Rochester’s languishing economy

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Rochester job creation continues to lag nearly all large U.S. metropolitan areas. From 2018 through August 2019, the Rochester metro’s lackluster record placed it 87th among the 100 largest metros. 

The chart above tells the tale: As a group, the large metros outpaced Rochester every year except during the housing- and finance-led Great Recession. By not having participated in the housing/construction bubble, Rochester was insulated from the worst of that downturn.

Rochester came back from the Great Recession, although employment grew only 6 percent since 2010. That’s a third of the 18 percent increase experienced by the comparison group. Our job count today is nearly identical to that of two decades ago. 

The bright spot in Rochester’s recent economic history has been education and health care. Combined, these sectors added 40,000 jobs from 2000 forward, offsetting a large share of the 48,000-job decline in manufacturing. Even here, however, relative job gains haven’t kept pace with the rest of the metro economies. “Eds & meds” grew 45 percent in Rochester, compared with an increase of 63 percent in the other big metros, which added seven million new jobs. The share of local employment in manufacturing fell from 20 percent in 2000 to 11 percent today with education and health care rising to 25 percent from 18 percent. The remaining sectors have largely retained their same employment shares.

What can we do?

There is no obvious tonic for Rochester’s lethargy. We can no longer blame this on Kodak. 

We share our stagnation with the rest of Upstate. Buffalo’s job creation since 2000 is only slightly better than Rochester’s, ranking 88th out of 100. Its 2018-19 rank is 85th to Rochester’s 87th. Albany has done better over the long haul, yet still ranks only 73rd for job creation since 2000 and 83rd for the most recent year. Despite Syracuse’s 91st ranking from 2000-2019, a 1.1 percent job spurt 2018-19 placed it 49th in the nation. 

That Rochester shares its malaise with other upstate cities suggests that the state is part of the problem. It is fair to argue that the state’s tax, labor and regulatory policies are adapted to wealthy downstate and ruinous for the upstate economy.

As I’ve argued in previous posts, it is time to reintroduce ourselves to the nation and refocus Rochester’s image. The current tagline used by Visit Rochester, “Limitless,” includes everything, thus nothing. Our cultural identity is strong, authentic and unique. Let’s build on it.

We don’t simply suffer from poor marketing, of course. A new image and a bold ad campaign aren’t sufficient. We must continue to build on our conspicuous strengths, such as our highly-regarded higher-ed sector, and tackle our conspicuous failures, particularly persistent poverty and the associated challenges of the city school district. 

I’ve lived here for nearly 30 years and have no plans to leave. For all those years I have been anticipating the day when the Rochester economy turns around and begins to achieve its potential. And I still am. 

Kent Gardner is Rochester Beacon opinion editor.

10 thoughts on “Rochester’s languishing economy

  1. Kent, I have always wondered why the State of New York never created economic and tax incentives for NYC financial service firms, technology companies and other Downstate businesses to expand research, operational units and disaster recovery sites in Upstate NY, especially with our redundancy of power sources (including Hydroelectric and Nuclear) and the strength of our Upstate colleges and universities. Instead, this growth typically goes to other states. Why hasn’t anyone tried to tie the Downstate and Upstate economies closer together thru a comprehensive NYS economic development policy?

    • I don’t know of any explicit policies directed at linking Upstate & Downstate ventures. That said, New York’s array of economic development incentives are quite competitive with other states. For firms within 30 miles of the Niagara Falls hydro project, the power is quite inexpensive. Outside that zone our power prices are competitive with those in neighboring states.

  2. I love Rochester and have been rooting for it to start thriving again. Unfortunately it seems like its just gone sideways. Lots of smaller companies, education, and healthcare jobs have made up for some of the jobs lost from the big three. But the average salary rates , benefits, and lack of diversity have not kept up with other economically thriving areas in the United States.

    I am moving to the West Coast to be with my both of my adult children who have
    amazing jobs and opportunities that they would not have had at their age in Rochester. My daughter as a woman is in a place with much more diversity at the higher levels than her previous jobs on the East Coast .

  3. Has anyone done a serious root cause analysis of the challenges facing our economic growth? If Education and Medicine are growing sectors, do we want to feed them from within our community or seeking to recruit from outside and then retain specialists and their families? It seems that we have a countervailing force of entrenched poverty and dismal public education in the City. At least from an image perspective unless we make a concerted effort to successfully address those core issues we can’t transform what Rochester is. It’s my perception that much of our state-funded economic development efforts are somewhat hit and miss and possibly pre-ordained politically rather than data-driven. I grew up in New York City. Back then aside from Kodak, B&L, and, Xerox all I knew about Rochester was that it wasn’t downstate and it was cold and snowy. With the growing east-coast presence of Wegmans and the exceptional brand value they have could we find a way to piggyback on their success as Rochester owned and grown? As much as some of our leaders want to relive the glory days of manufacturing with high paying jobs it’s time to build an alternative new path.

  4. If we don’t face up to the need to educate the children in our city, we will remain stalled, despite good schools in the suburbs. It is time to recognize that large, monopoly urban school districts, rigidified by law, regulation and contracts, don’t work in a modern economy and in face of flight from the city. The RCSD spends more than twice the national average per student while performing the worst of all large urban school districts. While some of our city’s charter schools are low performing, the better ones do far better than the district with similar students, showing that the children can be educated and that adult prerogatives get in the way. I think there is a leadership vacuum here: no strong voice in the business and civic community for changes that would benefit students, teachers and taxpayers. Until that emerges, Rochester will lag.

  5. Yes, Kent, the Lidestri’s of the world are the solution to Rochester’s problem — a factory, a manufacturing facility, that can provide employment for a large component of our populace that lacks the training, education or experience (the three cardinal bricks upon which one builds an ever upwards work life) for “eds and meds”. Critics, please don’t tell me that “all the factories are overseas” — they’re not. They’re just not in Rochester — or at least not in sufficient quantity to provide better paying jobs to our poverty laden city core neighbors.

  6. I think that you’re really quite mistaken. Although I’m disappointed at the employment numbers, I can tell you that Kodak has made a significant investment in Kodak Park (now called Eastman Business Park) and is actively housing 35+ other companies. Lidestri Foods, for example, is a fabulous business. Lidestri’s core business is pasta sauce–their facility at Eastman Business Park can produce some 4m jars of sauce per day with a modest workforce. Pasta sauce may seem a low tech product, but Lidestri’s volume & low cost is based on nearly-miraculous logistics & very sophisticated manufacturing technology. And there are other great examples. It is why I’m puzzled at the disappointing stats as there are many very successful & innovative companies here.

  7. I am moving back to Rochester after a 25-year absence to care for my ailing mother. Once my presents in the city is no longer required, I will be moving. It is sad to see how far behind Rochester is to other major metropolitan areas, both in job creation and infrastructure. There are no 21st century factories around to attract new tech businesses. Until we can revitalise Kodak Park to accept 21st century technology, we are going to be stuck with a massive hulk of useless space, a lot of which is now off the tax rolls.

  8. Visit Rochester’s taglines always sound like they were written by a committee that was determined to be as vague as possible, probably to serve all masters. Time for new blood and I’m not talking about agency people (sorry). There is an emerging dynamism here that your numbers and their marketing don’t or can’t reflect. The Beacon is part of it. The Chamber and it’s arms do not.

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