Move Forward or Fall Behind

by Keith Cooper

From Broader View Weekly, January 21, 2010

During his recent State of the State address, Governor David Paterson announced a new strategy to replace the faltering Empire Zones business incentives with a plan known as the Excelsior Jobs Program.

Empire Zones were created during Mario Cuomo’s governorship as a way to revitalize economically troubled areas and draw companies and jobs to New York State. While the zones were credited with creating jobs, the system’s limitations, manipulation and bloated size led to a dwindling of its popularity over the last several years. Even supporters like State Senator George Winner (who criticized Paterson for eliminating the zones) have acknowledged the flaws and inadequacies of the system.

While the details of the Excelsior Jobs Program are still sketchy at this point, the intent of the proposal is to bring new jobs into the area in fields like technology, manufacturing and clean energy. The program also looks at payroll dollars for determining tax credits to be dispersed, which is intended to promote the quality of jobs and not just the quantity.

Of course, several critics have attacked Excelsior Jobs even before its provisions have been fully disclosed.

In an article in the Corning Leader, Shawn Hogan criticized the plan for focusing too closely on high-tech jobs and energy efficiency. It may not be surprising that he’s no fan of the program. As the current chairman of the Steuben County Empire Zone, Hogan is scheduled to lose his job in June when the zones expire. He posited that the focus on new directions might be a problem because the “Southern Tier is still based on manufacturing.” The problem with Hogan’s prediction is that it ignores the changing industrial climate in the area and in the United States.

Improved technology and international outsourcing has eliminated jobs in manufacturing as well as other labor markets. Failure to heed the shifting industrial environment will only result in a failing local economy as jobs disappear and are not replaced with innovative alternatives. Increased attention to new technologies is vital to the survival of any region.

Furthermore, Empire Zones have failed to boost manufacturing jobs in the Southern Tier.

Southern Tier Economic Growth’s president, George Miner, has criticized the elimination of the zones and the creation of Excelsior Jobs. As companies not targeted for tax credits under the new program, he listed CVS, Sitel, General Revenue Corporation, and American Customer Care. While these companies are expected to create new jobs, and while they would not be specifically targeted to receive incentives under the proposed plan, none of them improve the climate for manufacturing jobs. While citing numbers of jobs created may be an effective political feather to wear in one’s cap, drawing a bunch of low-paying call center and retail jobs into the area while hemorrhaging lucrative and skilled-labor careers will continue to be detrimental to the area.

Miner also raised concern that the new program has no mention of incentives to the gas exploration industry. This is an interesting observation. With the prospect of natural gas in the Marcellus shale, exploration in the region is inevitable. It seems illogical to imply that the industry needs tax credit incentives in order to lure gas companies to upstate New York. A focus, instead, on industries that are as yet untapped is what’s needed.

In order to address those unexplored industries, an arm of the Excelsior Jobs Program aims to provide incentive to investment in innovation. This shows the governor recognizes the fact that little advancement is made without the involvement of venture capitalists. This component of the plan is vague in its description according to Paterson’s release, but I would hope that its implementation will encourage innovation into new technologies, energy sources, and careers.

I agree with my brother Gordon that the time to trade in the Empire Zones program has come. I don’t know if Excelsior Jobs is the answer to economic woes in New York State. I do know that an approach that is grounded only in past performance, with no foresight into the challenges of the future, will spell disaster for our area, and many other regions in the state. The governor’s plan may fall short of success; it may become a bloated and wasteful system that does little more than provide political fuel to one side or the other. Or, it may work. I don’t think anyone can predict at this point. However, if industry leaders and local politicians fail to take a pro-active stance and recognize the changing industrial climate, economic devastation is certain. Any failure to move ahead is a step backward.