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Corporate Welfare No Boon for Philadelphia Job MarketEdit

by Nathan A. Benefield, 04.19.06, a policy analyst with the Commonwealth Foundation, an independent, non-profit public policy research and educational institute located in Harrisburg, PA.

The latest Bureau of Labor Statistics release doesn't paint a rosy picture on the employment front for Southeastern Pennsylvania. The Philadelphia region continued to experience slow job growth of 1.1% from February 2005 to February 2006 (about 45% below the national growth rate), and ranked among the slowest growth areas in the entire state.

On the bright side, any job growth in the Philly area is an improvement. From February 2003 to February 2005, employment in the region grew by a miniscule 0.4%. However, within the City of Philadelphia itself, there are 18,000 fewer jobs today than in February 2003-Gov. Rendell's first full month in office.

Total non-farm employment in the region increased by 20,900 over the latest one-year period, fueled primarily by increases in Education and Health Services (private sector), Professional and Business Services, and Wholesale Trade. Combined, these three sectors account for over 14,900 jobs gained in the region.

Manufacturing jobs continue to decline. In February 2006, there were 4,100 fewer jobs than in February 2005, and there are 19,700 fewer jobs since February 2003. The Information Technology sector remains stagnant, with no change in employment in the past year (following a loss of 10,000 jobs in the region in the previous two years).

Gov. Rendell continues to award millions of dollars in taxpayer subsidies to Philadelphia businesses. According to a report by the Allegheny Institute, the Philadelphia region has received over $300 million in the past three years for "job creating programs"-the most of any region in the state. Yet despite the delivery of large corporate welfare checks to the Philly region, job growth has been greater in other areas of our Commonwealth.

Since January 2003, the Department of Community and Economic Development (DCED) has awarded over $236 million for "job creating" projects within the City of Philadelphia, claiming these would create or retain 39,000 jobs. Instead, as noted above, the city watched 18,000 jobs disappear during that time.

These "economic development" subsidies are intended to support large corporations and to encourage manufacturing and technology job growth, but employment growth in Philadelphia, and statewide, has occurred primarily in the economic sectors left alone by DCED.

Even more striking is that the Wilmington, Delaware division of the Philadelphia-Camden-Wilmington Metropolitan Statistical Area grew decidedly faster than did the Philadelphia division. The Delaware portion experienced a job growth rate of 1.6% during the year-that's 40% higher than the Pennsylvania portion. Why has Wilmington been so successful? The explanation probably lies in Delaware's lower corporate income tax, lower wealth and property taxes, and the absence of a state sales tax.

With Philadelphia's economy still slumping despite Harrisburg's failed policy of augmenting the bottom lines of big corporations with taxpayer subsidies, it is time for a new approach. Just look south across the Delaware River and one will see that corporate welfare is unnecessary for job growth.

Maintaining high business taxes to fund grants for a select few corporations will not attract many new companies to Pennsylvania-with the exception of those receiving corporate welfare. Reducing the tax and regulatory burden on all businesses is the only way to grow Pennsylvania's economy; and Philadelphia's job market cannot improve if it continues to depend on taxpayer-funded gifts from Harrisburg.

Permission to reprint is hereby granted provided the author and affiliation are cited.

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