Houses up; wages down Marist gathers data on the valley’s economy By LYNN WOODS

Houses up; wages down
Marist gathers data on the valley’s economy
By LYNN WOODS

Housing costs are increasing, but wages aren’t keeping up. The biggest growth in new jobs is in relatively low-paying sectors, such as retail, resulting in a greater proportion of lower-paying jobs. Job growth is slowing down at rates that are below the average for both the U.S. and the state.

The Bureau of Economic Research at Marist College’s School of Management has just released its annual Economic Report of the Hudson Valley for 2006, and the data reveal these trends. Data were tracked for Columbia, Dutchess, Greene, Orange, Putnam, Rockland, Sullivan, Ulster and Westchester counties.

Housing values have been increasing dramatically in the region (data was tracked for Columbia, Dutchess, Greene, Orange, Putnam, Rockland, Sullivan, Ulster and Westchester counties). The average selling price of a house in the Hudson Valley in 2006 was $568,486, compared with $336,060 in New York state and $268,200 in the U.S. (The average in the different counties, however, varied tremendously, from $900,695 in Westchester to $194,204 in Greene; in Dutchess it was $405,247 and in Ulster, $292,353).

“The large increase in housing values is relatively new to this area, excluding Westchester and Rockland,” said Dr. Christy Huebner Caridi, lead author of the report, noting that those counties “are a separate entity. They’re bedroom communities for New York City.”

Between 2001 and 2005, the percentage increase in average housing values relative to per capita income advanced 53 percent (all figures are rounded off), compared with 23 percent nationwide and 46 percent in the state.

The upshot of this statistic: The growth in total personal income has lagged behind the growth in housing values. “It has been increasingly difficult for families within the Hudson Valley to purchase and maintain a household,” the report states. “Further, while long-term homeowners have experienced a substantial increase in housing wealth, the increase in assessed valuations, insurance and maintenance costs is demanding an ever-increasing share of disposal income,” resulting in less disposal income for the purchase of goods and services.

More households are experiencing financial distress due to mortgage costs equal to or greater than 30 percent of annual total personal income. The percentage of single-family homes with mortgage costs greater than or equal to 30 percent of a year’s income is more than 40 percent in Putnam, Rockland and Westchester. Dutchess County was 39 percent. All were above the average percentage for the U.S., which is 35 percent. In terms of rates of increase of those in financial distress, Orange had the highest rate, at 49 percent increase, compared with a low of 2 percent in Westchester.

While employment grew from 2001 to 2005 in the region, the biggest growth was in service-related jobs, which have below-average compensation levels. And while there was approximately a 5.5 percent increase in the number of Hudson Valley residents commuting outside the region, mainly to New York City, this is not resulting in a significant increase in the level of household financial wealth across the region, according to the study.

“Except for Putnam and Westchester, retail accounts for over 10 percent of nonfarm employment,” said Caridi. Compensation in the retail sector “is basically half of the average wage. As more employment moves toward retail and to a limited extent, health care” which, although it includes doctors, also accounts for a high percentage of low-paying jobs “you’re going to bring down the average wage. There will be a lot of pressure on wages in the area. The jobs that are being created are not high paying.”

The exception to the trend is the increased employment in the management of companies and enterprises industry in Dutchess, Rockland, Sullivan and Westchester counties between 2001 and 2005. In Dutchess the growth in this sector was most significant: almost 10 percent, which was more than double the increase in Rockland, Westchester and Sullivan.

In 2005, the top four employers in Dutchess were government and government enterprises at 15 percent, health care and social assistance at 13 percent, retail at 11 percent and manufacturing at 10 percent. Compensation in the government and manufacturing sectors tended to be higher than the county averages, while the wages in the retail sector were below average; compensation for health care in terms of the average varied by county.

Dr. Ann Davis, assistant professor of economics at Marist who was the founding director of the Bureau of Economic Research and oversaw the report for the 15 years prior to 2005, when Caridi became lead author, said the numbers reveal that the Hudson Valley lost its edge compared with the nation and the state in 2006. “In the last few years the Hudson Valley was growing faster than the state and the U.S., but now it’s slower than either,” she said. She attributes this decline to the loss of manufacturing jobs. “Manufacturing was higher than average in the valley, but in the past five to 10 years that’s been changing. Now there’s a decline in the region.”

According to the report, “to recover the personal income lost when manufacturing jobs leave the region, it is necessary to create 1.6 jobs in the service-providing industries.”

Annual figures for nonfarm jobs show that from 2005 to 2006, growth was flat in the professional and business services category for the Poughkeepsie-Newburgh-Middletown area. (The number was 21,200 for both years.) In comparison, the sector grew in Kingston over the same period, from 4,800 jobs to 5,500 jobs. In the Putnam-Rockland-Westchester county area, the number of professional and business services jobs actually decreased for the period, from 71,200 to 70,600, although the magnitude of jobs is obviously much greater.

The number of overall service-providing jobs in all three regions, which besides professional and business services includes trade, transportation, utilities, information, financial activities, leisure and hospitality, increased slightly from 2005 to 2006 in all three regions, for a total 220,600 in Poughkeepsie-Newburgh-Middletown, 57,400 in Kingston, and 501,300 for Putnam-Rockland-Westchester.

A secondary but increasingly important source of income for the region is wages that are earned by Hudson Valley residents working outside of the region. The inflow number of people commuting outside the area for work advanced 4.31 percent between 2001 and 2006 and 5.45 percent between 2004 and 2005. Anecdotal evidence, based on increased road and commuter rail traffic toward New York City, suggests most of the migration is to metropolitan New York. However, with respect to income on real and financial assets, the data does not support a significant increase in the level of household financial wealth.

Davis said while for many years job growth in New York City was slower than in the Hudson Valley, the trend has now been reversed.

Caridi said it’s hard to quantify the impact on jobs and wages from people migrating to the area from the city. “We’re getting this movement of people living here who possibly have higher education levels. Both members of the family have business experience,” said Caridi. Some of these more affluent, educated migrants may be creating new jobs in the area through startup businesses, she said, which would be hard to track.

The economic impact of the migrants, some of whom perhaps only stay in the region on weekends, is mixed, added Davis. “On the one hand, they’re stimulating the economy by buying furniture and supporting local farm markets. They have a different sensibility, which makes for a new local food industry. But it also drives up prices for people who live here.”

Besides the migration of households with higher average adjusted gross income into the valley, which is greater than those moving out, the report tracks the movement of these higher-income households away from the southern-most counties toward the northern and northwestern counties where housing costs are lower.

The report documents the glaring discrepancy between Westchester and the urban areas up valley in terms of average weekly wages. In 2005, the average wage in Westchester was $1,071, compared with $734 in Poughkeepsie-Newburgh-Middletown and $591 in Kingston. In real dollars, the average weekly wage increased half a percent in 2005 compared with 2001 in Westchester; it was basically flat in the other regions.

Even as wages were flat, the average annual labor force increased almost 10 percent in the five-year period, with the greatest increase occurring in Dutchess County, at nearly 20 percent. Orange had a 14 percent increase; Sullivan, 15 percent; Ulster, 13 percent; and Westchester, 8 percent. In comparison, the increase statewide was 4 percent and in the U.S., it was 5 percent.

The report also tracked a slowdown in the real estate market. In the last quarter of 2006, both number of sales and the price of homes decreased for the first time in recent years. Construction spending on single-family houses across the Hudson Valley declined $122.9 million in 2006, a 15 percent reduction compared with 2005.

Judging by sales tax figures, people are buying at a lesser rate than in previous years. Overall sales tax for the Hudson Valley increased almost 2.5 percent in 2006, compared with almost 8 percent in 2005 and 12 percent in 2004.

The report also tracks education levels of the population. As expected, a much higher percentage of the population in Westchester, Rockland and Putnam counties had bachelor’s degrees more than 20 percent with Westchester and Rockland also having the highest percentage of population with graduate degrees (more than 20 percent in Westchester and more than 15 percent in Rockland). In contrast, less than 15 percent of the population had college degrees in Ulster County; more than 15 percent were high school dropouts, and 35 percent had high school diplomas.

For the region as a whole, more than 15 percent had a bachelor’s degree, less than 15 percent had a graduate degree, more than 25 percent of the population had a high school diploma, and more than 10 percent had no high school diploma. That pretty much parallels the average for the U.S., although nationwide there was a higher percentage of high school dropouts more than 15 percent and a higher percentage of those with high school diplomas 35 percent.

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