Jim VanBlarcom, a busy Bradford County dairy farmer, set a work day aside to come to Harrisburg and tell his story to Gov. Tom Corbett's Marcellus Shale panel. Royalty money from leasing farmland helped him double his dairy herd size, and he's glad the industry's here.
Penn's Woods are darker and deeper in red ink than ever before thanks to the tax-borrow-and-spend agenda of the Rendell Administration and some General Assembly members who failed to put Pennsylvania back on a path to prosperity. To add insult to injury last month, the U.S. Census Bureau announced that Pennsylvania would lose another C
Pennsylvania has borrowed over $3 billion from the federal government to keep its unemployment compensation fund solvent. Only California, with three times the population and a much higher unemployment rate, pays out more in unemployment claims.
Recent Blog Posts
Things are looking somewhat up for Pennsylvania’s economy, according to the annual Rich States, Poor States published by ALEC. The 2013 edition ranks Pennsylvania 34th in economic outlook, up from 40th last year and the highest economic ranking since the index’s creation.
Rich States, Poor States considers 15 factors heavily influenced by state policies to predict how a state’s economy will perform. While the commonwealth’s high tax burden and lack of worker freedom continue to hinder growth, a slowdown in state spending and continued phase-out of the capital stock and franchise tax have helped the state move from the bottom third to the middle-of-the pack.
But middle-of-the-pack isn’t good enough. To continue to attract jobs and investment, Pennsylvania will have to tackle big cost drivers like Medicaid and the pension tsunami. Continued tax reforms will help too, such as Governor Corbett’s latest proposal, which we estimate will create more than 2,500 new jobs by 2018 if enacted.
Earlier this week, GE announced plans to move 950 jobs from Erie, Pa. to Texas. What is one of the key reasons Pennsylvania continues to lose jobs and population to states like Texas? Economic freedom.
The Mercatus Center's latest edition of Freedom in the 50 States underlines the problem hindering the opportunities available to Pennsylvanians. The study ranks the Keystone State 31st overall on its freedom index. The reasoning:
The state's ranking remains mediocre on fiscal policy. It has higher-than-average taxes but performs much better than most states on government spending and employment. However, it has high government debt and is not as fiscally decentralized as most states.
Not only are Pennsylvanians taxed too much, but we are neck deep in government debt. The analysis also scored our state below average in business regulations and tort abuse.
Study after study finds that economic freedom results in higher quality of life. States with more economic freedom see higher rates of GDP growth, lower unemployment, and lower levels of state and local debt. Economic freedom also leads to higher incomes, less poverty, better environments, and even longer lives.
This short video from Duquesne University professor and CF Scholar Antony Davies underscores the benefits of economic freedom.
Critics, and likely election challengers, of Gov. Tom Corbett point to the singular fact that the state's unemployment rate is higher than the national average (though not significantly, nor significantly changed from last year). These critics claim this is the result of fiscal restraint in the last two state budgets. But focusing on this one data point ignores the broader economic trends found in the same Bureau of Labor Statistics data.
To begin with, the unemployment rate is determined by calculating the number of "unemployed"—those actively seeking work—by the total labor force (those with jobs plus unemployed). Thus the "unemployment rate" can rise if people lose jobs, or if more people enter the labor force by starting to look for work or move to a new state. The latter is the case in Pennsylvania—more people are entering the labor force, and most are getting jobs.
Here are some facts about Pennsylvania's growth:
- The number of employed persons grew by 143,537. Pennsylvania's growth rate was more than double the national average.
- Over the past year, Pennsylvania nearly matched the other 49 states combined in new labor force participants. PA's labor force growth rate was 17 times the growth in the other 49 states.
Last Two Years
- The number of employed persons grew by 165,997. Pennsylvania's growth rate was slightly higher than the national average.
- Pennsylvania's labor force growth rate was 4.5 times the growth in the other 49 states.
Corbett's Two Years vs. Rendell's Second Term
- Job growth (reported by employers, which differs somewhat from household survey data described above) was 91,100 over the past two years. From January 2007 to 2011, Pennsylvania lost 136,600 jobs.
- Pennsylvania's unemployment rate is down 0.1 percent since January 2011. It had grown 3.8 percent in the prior four years.
This trend shouldn't be surprising. The historical evidence demonstrates that government spending doesn't stimulate economic growth. Pennsylvania's jobs record demonstrates the old axiom that you can grow the economy or you can grow the government, but you can't grow both.
Who are We?
The Commonwealth Foundation is Pennsylvania's free-market think tank. The Commonwealth Foundation crafts free-market policies, convinces Pennsylvanians of their benefits, and counters attacks on liberty.
We applaud the Senate Finance Committee for moving meaningful pension reform legislation. The Committee advanced SB 922 to put all new state and school district employees into a defined contribution plan, similar to a 401(k). This is a critical first step to addressing our public pension crisis. Our ...