Economic development without more jobs – Hudson Valley One

Two significant first-quarter indicators, one measuring increased sales-tax revenues and the other rising home-purchase prices, have underlined the dynamism of the mid-Hudson economy as New York State enters the spring of 2024. What do these positive signs mean, and are they likely to be sustained?

State comptroller Tom DiNapoli’s office has released monthly totals of sales taxes for each of ten regions into which his office divides the state, and for each county within each region. The April 26 report for the first quarter of 2024 recorded a statewide increase in revenues of 1.6 percent over the first quarter of 2023 – the lowest rate of quarterly growth in the past four years, the comptroller noted.

The mid-Hudson region (Dutchess, Orange, Putnam, Rockland, Sullivan, Ulster and Westchester counties) increased by 6.7 percent first quarter to first quarter. New York City was next best at a jump of 3.2 percent. Five of the other eight regions reported first-quarter drops in sales-tax revenues, and none of the remaining three regions surpassed gains of 1,5 percent over 2023.

Westchester County’s remarkable 12.7 percent growth over first-quarter 2023 and gaming-driven Sullivan County’s 12.4 percent led the mid-Hudson surge. In Ulster County, the increase in sales-tax income was 5.7 percent, in Dutchess 4.4 percent, and in Orange 1.3 percent.

In his report, DiNapoli chose to shine the spotlight in state tax collections on New York City’s additional $79.4 million, attributing it to the Big Apple’s continued Covid-related rebound. He paid the more remarkable smaller-market mid-Hudson region’s $37.7-million gain less attention.
The lower rate of inflation which had cut the size of sales-tax revenues in the first quarter of 2024 made the mid-Hudson region’s accomplishment even more remarkable.

Most county governments anticipate flat funding from their current sales-tax revenues, in most counties their government’s most significant source of income. The county share of the $2.25 million unbudgeted increase in the first quarter of 2024 over 2023 in Ulster County will go to the surplus that will help keep the 2025 county property tax unchanged,

The recording of New York State sales-tax revenues is a messy process, requiring frequent “technical adjustments” as new information becomes available or as fines are levied. Major vendors filing late or inappropriately are not uncommon. Though the quarterly totals reported by the state comptroller’s office are more reliable than the monthly ones, they’re always subject to further adjustment.

A look at home prices

The New York State Association of Realtors (NYSAR) keeps monthly tabs on median residential real-estate prices in all but eight of New York State’s 62 counties. Based on more than 20,000 sales in 2023 and 2024, the first-quarter statewide median price rose from $361,000 to $383,500 — up 6.2 percent.

Though NYSAR doesn’t divide the state into regions, it’s easy to find the totals for each county within a region as defined by the state comptroller.

The 2023-2024 first-quarter increase in the median home price for each mid-Hudson region county is higher than the statewide increase. They are as follows: Dutchess 8.3 percent, Orange 9.6 percent, Putnam 13.5 percent, Rockland 8.0 percent, Sullivan 8.1 percent, Ulster 17.7 percent, and Westchester 14.5 percent.

Ulster’s 17.7 percent gain is the highest on the state except for three small upstate counties with so few closings that their median-price numbers are statistically unreliable.

In the first quarter of last year, the Ulster median price of $345,000 was $16,000 less than the state median price. In the first quarter of this year, Ulster County’s $406,000 median home price leaped to $22,500 more than the state median home price.

A median Ulster County home was higher-priced than the state median for the first time in generations.

Though there are exceptions, suburban and exurban home prices around New York City have been increasing while upstate home prices have in most places been in gradual cyclical decline. In a sense, Ulster County is moving closer to New York City.

The mobile workforce

The state’s labor market has been holding its own in the past year, with unemployment decreasing by about half a percentage point in New York City and increasing by about the same percentage outside it. New York City has been losing population but gaining jobs.

High interest rates have discouraged most major business investment in New York State, and the retail environment has adopted more of a wait-and-see attitude. Meanwhile, people have been spending more in the mid-Hudson region and paying more to live here.

Something new is happening in the economy, and nobody has yet been able to pin down exactly what it is. It’s all hypothesis.
So let’s hypothesize.

It’s a fact that more and more people getting hefty New York City paychecks rarely if ever set foot in that city. Younger ones in particular seem to prefer to work from home all the time (though some studies have disputed that). Many are digital. Others hold hybrid jobs requiring some office attendance.

A recent study that came up with the estimate that 27 percent of the workforce is now remote-capable seems a reasonably conservative estimate. With ten million jobs in the New York metro area, 2.7 million could potentially be working independently or semi-independently of an anchor office. One percent of that number clustering in a single location would be a major economic boost for any community.

With complete job mobility, people will live where they want to live rather than where they work.

In Ulster County, it would increase spending power enormously. The jobs would still be on New York City payrolls, but the spending would be in Ulster County. It would explain why sales-tax revenues and home prices are increasing rapidly while the number of local jobs is not.