Three Trends Threatening Pennsylvania’s Future

Date Created: Aug 6th 2019 | Categories: Blog |

Can you imagine a Pennsylvania where all our residents have the opportunity to experience earned success and upward mobility?

Here in Lancaster County, we are blessed to live in a very special place.  This is a terrific place to raise a family, recreate, work, and start a business. Sadly, this isn’t the case of every community throughout our Commonwealth.  There is alarming data to suggest that even in the midst of a growing national economy, Pennsylvania is not well-positioned for the future.

In fact, some of the data is so alarming that if we don’t make significant changes, and work together to build a stronger Pennsylvania, the impact could be felt right here in Lancaster County.

 

What are those concerns?

 

  • A recent study exposed that Pennsylvania is 47th in business environment and the 45th best state to start a business.
  • PA is the second oldest state in the country by age and getting older.
  • Our young people are leaving for greener pastures elsewhere.

 

Should these trends continue, the cost of state government will continue to grow. Taxes will increase, services cut, or both.  More people with financial means will opt to leave for greener pastures, and the Commonwealth will lose some of the gains we’ve made during this strong economy.

While the outlook for Lancaster County is strong today, the future may not be all that we hope for our children and grandchildren. I fear we are overexposed to financial risk should our economy contract and we experience any depth of recession.

I’d like to share a few thoughts with you on these three issues, how they work together, and what we can do to solve these challenges proactively.

 

PA’s Business Environment

When it comes to the business environment in Pennsylvania, we can and must do better. Strong Republican leadership and pro-growth economic policy have led to growth, but economic opportunity and upward mobility still seem out of reach for far too many.

 

  • Since January 2017, the Bureau of Labor Statics reports that 135,200 new middle-class jobs have been created across the state.
  • Average wages in 2018 were $1,250 higher than in 2017.

 

While that is all good, there are warning signs.

According to a recent study by WalletHub, there are two warning signs that are particularly important:

 

1. Pennsylvania is ranked as the 46th best state for business environment.

That’s lower than New York and California. People cannot live securely without the presence of stable, good-paying jobs.

While things look good today, compared to many other states, the economic environment could be significantly better.

In April 2018, Allegheny Institute said:

 

“Pennsylvania has an overall poor business climate, high business taxes and a business stifling regulatory climate. Its fealty to unions is evident in the absence of a right-to-work law, high rates of unionization of public sector employees and allowing teachers and transit workers to strike.  If Pennsylvania wants stronger economic growth, it needs to remove the glaring constraints it places on free-market economics and it needs to address its shortsighted governance practices.”

 

2. One of the best indicators of future success is business startups and entrepreneurial growth.

Although just 21.5 percent of all small businesses are employers, almost half of the nation’s private-sector workforce (49.2 percent) is employed by small business–that’s 120 million people across the United States.

In the study mentioned above, WalletHub ranked Pennsylvania as the 45th best state to start a business.

I hope you caught that number!!!

That is abysmal and it is inexcusable. 

Lancaster County is abundant in entrepreneurial spirit, yet many feel they can’t pursue their dreams due to limitations big government has placed on them.

 

Pennsylvania is Getting Older

Pennsylvania has a low birth rate with an increasingly older population. The population of adults of prime working age is falling. 

The Philadelphia Inquirer stated, “The state’s senior population is growing at a rate 20 times faster than Pennsylvania’s overall population. By 2025, more than one in five Pennsylvania residents will be 65 or older.”

This creates several problems:

 

  • There are fewer people working to pay state and local taxes to support the needs of our seniors, as well as other important priorities.
  • The demand for nursing homes, senior centers, transportation services, and other programs offered by state and county governments will increase. 
  • The annual cost of providing senior programs is increasing more than twice as quickly as the revenue sources that fund them.

 

“It’s by no means an easy issue and it is only going to get worse,” said Robert Strauss, a professor of economics and public policy at Carnegie Mellon University who has studied the effect of the aging population on state finances.

Strauss predicted that between fiscal year 2013 and 2025, state spending on senior service could increase by as much as $3.1 billion.”

 

Young People are Leaving the State & County for Better Employment and Lower Cost of Living

For any economy to grow and provide for a better future, it must have young people entering the workforce. Unfortunately, when it comes to Pennsylvania’s youngest and brightest workers, many are leaving for greener pastures.

Known as a “Brain Drain,” graduating college students are taking their skills, degrees, and tax dollars to other states.

Currently, Pennsylvania ranks 8th in terms of brain drain.

In a recent article, “Only 27 percent of students plan to stay in the region, and a full 40 percent said they were sure that they wanted to leave and find employment elsewhere.”

Brain Drain doesn’t just affect the economy, it also affects communities in other ways as laid out in a report

As those natives who have more resources leave, those left behind may struggle to support churches, police athletic leagues, parent-teacher associations, and local businesses…

 

What is the Point?

There are three dynamics that will work together to threaten the gains we have made since the economy rebounded:

 

  1. Pennsylvania’s poor business climate and lack of small business startups.
  2. An aging population
  3. Continued decline in the population of those of prime working-age

 

Currently, Pennsylvania risks going into an unsustainable fiscal death spiral. It will not take much for us to head toward crushing billion-dollar deficits that require painful decisions. 

I would rather be proactive in solving these problems… When we are reactive, it’s often too late.

In order to solve these problems, we must take steps now to reduce the unnecessary and burdensome regulations that inhibit small business growth and entrepreneurship. This is the driver of economic growth, innovation, new wealth, and good-paying jobs.

We need our best and brightest to come to and remain in Pennsylvania.  Like many of you, I want our Commonwealth to be a place where our children choose to take advantage of our institutions of higher education, form families, experience economic opportunity, involve themselves in the broader life our communities, and contribute to both local and state economies.

Finally, the more young people who stay, the more jobs we create, and the more communities can serve seniors and their needs as they age. We must rebalance the number of younger people who are contributing to the state economy due to gainful employment or entrepreneurship.

Can you imagine a Pennsylvania where all our residents have the opportunity to experience earned success and upward mobility?

I can.