Unemployment, Crime, Poverty, Taxes, Potholes, Credit Downgrades afflict City of Niagara Falls

In Niagara Falls

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Despite 160 Tourists for each and every Resident

Unemployment is a hardship, so much so that it comprises half of something called the Misery Index, a widely cited economic indicator (the other half is inflation).

Unemployment is connected with all kinds of community, family and individual dysfunction. It leads to increased alcohol consumption and drug abuse, spousal arguments, domestic violence and other health and legal problems. Unemployment is linked to depression, anxiety disorders, increased stress-related symptoms such as fatigue or headaches and prevalence of medical illnesses in general, as well as higher rates of crime and lower rates of volunteerism on the community level.

As we reported last week, the city of Niagara Falls had the highest unemployment rate of any city in all of New York State, 7.7% for the month of June, 2017, more than two percentage points higher than Niagara County (5.6%) and a stunning three points higher than New York State (4.5%).

 

Source: NYS Department of Labor

This for a city that purports to welcome somewhere around 8 or 9 million tourists every year, almost as many as Epcot Center at Disneyland in Florida.

Taking the lower bound of 8 million, and rounding up the city’s population to 50,000, that works out to a total of 160 visitors a year for every woman, man and child who lives in the city of Niagara Falls.

Let that sink in for a moment. 160 visitors, with vacation dollars in their pockets, for each and every person who lives in Niagara Falls. If each of them spent, say, $100, that would amount to $800 million a year, or $16,000 per person. $800 million is nearly ten times the annual budget of the city of Niagara Falls. Who gets that nearly billion dollars a year? Where does it go? To Jimmy Glynn, owner of Maid of the Mist? Jeremy Jacobs of Delaware North, who feeds the multitudes who visit Niagara Falls State Park? Or is it Albany, which gets money from both, in addition to the parking and other assorted fees from the 1500 parking spaces in the park? Or the national hotel chains that have proliferated downtown? All valid questions.

In addition to having by far the highest unemployment of any city in the state, Niagara Falls also has the highest rates of both property and violent crime, and near the highest rates of poverty and taxation.

Adding to our bleak circumstances, last week Standard and Poor’s downgraded the city’s bond rating to BBB+, just three notches above speculative grade BB+ (municipal bonds floated by cities are routinely rated investment grade). Speculative grade bonds go by another name: junk bonds. Standard and Poor’s did not exclude the possibility of the city’s credit rating sinking to junk status within a couple of years.

But the crime, poverty, taxes, fiscal mismanagement – only tell part of the story.

The dirty little secret is that despite all the visits from Gov. Andrew Cuomo to Niagara Falls promising millions of dollars for downtown development, little of which he’s delivered on, and all the prognostications for a better future made over the past decade by Mayor Dyster and his coterie of cheerleaders and pollyannas, the unemployment rate for the city is getting worse, while the state’s is improving.

As you can see on the graph accompanying this article, the unemployment suffered by Niagara Falls isn’t confined to the June, 2017 snapshot. It’s been going on for years. You’ll also notice that, since 2017 is only half over with, it was necessary for us to project the unemployment numbers for the second half of the year. How did we do this?

Unemployment rates as reported by the state Department of Labor are not seasonally adjusted. That means that unemployment numbers go up and down according to whether it’s tourist season in a place like Niagara Falls, harvest time in an agricultural region or the annual pick-up in retail hiring for the holiday season.

While Niagara Falls unemployment was 7.7% in tourism-season June, it was 8.9% back in January, and will start to rise again in September. So it’s not a matter of simply averaging the first six months of the year to arrive at unemployment for the second six months. In scrutinizing the Labor Dept. tables, however, we noticed that the April unemployment figure, on the slope from the winter doldrums until hiring begins in earnest for the summer, consistently approximates the unemployment rate for that year. It’s not scientific, but it’s surprisingly accurate within a couple of tenths of a percentage point.

Therefore, we make the following prediction: the rate for Niagara Falls will actually increase this year by 0.3%, from 7.2% in 2016 to 7.5% (2017), simultaneous with the rate for New York State dropping from 4.8% in 2016 to 4.5% this year.

In other words, hiring across New York State will improve in 2017, everywhere except the city of Niagara Falls, where it will be worse than it already is.

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