Don Cunningham: Lehigh Valley Economy is Rising, But Not from Ashes
By Colin McEvoy on March 22, 2018
This column, written by LVEDC President and CEO Don Cunningham, originally appeared in The Morning Call and on the newspaper’s website on March 21, 2018. (Click here to read Cunningham’s previous columns.)
This column is excerpted from a speech given this month to the LVEDC 2018 Annual Meeting at the ArtsQuest Center at SteelStacks in Bethlehem.
It’s quite fitting that we meet on this site. It was 20 years ago this month – March 1998 – when the Bethlehem Steel plant here closed. The blast furnaces out this window had gone silent three years earlier. Death came slowly to the whole plant, followed by a corporate bankruptcy and a City left wondering what, if anything, would come next.
I was then a 32-year-old mayor in office all of three months. I remember walking in front of those silent blast furnaces for the first time, a bit in awe. It was difficult at that time to envision this place, as it has become, the social, artistic and business-meeting center of the Lehigh Valley.
Twenty years ago – only a fraction of time, quite frankly – yet it now seems distant. With all the change of two decades, it’s hard to remember that economy. Some in this room came of age after it was gone. For them, it’s always been history.
National politicians and national media often seem to pine for a bygone economic era, wishing it back in words, empty actions or odes to nostalgia. Those of us here, realize the reality. We’re better off today.
Our air is cleaner, as is the river, jobs are safer, our economy is more diverse, our downtowns are vibrant again, technology has improved and expanded health care, our manufacturing base and the economy. The economy and population are growing as new businesses and people come here or start here.
A New York Times headline back around 2001 called us a phoenix rising from the ashes. The rising part was right, not the ashes. What today’s economy is built upon isn’t ash. It’s a solid rock foundation built by the values of those who came before and the visionary leaders who looked to a life and economy beyond steel.
The key was not to fear the future – or fight it – but to build it. Change is life’s only constant. The Lehigh Valley understood that then, and we must remember it today. Humans often cling to a past that wasn’t exactly as we remember it while complaining about today and lamenting tomorrow. Yesterday is only more comfortable because it’s over, the future only scary because it’s not yet known.
The Lehigh Valley’s economy has never been better. Yes, never.
Last year, our region produced $39 billion in Gross Domestic Product, or GDP, the measure of total economic output. It’s the largest in our history, surpassing those good ole days of Steel.
The Lehigh Valley is the 65th largest economy in the United States, jumping up eight spots from the year before. More economic output is generated here than in the entire states of Vermont and Wyoming. If the Lehigh Valley were a country we would be the 87th largest in the world. For the second straight year, the Lehigh Valley is in the top five in the Northeast United States for economic growth, only surpassed by New York, Boston, Philadelphia and Pittsburgh.
Of course, size alone is not a measure that something is better – unless, of course, you come from Texas. What makes a solid economy is balance and opportunity for people of all incomes and skill levels. Economic growth is meaningless if it doesn’t enhance, not harm, a region’s quality of life and strive to create opportunity for all people, not just the educated or highly skilled. The best pathway for people to realize the fullness of life is the opportunity for meaningful work that pays a life-sustaining wage. To me, that is the aim of economic development.
The Lehigh Valley economy is like a sturdy table standing on four legs. Our top four economic sectors are within $2 billion of each other. Our largest economic sector is finance, insurance and real estate at $7.9 billion. Manufacturing is second with $6.9 billion. We’re the rare community in the United States with a growing manufacturing base helping to lead our economy. Third and fourth are professional and business services & education and health care. They each generate about 5.3 billion in output.
When looking at jobs not economic output the list changes. Health care and social assistance is 17 percent of our jobs, a total of 55,830. Much to the surprise, I’m sure, of a lot of national business writers, retail remains second with 34,380 workers and manufacturing third with 32,388. Our fourth biggest employment sector was our fastest-growing last year, transportation and warehousing, which now has nearly 28,000 employees, about 10,000 more than five years ago.
We have become a jobs center for a large area with 92,000 workers a day travelling into the Lehigh Valley from Berks, Schuylkill, Carbon, Monroe, Bucks and Montgomery counties. One of our biggest challenges is keeping pace with demand for land, labor, skills and new infrastructure. The market has added 20 million square feet of industrial space in the last five years for an inventory of 116 million. There is an additional 5 million under construction today.
Along with developers and the governments who receive property taxes, the biggest winners during the last five years are lower-skilled workers with high school educations, nationally, a struggling employment demographic. The explosion of online retail and the rise of fulfillment centers to serve direct to consumer shopping has created a market minimum wage of $15 per hour and full employment in this category. Frankly, this is a feat that social scientists dream of when fighting for higher government minimum wages, the reduction of poverty, crime and social services. If you’re willing to pick and pack, drive a forklift and work a demanding job at a fast pace – just like was required back in the day of steel mills and slate quarries – you’re going to make more than in other jobs here, including traditional retail. Yet, it remains the part of the Lehigh Valley economy that we love to hate.
There will always be land use and road issues created by new industries and rapid growth. They are all solvable through smart planning, farmland preservation investments and increased funding to widen and improve roads and intersections, along with increasing the use of rail to move freight. It will just take a little time – as it did with the resurgence of our cities.
Economic growth is about balance: the balance of jobs in cities and suburbs, in manufacturing and offices, and for workers of both low and high skills. It’s also about the balance of jobs created by companies staying and growing at home and companies from other states and countries entering the market.
Our economy is growing. Our renaissance is well under way — but far from finished. While we suffer some of the growing pains, let us remember that what’s happening here is the envy of many communities and regions across America who’ve yet to find their way back from economic change. We have looked forward together –and because of that — our todays and tomorrows are even brighter than our storied past.
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