Metropolitan policies have statewide consequences: A cautionary tale

We posted earlier today of Seattle’s strong tech-STEM economic clusters. Our research has consistently pointed to the metro area’s economic vitality, which may stand in sharp contrast to other parts of our state. 

Seattle was the nation’s fastest-growing major city in 20131 and the state ranks among the top on many measures of economic vitality and quality of life.

But we cannot afford to let our state’s past and current successes lull us into a false sense of security. Many Washington counties continue to experience high unemployment and employers around the state report difficulty finding qualified job applicants.

Metro areas have often been economic winners in the post-recession recovery, which has yet to reach less densely populated regions. These successes have occasionally been spurred by local and statewide policies that may have only marginal effects on the regional economy (think local employment policies like the minimum wage and paid sick leave, or regulatory policies that have differential impacts on industrial clusters, business models, or business size). 

In Washington, it’s common to reflect on the differences between the Puget Sound region and the rest of the state. But such distinctions are common in many states: Chicago v. downstate Illinois, the Twin Cities and northern Minnesota, urban California and the central valley, New York City and upstate New York, and so on. The distinctions aren’t perfect, but the urban-rural split seems to have become more pronounced in the 21st Century economy.

All this is by way of introduction to a short analysis by William Tucker in the Deseret News (not our regular go-to publication, either; thanks to The American Interest for the link). Tucker looks at the effects of NYC policies on upstate New York and finds compelling evidence of negative economic consequences.

Upstate New York — that vast 50,000-square mile region north of New York City — seems to be in an economic death spiral.

The fate of the area is a small scene in a larger story playing out across rural America. As the balance of population shifts from farms to cities, urban elites are increasingly favoring laws and regulations that benefit urban voters over those who live in small towns or out in the country.

Here’s an example of what he means.

“Basically what you’ve got in New York is a state tax code and regulatory regimen written for New York City,” says Joseph Henchman, vice president for state projects at the Tax Foundation in Washington.

“Legislators say, `Look, New York is a center of world commerce. Businesses have to be here. It doesn’t matter how high we tax them.’ I hear that a lot. But when you apply that same logic to upstate, the impact is devastating.”

Sometimes the urban-friendly policies make sense. But legislators should not lose sight of the effects their preferred policy prescriptions may have on struggling communities outside the thriving urban communities. 

Opportunity Washington’s priority is “building a culture of opportunity and expanding economic prosperity statewide.” That necessarily entails an appreciation of the statewide impacts of public policy.