New Report Finds that Pennsylvania Underperforms Economically Dispite High Development Capacity

Corporation for Enterprise Development Report Underscores Need for Pennsylvania Policymakers to Capitalize on State’s Existing Strengths

Harrisburg – According to a new report, Pennsylvania is not living up to its potential for economic development. Despite having a strong development capacity, Pennsylvania continues to have mediocre performance on a variety of economic outcomes – earnings, equity, quality of life, and employment.

“The upcoming economic summits hosted by governor-elect Rendell provide an ideal forum in which to focus on Pennsylvania’s historical strengths and develop policy ideas to bring its economic performance up to the state’s potential,” noted Keystone Research Center (KRC) Communications Director Peter Wiley.

The 2002 Development Report Card for the States (DRC) from the Corporation for Enterprise Development uses a three-index framework – Performance, Business Vitality, and Development Capacity – to grade all 50 states. Data were collected on 71 measures and then each state was individually ranked in every measure based upon the raw data. The best score was “1” and the worst score was “50.” Thus the study is based on comparing each state’s performance compared to all other states. The three main indices are comprised of sub-indices, which are themselves made up of a variety of indicators.

The Performance index includes data on employment, earnings, equity, quality of life, and resource efficiency; the Business Vitality index includes data on competitiveness of existing businesses, structural diversity, and entrepreneurial energy; the Development Capacity index includes data on human resources, financial resources, infrastructure resources, amenity resources and natural capital, and innovation assets.

The DRC shows that Pennsylvania earned an ‘A’ in Development Capacity, a ‘B’ in Business Vitality, and a ‘C’ in Performance.

Pennsylvania’s ‘A’ in Development Capacity reflects its relatively strong rankings in human resources, financial resources, and innovation assets:

19th in college attainment

16th in high school graduation

15th in employed doctoral scientists and engineers per 1,000 workers

14th in private research and development spending per worker

Pennsylvania’s ‘C’ in Performance reflects its mediocre to poor rankings in earnings and job quality, employment, and equity:

30th in average annual pay growth

30th in involuntary part-time employment

36th in income distribution change

46th in mass layoffs

47th in long-term employment growth

“This report highlights the need for Pennsylvania decision makers – business leaders and policy makers – to avoid quick-fixes in this recession and continue to make long-term investments in economic fundamentals such as a skilled workforce, technological capacities, and quality amenities,” said Wiley.

“Coupled with the findings from The State of Working Pennsylvania 2002, this report reinforces the need for innovative action from Pennsylvania leaders to make economic opportunity and security for workers less elusive,” said KRC Policy Analyst David Bradley.

To restore more broadly shared prosperity, KRC recommends a 12-point Pennsylvania Postindustrial Opportunity Initiative. The PPOI would bring Pennsylvania policy into alignment with its 21st Century economy. It would also implement policies that encourage businesses to take the high road to profitability, based on improving productivity, quality, the rate of innovation, and service.

For the complete Development Report Card for the States and for state-by-state assessments across all 71 indicators, see http://drc.cfed.org

The State of Working Pennsylvania 2002, which includes an outline of the Pennsylvania Post-Industrial Opportunity Initiative, is available on line at www.keystoneresearch.org