New York: Making it Tough for Manufacturing to Survive

By November 28, 2006General

Here’s a depressing story. New York lost 26% of its manufacturing jobs in the last five years. But wait — look at our Competitiveness Redbook, which ranks states according to 42 separate indicia and you’ll see that New York ranks second — behind only Hawaii — in the “Cost of Doing Business” index. That’s not good.

Last year, we asked one of our small and medium manufacturers based in the Empire State how his business was doing. He said, “It’s like that Frank Sinatra song.” We looked at him quizzically.

“You know the one,” he said, “If you can make it there, you can make it anywhere.” We had a good chuckle, but his point was well taken. The burdens on business in New York are right up there, even ahead of fourth-place California.

This, of course, is a microcosm for the world at large. We need to create a climate where manufacturing can thrive. We don’t do that by having a near 32% cost disadvantage vs. our competitors in such areas as legal costs, tax and regulatory burdens and energy costs. Within the US, manufacturers will locate where the tax and legal climates are the best. That plays out globally as well. Importantly, wages are less of an issue. It’s everything else that kills jobs. (Lou, are you listening?)

New York also ranks dead last in net state migration — 50th to California’s 49th, meaning people are leaving along with the jobs. New York ranks second (to California’s #1) in business taxes, and second (to Connecticut) in state and local tax burden.

All of this adds up to a state’s — or a Nation’s — competitiveness. New York is quite literally paying the price for creating a climate that just isn’t conducive to business. And according to these statistics, over 190,000 New Yorkers paid with their jobs.