The Wall Street Journal recently published the results of its study of the hottest and coldest job markets in major U.S. metropolitan areas. It was not surprising to see Rochester on the list of struggling cities, but it was certainly dismaying to find that we ranked dead last.
The study looked at recent jobs data for the 53 metro areas with populations greater than 1 million. It included average unemployment rate and labor-force participation rate in 2018 as well as change in employment and labor force for the fourth quarter of 2018 when compared with the previous year. It also looked at the difference in average weekly wage in the first half of 2018 compared with the first half of 2017. Rochester fared poorly in each of these categories.
Buffalo placed second to last, making Upstate New York even worse than Detroit when it comes to job market vibrancy.
Rochester was the smallest of the cities studied, but size didn’t seem to be an important performance factor, as New York City, Philadelphia and Chicago also placed on the wall of shame, among the bottom 10.
The typical scapegoats for these results, depending on your political persuasion, seem to be weather, taxes, or politics. However, none of these were unanimously conclusive.
Many of the hottest job markets were in the hottest climates. Austin ranked best, with San Jose, Orlando, Raleigh, Nashville and Dallas also on the list of the best job markets. However, climate can’t be everything, as colder locales including Salt Lake City, Boston, Seattle and Denver also made the list. Interestingly, New Orleans was the only warm-weather city on the worst performers list.
Most of the states in the best job markets were lower-tax states (including Texas, Florida, North Carolina and Tennessee), and most of the worst job markets were in high-tax states (like New York, Michigan, Pennsylvania, Illinois and Connecticut). However, there were notable exceptions, including Boston and San Jose.
Cities on both the best and worst lists came from a mix of red and blue states, indicating that political affiliation and policies cannot be solely credited or blamed for labor market vibrancy or lack thereof.
While there appears to be no “silver bullet” for why job markets are performing well or not, it is likely the intersection of all these issues, and others, matter. Upstate New York unfortunately is burdened by the trifecta of less desirable climate, high taxes, and political policies that often repel job-creating businesses and cause people to move out of state.
There are certainly exceptions to the doom and gloom, and Rochester has many notable attributes, including proximity to a number of higher education institutions, quality of life, and affordable real estate. However, without job growth, solid compensation, and qualified candidates to fill jobs, the health of our economy will continue to be suspect.
Unfortunately, we as Rochesterians have little control over these issues. Perhaps in time global warming will make our region more desirable, but upstate votes for politicians who will reduce taxes and limit regulation on businesses are dwarfed by downstate votes to the contrary.
That likely means we will continue to lose population, particularly among those who create jobs.
Mark Armbruster is president of Armbruster Capital Management Inc., a registered-investment adviser in Rochester, with $400 million in assets under management. He has given numerous talks on exchange-traded funds, alternative investments, and other financial topics to groups of professional investors and students around the country.