction (+400). Losses were centered in information (-300)and leisure and hospitality (-200).

SOUTHERN TIERJOSEPH KOZLOWSKI 607-741-4485

Private sector employment in the region rose over the year by2,000, or 0.8 percent, to 248,700 in February 2005. Gains intrade, transportation and utilities (+900), educational and healthservices (+700), manufacturing (+500) and financial activities(+300) outpaced losses in information (-300) and smaller lossesin several other industries.

MOHAWK VALLEYMARK BARBANO315-793-2282

Private sector employment in theUtica-Rome metro area rose overthe year by 700, or 0.7 percent,to 97,200 in February 2005.Job gains in educational andhealth services (+700), manufac-turing (+200), and smaller in-creases in several otherindustries more than offsetdeclines in profes-sional and businessservices (-400).

WESTERN NYJOHN SLENKER716-851-2742

Private sector employment in theBuffalo- Niagara Falls metro areaincreased over the year by1,300, or 0.3 percent, to442,500 in February 2005. Jobgainers were led by natural re-sources, mining and construction(+700), financial activities(+600), educational and healthservices (+500), and professionaland business services (+400).Manufacturing (-1,300) lost jobsover the year.

CAPITAL DISTRICTJAMES ROSS

518-462-7600From February 2004 to February 2005, the num-ber of private sector jobs in the Albany-Schenectady-Troy area increased by 3,900, or 1.2 percent, to331,100, a record high for the month. Industrysectors adding the most jobs included educationaland health services (+2,100), manufacturing (+700),professional and business services (+600), and fi-nancial activities (+400). Information (-400) lost jobsover the year.

HUDSON VALLEYSEAN MacDONALD914-997-8798

Private sector employment in the HudsonValley increased 16,700, or 2.3 percent, to728,100 over the 12 months ending Febru-ary 2005. Job gains were centered in edu-cational and health services (+5,000), leisureand hospitality (+3,000), professional andbusiness services (+3,000), trade, transpor-tation and utilities (+3,000), and financialactivities (+2,200). Information (-800) andmanufacturing (-700) lost jobs over the year.

CENTRAL NYROGER EVANS315-479-3388

Private sector employ-ment in the Syracusemetro area rose 2,900,or 1.1 percent, to257,700 over the 12-month period ending Feb-ruary 2005. Job creationwas concentrated in pro-fessional and businessservices (+1,000), edu-cational and health ser-vices (+900), leisure andhospitality (+900), andtrade, transportation, andutilities (+700). Manufac-turing (-1,000) lost jobsover the year.

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NEW YORK CITYJAMES BROWN 212-621-9353

The City added 36,700 private sector jobs for the 12-month period endingin February 2005, a gain of 1.2 percent. Three sectors – leisure and hospitality,educational and health services, and trade, transportation and utilities – eachadded more than 10,000 jobs. The financial activities sector gained strength,while manufacturing was the only sector to lose jobs over the year.

LONG ISLANDGARY HUTH 516-934-8533

Long Island private sector employment roseover the year by 14,900, or 1.5 percent, to1,012,100 in February 2005, a record highfor the month. Job gains were centered inprofessional and business services (+3,900),educational and health services (+3,500),leisure and hospitality (+3,500), trade, trans-portation and utilities (+1,600), natural re-sources, mining and construction (+900),and other services (+800).