Appalachian Basin

Rumors of a Southern Tier Revival Absent Natural Gas Are Greatly Exaggerated

There are rumors floating around, spread by the New York State Department of Labor (DOL), to the effect the Southern Tier of New York is on the path to growth and revitalization, a comeback if you will.  Sadly, it’s not the case.  The Southern Tier has regained but a tiny fraction of 20,800 jobs it’s lost over the last decade and needs natural gas development.  Make no mistake about it.

Earlier today, we received a little blurb from one of our regular readers and commenters extolling the revival of the Southern Tier, as proclaimed by the New York State Department of Labor, and suggesting everything was alright and there was no need for natural gas development.  This reader, who we welcome to our pages because he engages and discusses rather than rants, is one of those folks who announces their neutrality a little too much to be believed, and somehow always ends up aiding the opposition view.  Still, he’s civil, and that’s to be admired in this debate.  So, we respectfully disagree.

This reader/commenter challenged Nicole’s Thirty Days of Silliness and Scare from the Natural Gas Opposition post and her contention the Southern Tier was dying and in danger of economic collapse.  He offered the following:

And some interesting stats:

Three years after the official end of the “Great Recession” in the U.S., the Southern Tier’s economy continues to slowly recover from the lingering effects of the downturn. From 2010 to 2011, the overall private sector job count in the Southern Tier (Broome, Chemung, Chenango, Delaware, Schuyler, Steuben, Tioga and Tompkins counties) increased by nearly 1,200, or 0.6%, to just under 210,000. The three counties in the region with the fastest private sector job growth in 2010-2011 were:

• Chenango (+8.0%)
• Schuyler (+4.8%)
• Chemung (+2.2%)
• All three counties grew faster than the state (+2.0%) and nation (+1.8%) in 2011. *

Job losses were centered in natural resources, mining and construction (-800), leisure and hospitality (-700)

The Southern Tier’s higher education system is a key contributor to the region’s economic success.

Well, these statistics immediately caught our eye, as the reader can imagine.  We decided to check them out and found there was a lot more to them.  The Southern Tier is in deep trouble and needs natural gas development.

We knew there was something wrong with the DOL data as soon as we saw it.  We went back and checked the source to learn several things. First, the DOL only quotes private employment numbers, which is not total employment.  Clearly, it’s the most important number, but not if you’re the school teacher just laid because of school enrollments that are dropping like a rock throughout the Southern Tier due to lack of economic opportunity.  Secondly, it only looked at data for 2010 to 2011, hardly enough time to know if non-gas strategies for economic development are making a difference.  One year of change is, likewise, inadequate to discern whether or not this growth was really an advance or just a slight recovery of what was lost.  It was the latter.  Check out this table:

Southern Tier Average Employment

This table depicts annual average total employment from 1990 through 2011 and also includes a trend line (in blue).  Readers can see for themselves what’s happened.  Total employment in the Southern Tier is down 21,800 since 2011 or 7% for the decade.

And, here is more:

ST Unemployment

The unemployment rate went from 4.4% to 8.0% over the same period. So much for the great improvement!

That is only the beginning, however.  Some of the growth that has taken place in Chenango County, for example, is attributable to businesses such as Payne’s Cranes, which has been able to expand and hire several new people thanks to the natural gas industry and its work across the border in Pennsylvania.  Then there is Vestal Asphalt, about which we’ve written several times here and which employs many Southern Tier workers servicing the natural gas industry.  Plus, there is the word from the New York Times about what has happened in Chemung County as a result of natural gas.  Whatever good news exists regarding the economy of the region is arguably attributable to natural gas development next door in Pennsylvania.

Now, let’s compare some employment data for the twin tiers of the two states.  The U.S. Department of Labor, Bureau of Labor Statistics, collects data for its Quarterly Census of Employment and Wages, which allows comparison of the number of jobs located by county using the same database for both states.  Bradford and Susquehanna Counties in the Northern Tier directly border Chemung, Tioga and Broome Counties in the Southern Tier.  This data yields the following:

Screen Shot 2013-01-05 at 12.33.03 PM

Notice the three New York counties lost 13,327 jobs (10,084 in Broome, 3,014 in Chemung and 229 in Tioga) for a 8.6% decline, while the two Pennsylvania counties gained 1,645 jobs for an increase of 5.2%.  Imagine the possibilities for New York’s Southern Tier counties if they could secure natural gas development not just over the border but within their borders.

Want more evidence?  Well, take a look at the wages paid:

Screen Shot 2013-01-05 at 8.50.47 PM

The charts speak for themselves regarding the divergence of patterns – explainable by the natural gas development that has taking place in Bradford and Susquehanna Counties since 2008.  The three New York counties experienced a nearly $70 million loss in wages over this period (down 1.2%) while the two Pennsylvania counties gained $278 million (up 28.3%).  That’s almost a $350 million difference, with the two rural counties capturing income the Southern Tier could desperately use.

Finally, let’s look at one last set of statistics regarding the number of employer establishments.  We hear a lot from our friends among the natural gas opposition about the “boom and bust” cycle connected with oil and gas.  There’s no doubt such cycles exist, but one can say the same of farming, housing construction, steel manufacturing and even high-tech businesses, as Southern Tier communities where it seemed everyone once worked for IBM know very well.  Have recent natural gas price declines produced a bust, as some allege? Well, readers can judge for themselves.

Screen Shot 2013-01-05 at 9.22.53 PM

The question answers itself, doesn’t it?  The Pennsylvania counties have added 410 business establishments since 2001 and 149 since 2008, while the New York counties only gained 94 since 2001 and 4 since 2008.  It’s not hard to see where the bust is and where the boom is.  There will, obviously, be ups and downs and businesses will continue to come and go, but there is no question who is doing better.

The data tells a powerful story.   Natural gas is bringing prosperity to the Northern Tier of Pennsylvania while the Southern Tier of New York languishes.  The New York State DOL has, quite naturally, focused on some statistics that support the idea some sort of meaningful economic recovery is taking place within the Southern Tier.  There was some improvement in a few areas between 2010 and 2011, but long-term, it’s little more than a minor uptick after a disastrous fall.  It will take a lot more than niche agriculture, green manufacturing and tourism to revive the Southern Tier.  Tourism jobs, in fact, fell in the Southern Tier, according to DOL, while they’re growing in Bradford County.   It will take natural gas development to get the job done and every day New York delays approving it is a wasted day that leaves it further behind its Pennsylvania neighbors.

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