Don Cunningham: Lehigh Valley’s Economy is Built on a Solid Foundation

By Colin McEvoy on August 20, 2018

This column, written by LVEDC President and CEO Don Cunningham, originally appeared in Lehigh Valley Business on August 20, 2018, as part of their special issue on the Top 100 privately-held companies in the Lehigh Valley. (Click here to read Cunningham’s previous columns.)

Don Cunningham

Don Cunningham

It was 20 years ago that Bethlehem Steel closed in Bethlehem.

At that time, I was a young mayor in Bethlehem, just three months into office when the company that had defined a city and a region’s economy for a century fell silent.

It’s hard to believe that two decades have passed since that day in March 1998. It’s even harder to believe when one looks at how the economy of the Lehigh Valley has grown and changed and diversified since then.

In death, we were reborn.

New growth and change started to become apparent even a few years after the plant closed and work began to reclaim those 4.5 miles along the Lehigh River. A New York Times headline in 2001 called Bethlehem a phoenix rising from the ashes.

The rising part was right, not the ashes. Today’s economy is built on a solid foundation that was developed over time by leaders who looked ahead and created the infrastructure and assets of a new Bethlehem and new Lehigh Valley.

In this issue, as Lehigh Valley Business takes a look at the largest privately held companies in the Lehigh Valley, Berks County and region, you can see how manufacturing remains strong, how technology and innovation continue to find a home and how new businesses mix with the old to provide a new and better economy today.

Growing economy

The economy of the Lehigh Valley has never been bigger. Last year, the region’s gross domestic product surpassed $39 billion, the largest in our history, including during those good ole days of Steel.

The Lehigh Valley now has the 65th largest economy in the United States, jumping up eight spots from the previous year.

More economic output is generated in this region than in the entire states of Vermont and Wyoming. If the Lehigh Valley’s economy were that of a country, it would be the 87th largest in the world.

Our largest economic sector is finance, insurance and real estate with $7.9 billion of our GDP.

The sector is continuing to grow in a revitalized downtown Allentown, a center for new corporate office buildings that’s developing a cluster of businesses in this growth sector.

Manufacturing remains strong in the Lehigh Valley, evidenced by the wide variety of manufacturers populating this year’s top 100 privately held companies list. Manufacturing produced $6.9 billion in GDP, ranking as the region’s second largest industry.

Wide range of products

Two decades after losing one of the world’s largest steelmakers and nearly all of the garment mills so prevalent in the region as goods manufacturing sought lower wages in foreign markets, manufacturing has been born again in the Lehigh Valley, making us a rare community in the United States.

Products produced here range from medical devices to batteries to musical instruments such as guitars and organs to craft beer and candy.

The third and fourth largest sectors of the Lehigh Valley economy are professional and business services and health care and education, each generating about $5.3 billion in output.

Health care remains the largest employment sector with about 56,000 jobs, or 17 percent of the total jobs.

Of course, size alone is not a measure that something is better. What makes a solid economy are balance and opportunity for people of all incomes and skill levels.

Economic growth is meaningless unless it enhances – not harms – a region’s quality of life and strives 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.

And that is the aim of economic development.

Rising wages

The exploding growth of online, direct-to-consumer retail and the rise of distribution and fulfillment centers in the Lehigh Valley and Berks County have created a dynamic unique across the country.

We have reached nearly full employment for the nonskilled and less educated portion of our workforce as more than 10,000 jobs have been added the last five years in a sector that employs more than 30,000 with a minimum wage near $15 per hour.

The labor-intensive demand for people to pick and pack, drive a forklift and work hard in the new world of retail – preparing products to be delivered to retail businesses or direct to consumers – has generated a market minimum wage that other areas are trying to create with legislation.

All of this combined has created a Lehigh Valley that is a jobs center for people from surrounding counties.

More than 92,000 workers travel into Lehigh and Northampton counties each day from Berks, Schuylkill, Carbon, Monroe, Bucks and Montgomery counties. This is not unlike what occurred during the time when Bethlehem Steel employed 30,000 people in Bethlehem.

Today, however, our economy is much more diverse, opportunities are more extensive and there is more balance across the various parts of the Lehigh Valley economy.

We couldn’t have predicted it 20 years ago while we scrambled to build a new tomorrow at the graveside of the past.

But, these 100 private companies and hundreds and hundreds more just like them of all sizes and sectors that choose to make the Lehigh Valley, Berks County and this region their home have built an even better tomorrow.

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