Challenged to revisit my dismal review of Rochester’s recent economic performance, I looked again at the influence of Eastman Kodak.
We often chart economic trends from the previous peak or trough of the business cycle. The so-called Great Recession began in 2008—so, 2007 is a good place to start. Rochester metro employment was 4 percent higher in 2018 than in 2007, about half the growth rate nationwide and well under the state’s 10 percent rate.
Moreover, the metro unemployment rate is roughly equal to that of the state and nation. (Note: The “U6” unemployment rate in the chart below is the share of the labor force that is unemployed plus discouraged workers and individuals marginally attached to the labor force, e.g. those working part time who would prefer full-time work.)
The Kodak impact is apparent in two statistics: First, as noted in that previous post, Rochester’s employment gains are feeble when compared to the nation’s 100 largest metros, placing fourth from the bottom.
Second, Rochester’s growth in real GDP from 2007 to 2018 was effectively zero. The nation’s growth rate topped 16 percent and New York’s was trending higher (the 2018 figure has yet to be released). My friend and fellow dismal scientist, Gary Keith of M&T Bank, attempted to account for the Kodak effect by looking at the chemical manufacturing sector, which includes the bulk of Kodak employment and payroll (although not all). He estimates that real GDP in this sector fell 74 percent from 2007 to 2018. When this sector is removed from the aggregate, real GDP is shown to increase by more than 6 percent.
Kodak’s employment impact is also substantial. Roughly 11,000 of the 12,500 local jobs Kodak had at the start of 2007 have gone away. As these jobs paid well above the average for the economy, they had a disproportionate impact on GDP and a ripple effect on jobs in other sectors.
Kodak left a proud legacy and continues to be going concern. But at 1,500 jobs (as reported to the Rochester Business Journal), the days of its outsized economic significance are over.