Unemployment Statistics & The Nevele Project: An Analytic Approach To What's On All Our Minds...
In the January 16th edition of the Shawangunk Journal I wrote a letter which questioned whether the unemployment rate in the Town of Wawarsing was actually 18 percent. I attempted to raise funds to conduct an actual household survey in the town which failed. I contacted the Bureau of Labor Statistics (BLS) to inquire if they would be willing to conduct a local survey, and their response was "unfortunately, the Bureau doesn't have the resources to conduct additional surveys".
Despite the lack of interest and lack of resources associated with the unemployment rate in Wawarsing, it still remains the community's most critical challenge. Economists from NY State, the BLS office in NY/NJ, and the BLS office in Washington D.C. have all referred me to the Census Bureau's American Community Survey (ACS). This is the same ACS which I referred to in my previous letter, and the same ACS data I presented to Supervisor Distel on Jan 16th. The Census ACS is a 5 year estimate spanning 2008-2012 that was produced in 2013.
The 17-18 percent unemployment rate claimed by Wawarsing town supervisors since 2009 is inaccurate because it is based on social services data. The ACS estimates 1231 people (+/- 254) are below the poverty level. It is estimated 49.4 percent of them (+/- 10.3 percent) are in the labor force, while 40.4 percent of those below the poverty level are employed. It is realistic that a household can have two people working full time and their income qualifies for social services. It is also realistic that people receiving social services are not participating in the labor force and are disqualified from being classified as unemployed.
The ACS estimates the unemployment rate for the Town of Wawarsing which includes the Village of Ellenville at 11.6 percent with a margin of error (+/- 3 percent). 14.6 percent unemployment would be the highest unemployment rate given the +3 percent margin with 792 unemployed out of 5429 participating in the civilian labor force.
I'm going to divide the number of unemployed at the 14.6 percent rate by 4, in order to roughly extrapolate the four types of unemployment and for the sake of an equitable distribution.
At 14.6 percent, we have 792 people unemployed out of 5429 participating in the civilian labor force. 198 are frictionally unemployed, 198 seasonally unemployed, 198 structurally unemployed, and 198 cyclically unemployed.
The Ulster County Executive recently came to town to speak about the Nevele project and asked us to "really think about the statistics that are so real." He spoke about 1500 construction jobs over 5 years, 2000 full time jobs, and a cumulative total of 4000 jobs. He spoke about "putting an end to unemployment in Ellenville in our lifetime."
What the County Executive did not say was that the "casino bill that passed included language that requires all applicants for casino licenses to 'provide agreements with organized labor demonstrating labor harmony.'" This is why all of the companies seeking casino licenses are signing project labor agreements which are exclusionary. Unions increase wages by reducing the supply of labor; the PLA's signed by the Nevele exclude non-union members from construction and hotel jobs.
In addition to the exclusivity of construction and hotel employment, employment in gaming operations will be subject to exclusivity from educational requirements which are being developed in conjunction with SUNY Ulster and SUNY Sullivan.
Now let us "really think about the statistics that are so real" as the County Executive has encouraged us. The Census ACS lists 341 construction jobs in the Town of Wawarsing. Union data for Ulster County indicates 16.2 percent of private construction is unionized. That's 55 private construction workers who are unionized in the Town of Wawarsing and may get a call from the union hall to work on the Nevele project.
The New York Hotel and Motel Trades Council says membership in their union is "wall to wall in all hotel departments." The Census ACS lists 462 jobs under the umbrella heading of "arts, entertainment, recreation, and accommodation and food services." Given, the 16.2 percent private union membership in Ulster County, approximately 75 of the 462 arts, entertainment, recreation, and accommodation and food services professionals in Wawarsing are unionized.
Approximately 130 unionized workers in Wawarsing/Ellenville are eligible to work at the Nevele under the existing PLA with the Hudson Valley Building and Construction Trades Council and the New York Hotel and Motel Council. Roughly half of the 14.6 percent unemployed in Wawarsing, 7.3 percent or 396 people, are structurally and cyclically unemployed. These residents are already excluded from employment due to their lack of skills and experience for available jobs as well as a lack of available jobs for those who want them. For the sake of argument, let's assume 16.2 percent of the cyclically unemployed join a labor or hotel union, or 32.
Perhaps 16.2 percent of the 198 frictionally unemployed entering the labor force fresh out of high school, college, or the military, in addition to those in between jobs, will either join a labor union or hotel union and find employment at the Nevele. Again 16.2 percent of 198 equals 32.
Unless a large portion of Wawarsing/Ellenville residents who are not currently participating in the labor force decide to re-enter the labor force, join a union, or complete a course of study at SUNY Ulster or SUNY Sullivan, we are looking at 194 jobs at the Nevele for Wawarsing/Ellenville residents.
The Census ACS worst case scenario unemployment rate for Wawarsing/Ellenville is 14.6 percent. If 194 out of 792 will be employed at the Nevele this would leave 598 still unemployed with an approximate unemployment rate of 11 percent. Out of the 1500-2000 jobs created by the Nevele, 1306-1806 would be held by people outside of the Town of Wawarsing/Village of Ellenville.
It is shocking elected officials would expect the community to rally around such a project. Given the 11.6 percent unemployment rate (+/-3 percent) in Wawarsing/Ellenville, the union and educational exclusivity of the jobs that might be created at the Nevele, how dare the County Executive come down here and declare that Nevele project is "about the end of unemployment in Ellenville in our lifetime?"
The County Executive has no "statistics that are so real" to support such a claim. We know he isn't looking at the data that supports an 18 percent unemployment rate in Wawarsing/Ellenville because it does not exist. We also know he isn't looking at the Census ACS for our area because he would understand that there are 4 categories of unemployment affecting 792 people. What Mr. Hein is promoting as "statistics that are so real" are forecasts and projections from The Empire State Development Corporation, which ran data from Pennsylvania and Maryland through a $43,000 REMI program.
I urge my neighbors in Wawarsing/Ellenville to think critically and objectively about the labor, jobs, and unemployment situation confronting us. Casino gaming will not end unemployment in Wawarsing/Ellenville in our lifetime. Inaccurate claims of 18 percent unemployment and "putting an end to unemployment in Ellenville in our lifetime" without real statistics to back them up ought to raise red flags with every member of our community. Since the labor situation in our community has been distorted by elected officials, why should a reasonable person assume the projections of property and school tax relief are not equally flawed?
Proposition 1 and the Upstate NY Gaming Economic Development Act created a market structure which is a hybrid between monopolistic competition and oligopoly. The market structure in which the four upstate casinos will operate shares characteristics of each. This market structure combined with the costs of capital for each location, the amount of revenue each casino is authorized to retain, and in our case a property reevaluation, is going to have a significant impact on the forecasts and projections of tax relief.
It is unfortunate the Upstate NY Gaming Economic Development Act does not contain a transparency clause which requires companies pursuing gaming licenses to release their costs of capital and capital budgeting decision methods to the communities they seek to operate in regularly. That information would make clear whether the payback period will be completed prior to the monopolistic competition/oligopoly hybrid market structure expanding in seven years or if cash flows will be sufficient to perpetually debt finance.
Without calculations of the payback period, net present value, internal rate of return, and modified internal rate of return for the Nevele project, the amount of property and school tax relief we can expect after the revenue is redistributed throughout the county is unknown at best.