Under construction

Construction Money

“Construction’s the biggest sector in the economy,” proclaimed one of the three members of the governance committee of the Ulster County Industrial Development Agency last Friday afternoon at the county office building in Kingston.

The other two members of the committee didn’t comment. Neither did either of the two county employees who administer the IDA.

The statement, which is demonstrably incorrect, reminded me of the old days when backbench Ulster County legislators would routinely get up and remind their colleagues that agriculture was the biggest and most important sector of the Ulster County economy. Nobody would contradict them, either.


They were wrong about agriculture, too. Like proper pre-Aristotelians, true Ulsterites tend to believe things about the economy that they have long assumed are true rather than examined to see whether they true.

It could be that some of these good folks know such statements are untrue but don’t want to say so. This kind of deference, I would argue, is even more pernicious than if they did not know what was true and what was not, and therefore were willing to accept what they had been told.

The sad thing is that the members of the IDA and its staff have so little knowledge of Ulster County’s economy. I’m not publishing the name of the IDA member I quoted. When ignorance is so widespread, there’s no point in singling out one individual. It could probably have been any of them. (The three members in attendance were John Morrow, James Malcolm and IDA chair Mike Horodyski; the staff consisted of Suzanne Holt and Linda Clark.)

It’s not that the facts are not readily available. County planning board staff has the basic information these folks apparently lack. That county department, which routinely gives training courses to newly appointed local officials, should also give basic training on economic development to Ulster County’s legislators, county staff, IDA and advisory groups. The present level of knowledge of economic matters is appalling.

What elementary knowledge could these good folks glean from the Internet? Well, the sources are readily available. “The Economy at a Glance” on the federal Bureau of Labor Statistics website would have told them that Kingston, New York (the Kingston metropolitan area is coterminous with the entire county) had 84,700 persons in its civilian labor force this April (the most recent data). Of these, 80,000 were employed. Total non-farm employment, seasonally unadjusted, in the county (thousands of employed Ulsterites work in other counties) was 60,500.

The BLS divides this labor force into ten “supersectors.” Here’s the employment in each, in descending order: federal, state and local government 14,600; trade, transportation and utilities 12,100; private education and health services 10,000; leisure and hospitality 7600; professional and business services 5000; manufacturing 3300; miscellaneous services 2700; finance, insurance and real estate 2200; construction 2000; and information 1000.

An enormous amount of reasonably accurate detail is available even at the county level about each of these supersectors. For illustration, let’s drill down only into what the BLS calls the construction and extraction (mining) occupational groups (not the same as industries, but close enough for our purposes).

As of May 2013, the 1970 workers in construction and extraction jobs in Ulster County were classified as follows: 340 carpenters, 320 highway maintenance workers, 280 construction laborers, 200 operating engineers and other construction equipment operators, 190 electricians, 140 plumbers, pipefitters and steamfitters, 120 first-line supervisors of the construction trades, 50 construction and building inspectors, 40 masons and concrete finishers, 30 roofers, 30 construction and maintenance painters, and a small (data suppressed) number of paving, surfacing and tamping equipment laborers.

That’s the Ulster County construction employment universe. Want to know these folks’ hourly pay? It ranges from $16.07 per hour for the median construction laborer to $28.05 per hour for the median first-line supervisor. It’s reasonably well-paying work if and when you can get it.

The same level of data is readily available for all other persons in every other occupational set, including the 2030 Ulster workers who install, maintain and repair machinery and appliances for a living.

Though there have been more workers in the Ulster County construction industry in the past, an examination of their numbers shows the category has never been huge. The high point in the past 25 years, for which the statistics are easily available, shows a peak of 3000 workers for the Ulster County mining, logging and construction supersector in 2006. For most of the past quarter-century the numbers have been at about the level they are now.

Local labor vs. inducements
The main feature of the short IDA meeting late last Friday afternoon was a discussion of the IDA’s position on the use of local labor by applicants. Some applicants, particularly national companies, have been bringing in construction crews and supervisors from other parts of the country and importing construction materials they could buy locally. Meanwhile, they have been receiving IDA inducement in the form of tax-exempt bonds, sales-tax exemptions, waived mortgage fees and substantial reductions in real-estate taxes.

Other counties have demanded the use of local construction labor from IDA project applicants. Ulster’s planning to do the same. Because the additional cost of union labor (PLAs, as the project labor agreements are called) can be substantial, most counties have backed off these as a pre-condition of IDA approval.

The IDAs instead try to bargain a cost differential to induce the use of local labor by developers. In its inducements, Orange County asks for a ten per cent differential between imported and local labor, and Monroe County 25 per cent.

The Ulster IDA likes the idea of a differential, though Horodyski cautioned that he “didn’t want to discourage applicants.” A matrix, Holt said, will be devised by which applicants willing to use local labor get extra points.

In practice, the local IDA routinely grants requested inducements to applicants in specific industries. IDAs in some other jurisdictions regard inducements as discretionary rather than virtually automatic, but not Ulster. The Ulster agency recently unanimously voted an inducement to Rochester-based Wilmorite for the Park Point dormitory project in New Paltz against virulent local opposition. Since the local governments have land-use and SEQRA authority, this project may well end up the subject of litigation.

I have nothing against “buy local” initiatives. They’re better than nothing. But they are generally peripheral to the central concerns of economic development, which according to the latest economic theory consists of a cohesive strategy of growing firms, networks and sectors in order to strengthen proximity and knowledge spillovers.

Ulster County is not alone in lacking such a strategy.