Don Cunningham: We Have Met the Enemy, And It is Us, And That’s OK

By Colin McEvoy on April 6, 2018

Don Cunningham, President and CEO of the Lehigh Valley Economic Development Corporation (LVEDC), wrote this column for the Morning Call‘s special Outlook section, which was published on March 25.

Don Cunningham

Don Cunningham

Life’s only constant is change.

Yet we humans often cling to a past that wasn’t exactly as we remember it while lamenting a tomorrow that we’re helping to create. The future is often scary. Yesterday is comfortable, since it’s over. In reality, back when the past was the present, we did a lot of bitching about it, too.

And so it goes.

There’s not better example of that today than the changed economy of retail. The moonshot of the internet and the iPhone forever altered how we buy things. Therefore, it forever altered how companies sell and supply things.

The Lehigh Valley is at ground zero of that change. Right now, we’re winning on both sides. The region is a national hub of the back economy of direct to consumer retail, the retail where you don’t leave your couch or change your sweatpants. You flip through screens of pretty pictures, compare prices, enter a credit card number, click a button and — voila! — a few days later a package arrives at your door.

The “voila!” part is the new retail economy. It includes large fulfillment centers, IT code writers, tens of thousands of workers, tractor-trailers, packaging manufacturers, FedEx and UPS delivery trucks, and drivers. More than 10,000 jobs have been added in this sector in the last five years in the Lehigh Valley.

Today, nearly 30,000 people work in some part of it, more than were employed here in the steel industry during its height in the 1950s.

Interestingly, despite national trends and the emerging decline of brick-and-mortar store-based retail, the Lehigh Valley has not lost ground in retail employment. Retail remains the region’s second largest employment sector with 34,000 workers. (Health care is the Lehigh Valley’s largest with 55,800 workers.)

Contrary to romantic notion, starting pay is much better in e-commerce retail. If you’re willing to work in a fulfillment center picking and packing, driving a forklift or monitoring inventory, the average starting wage is $15 per hour. It’s much lower as a retail clerk.

The work is more demanding and fast-paced in e-commerce, just as it was back in the day in a steel mill or slate quarry versus other work at the time. It requires little skills or education. Books have been written about creating a national $15 minimum wage: E-commerce has done that here.

Yet, it remains the part of the Lehigh Valley economy that we love to hate. I get emails and social media posts, probably from people in their sweatpants who just ordered five things on Amazon, lamenting the presence of warehouses in the Lehigh Valley. Township officials are deluged with angry, not-in-my-backyard residents opposing new industrial development projects.

The term “warehouse” has become a pejorative, however inaccurately the term is used. A traditional warehouse is a place where a business stores supplies and materials, like a big closet. It’s visited when something needs to be retrieved.

E-commerce fulfillment centers are quite the opposite. Their core mission is to bring in product and move it out as fast as possible, not to warehouse it.

The term warehouse, however, allows for a cognitive separation from what takes place there and why. Consumers have made fulfillment centers the new retail stores not a corporate boogeyman. We have made FedEx and UPS drivers our new store clerks, not FedEx and UPS.

We have met the enemy and it is us — and that’s OK.

There are always land-use and road issues created by new industries and rapid growth. They are all solvable through smart planning, farmland preservation and increased funding to widen and improve roads and intersections. Investing in the use of rail to transport freight is also needed. It takes a little time.

Adapting — not opposing — is the key to balance economic growth, opportunity for workers and quality of life. It’s happened here before. During the heyday of steel, Bethlehem made Linden and Center streets one way to better move tens of thousands of workers. Route 378 was built to better transport products.

We are fortunate to be at the center of the e-commerce world. It didn’t happen because of government incentives or recruitment but because of market forces, available land, labor and the geography of quick access to 40 percent of American consumers in a day’s drive.

For now, the Lehigh Valley is thriving on both sides of the retail world. The growth of robotics and technology will certainly create a different future. And, then, we will fondly remember the good old days of today.

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