Many Pennsylvania Industrial Development Authority Loans Create Low-Quality Jobs

David Bradley
Publication Date: 
August 1, 2002

A central goal of Pennsylvania economic development programs is to create more good jobs in the Commonwealth. As one gauge of success towards this goal, this report examines the quality of jobs created by low-interest loans distributed through the Pennsylvania Industrial Development Authority (PIDA) program, one of the state’s major business subsidy programs.

Our analysis covers (312 PIDA job creation and job retention projects that received a total of $238.5 million in loans from July 1998 to March 2002. These projects promised to create or retain 19,360 jobs.

  • Of the 312 projects, 122, or 39 percent, produced low-quality jobs (defined as having a projected payroll per job less than 80 percent of the industry average).

  • In durable manufacturing, which accounts for half of all PIDA projects, 45 percent of PIDA loans produced low-quality jobs.

  • In the Western part of the state and in the Southeast/Southcentral region, nearly half of all PIDA loans went to companies projected to create or retain low-quality jobs.

  • In Allegheny County, Philadelphia County, and Bucks County, which together accounted for nearly 100 projects, nearly half of all PIDA loans projected to create low-quality jobs.

This new evidence highlights the need for two common-sense reforms.

  • Improved disclosure: all companies receiving economic development subsidies (from PIDA or any other program providing grants and loans to individual companies) should disclose basic information on jobs actually created and retained, and their wages and benefits. Improved disclosure would generate more complete and reliable data, permitting analysis of whether other programs in addition to PIDA subsidize creation of large numbers of low-quality jobs.

  • Basic wage standards: since most of Pennsylvania’s more than 200,000 businesses operate without direct subsidies, it makes little sense for government to give grants, low-interest loans, or special tax breaks to companies that pay poorly, including by the standards of other companies in their industry. All Pennsylvania business subsidy programs should require companies to pay at least 150 percent of the minimum wage and 85 percent of the industry average wage.

Other needed reforms include limits on how much subsidy companies can receive for each job created and “clawback” provisions that require companies to repay subsidies to the extent that they fail to meet original job targets (for discussion of these issues see, Create Good Jobs and Higher Performance with Economic Development Dollars, on line at

This report should be valuable to economic development practitioners across the Commonwealth, as well as to state and local lawmakers, other policymakers, and the media. Using information in Appendix A, practitioners in 10 small regions and 12 individual counties can compare the quality of jobs produced with their PIDA loans against the performance of other areas and the state as a whole. Closer scrutiny of the quality of jobs currently created through business subsidies is an important first step towards economic development approaches that more strategically seek to create good jobs.