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Don Cunningham: A New Chapter for Lehigh Valley Economy

By Colin McEvoy on May 1, 2020

This column, written by LVEDC President & CEO Don Cunningham, originally appeared in The Morning Call and on the newspaper’s website on April 29, 2020. (Click here to read Cunningham’s previous columns.)

Don Cunningham

Don Cunningham

In William Shakespeare’s Julius Caesar, a soothsayer — a person who supposedly can foresee the future — warns the Roman leader of a peril that awaits him on March 15, the Ides of March.

Soothsayer: “Beware the Ides of March.”

Caesar: “What man is that?”

Brutus: “A soothsayer bids you beware the Ides of March.”

Real life has no soothsayers.

This March 15 was a beautiful spring Sunday. I took a long walk knowing Monday would be a little different. I’d start working from home. It all seemed temporary, a brief hiatus until the virus that had started to appear in the Lehigh Valley passed.

Friends had rented a large vacation house on the Virginia coast and invited us to join an impromptu vacation. We considered it but declined.

The life-changing reality of the coronavirus pandemic and its economic implications arrived at different times in various countries, states and regions. In the Lehigh Valley, it arrived on the Ides of March.

It’s clear where it was before March 15.

The Lehigh Valley economy was surging. The region surpassed $41 billion in economic output, or GDP, for the first time in 2019. Unemployment had hovered at record lows for the last several years, while the biggest challenge facing employers was filling positions and finding employees with the skills required for new jobs.

Economic development work had become attracting talent. Employers would remain or relocate to the regions attracting and growing a talented workforce, particularly those aged 18 to 34.

The Lehigh Valley was winning the game. One of the top five growing metropolitan markets in the Northeast United States for the last five years, new apartments and offices were being built in the region’s cities as the population of young workers outpaced the rest of Pennsylvania and slightly exceeded that of Philadelphia.

The health care industry was booming with the expansion of the region’s two, large health networks: Lehigh Valley Health Network and St. Luke’s University Health Network. Their combined workforce of more than 30,000 employees drove the region’s largest employment sector of more than 50,000 workers.

Manufacturing and production were growing — the second largest part of the region’s economy — with an expanding job base of more than 34,000 workers. The surge of manufacturing was linked closely to the growth of the region’s industrial base as a transportation, distribution and e-commerce fulfillment market for much of the East Coast, an industry with an additional 30,000-plus workers and growing.

After seven weeks of quarantine, there is some data and information on the current Lehigh Valley economy. It may surprise you.

Unemployment certainly has grown as the service, retail and hospitality economy has ground to a halt due to the lack of customers and consumption at businesses deemed nonessential or life-sustaining. It’s reasonable to expect April unemployment numbers of 15% or higher. It’s unknown how quickly those jobs will return as the quarantine ends.

What’s interesting, however, is that much of the Lehigh Valley economy hasn’t stopped operating and is hiring. Job postings are rebounding.

JobsEQ, an employment data service that monitors job demand by studying online ads, reports that 5,200 different employers have posted 20,298 jobs for 650 different occupations in the Lehigh Valley during the last month. The biggest demand has been in essential retail, health care, e-commerce and freight movers.

A large portion of the Lehigh Valley economy is in essential industries. In fact, the Lehigh Valley is one of the top 10 markets in the U.S. for essential employees working outside the homes on the front lines of manufacturing, production, e-commerce, distribution, health care, grocery stores, pharmacies and other emergency and vital services. More than 125,000 Lehigh Valley workers — nearly 40% of the total workforce — have worked outside the home for the last seven weeks.

The Lehigh Valley historically and today is an industrial center of critical importance to the economy of the U.S. and the East Coast. This crisis has only amplified that.

As for tomorrow?

The solid and diverse base of the Lehigh Valley economy will limit the overall impact of the quarantine and recession here. Some cornerstones of the economy — health care, manufacturing and production, and distribution and e-commerce — will grow in value and importance. Development in these areas has continued and demand for land and buildings remains high. Jobs will continue to be created.

Job creation in these growth markets will help to absorb some job losses in other areas.

Opportunity also will exist through creative destruction. Office tenants may look to leave crowded urban environments and seek more affordable markets, just as young professionals may find crowded, small apartment buildings in Brooklyn less attractive.

While GDP will drop and unemployment will rise this year, the foundation of the Lehigh Valley economy will remain strong and recover faster than much of the country.

The Ides of March spelled an end for Caesar. It will represent a turning point and a new chapter for the Lehigh Valley economy.

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10.6% of Labor Force
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