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Study Shatters Image of Labor Market

By David Robinson

September 21, 2010
 

You can forget many of the old notions about the Western New York labor market.

According to those perceptions, labor costs here were high, factories dominated the local job market, and unions were a powerful force throughout the marketplace.

Not so, said Kathryn A. Foster, the director of the University at Buffalo Regional Institute, which released a new report Monday on the composition of the Western New York labor market.

"This is not your grandfather's economy," she said. "It is remarkable to the extent the Western New York economy mirrors the national economy."

That huge shift has occurred over the last four decades, as factories have closed, and service industries, such as banking, health care and back-office work, have flourished.

That has resulted in a job market that has shattered many of the widely held perceptions that both outsiders and residents have of the local economy, said Thomas Kucharski, president of Buffalo Niagara Enterprise, the business development and marketing group that commissioned the report.

For instance:

* While wages locally once topped the national average, the average wage of slightly less than $40,000 across all occupations in the eight counties of Western New York is 3 percent below the U.S. average of $41,275.

* The wage gap is even greater for many higher-paying jobs, such as business and financial positions, computer and mathematics occupations, as well as science and legal work. Those jobs locally typically pay about 10 percent to 15 percent less than the national average.

* Wages for goods-producing jobs, which include positions in construction, production and transportation, tend to be slightly higher here, running about 2 percent to 5 percent above the national average.

* Nine out of 10 jobs created locally since 2001 have come from five service industries: health, education, financial, professional and business, and the leisure and hospitality sector.

"Manufacturing is no longer dominant," Foster said. "That's a really important story line."

Unions still play a much larger role in Western New York than they do nationally, but their role in the labor market has been steadily declining.

Roughly 17 percent of all private-sector workers in Western New York belong to a union, down from 26 percent in 1986. But that still is more than double the national average of 7.2 percent, according to the U.S. Bureau of Labor Statistics.

Union membership among government workers locally is especially strong -- 78 percent of all public-sector employees, more than double the national average of 37.4 percent.

"It's very much a public-

sector story and a skilled-labor story," Foster said. "It's been a very profound change."

But the report also noted some difficult challenges facing the local labor market. For one, Western New York's schools, including its colleges and universities, produce about 30,000 graduates each year. About 15 percent have only high school diplomas.

But only about 10,000 local workers retire each year, which creates intense competition among those students who want to find work locally, especially since job growth within the region has been sluggish for most of the last two decades.

"There aren't enough people getting out now," Foster said. "That combination of supply and demand is what creates a wage scale.

"Our wages are competitive," she said. "They tend to be lower, and they tend to be lower in the higher-paying occupations, like management and lawyers. Our wages tend to be higher than the national average in the goods-producing occupations."

The Western New York labor force tends to be slightly older than the national average, with 17.6 percent of workers locally age 55 or older, slightly more than the 16.9 percent national average.

Young workers, meanwhile, are in shorter supply locally, with those 25 and 34 years old constituting 18.9 percent of the local labor force, below the national average of 21.4 percent. But those young workers tend to be better educated here, with 31 percent holding college degrees, higher than the national average of 29 percent.

"If you're going to keep that educated group, the knowledge-based sector must grow," Foster said.

The biggest job producers since 2001, in fact, have been companies in the health services and the professional and business services sectors -- a trend that the state Labor Department predicts will continue through the next six years.

Kucharski said the report can help Buffalo Niagara Enterprise provide potential clients detailed information about labor costs and availability, which are among the top factors considered by site selectors.

"It tells them we're educated. We're not just steel plants and cement manufacturing and milling, like we were," he said.

"We're extremely competitive across all segments" on wages, he said. "You have an availability of labor here. You're going to find people who are willing to work."