Between now and the end of November, Pennsylvania legislators will develop the commonwealth’s final 2020-2021 budget. As part of that process, our senators and representatives may need to address a significant deficit As a consequence of the COVID-19 pandemic.
While the lure of reducing expenditures and implementing cost control measures will be strong, legislators should analyze budget line items carefully to discern investments from expenditures so that programs critical to reversing the economic impacts of COVID-19 and accelerating the recovery of Pennsylvania’s economy remain viable.
When they do so, they’ll conclude that the commonwealth’s Manufacturing PA initiative, which stimulates domestic manufacturer growth and expansion, is an investment that should be enhanced based upon the manufacturing sector’s proven ability to lead Pennsylvania back to economic prosperity.
From July 2019 through February 2020, Pennsylvania manufacturing employment increased by 2.7%. Employment growth in all other sectors was 1.1% during the same period. Prior to the COVID-19 pandemic, Pennsylvania’s industrial employment was growing at a rate more than twice that of the state overall and three times that of the nation.
From an economics perspective, manufacturing is proven to generate more real wealth — meaning revenue from out-of-state customers — than nearly any other sector of our economy. Simply put, manufacturers infuse new dollars into Pennsylvania’s economy and don’t simply recirculate the same domestic dollars. Pennsylvania manufacturers exported $36.9 billion of goods in 2019, up 2.8% from the year before. Those exports brought new foreign revenue into our communities, which manufacturers distributed in the form of wages, payments to supporting businesses, regional expansion efforts and tax remittances. With other wealth-generating industries like tourism and higher education still struggling, manufacturing is clearly the commonwealth’s best investment for injecting new dollars into the economy.
According to the state Center for Workforce Information & Analysis, the average Pennsylvania manufacturing worker earned $64,251 in wages in 2019, inclusive of overtime, shift differentials and other compensation. That’s nearly 12% more than Pennsylvania’s overall average wage of $57,497 for the same period. With a workforce of more than 575,000, Pennsylvania manufacturers paid out nearly $37 billion in wages in 2019 and forwarded $1.13 billion in personal income tax withholding to the commonwealth.
While non-industrial Pennsylvania businesses shed nearly 19% of their jobs amidst the pandemic, manufacturers retained a much higher percentage of their workforce as the majority remained operational as life-essential businesses or critical suppliers of defense, medical and national security products. Currently, Pennsylvania’s manufacturers are running at 90% of their pre-COVID employment levels, with an estimated 20,000 jobs still available. The commonwealth’s industrial firms are bouncing back from the pandemic. The services they access through Manufacturing PA will accelerate their continued recovery and hasten their return to full employment and the creation of new jobs.
During times of constrained resources, our leaders in Harrisburg must exercise care to not scale back programs that are key to Pennsylvania’s return to long-term fiscal viability and abundance. Upon close examination, the Manufacturing PA initiative holds up as an investment that makes sense for the commonwealth even during the most austere times.
ERIC JOSEPH ESODA is president and CEO of the Northeastern Pennsylvania Industrial Resource Center.
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Continued state funding for manufacturers will stoke the post-COVID recovery - Wilkes-Barre Citizens Voice
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