New study finds Pennsylvania doesn't live up to its potential for turning innovation into jobs
Pennsylvania universities so often receive plaudits for their research in advanced fields that the praise has practically become background noise. But a new study digs into the economic impact of that work, and it finds the Keystone State lags when it comes to turning academic breakthroughs into jobs.
The Brookings Institution blames Harrisburg for much of the shortfall, noting that state funding for innovation-based development has yet to recover from severe budget cuts that date back to the Great Recession.
Pennsylvania’s higher education system, meanwhile, ranks fourth in the nation for investment in research and development, according to the report. It valued those activities at $4.8 billion in 2020.
“Few states possess as many of the assets needed for innovation-driven growth as Pennsylvania,” Brookings’ Washington-based researchers write in the study released Thursday. Yet, they note, the state “has not been able to convert its assets into abundant, high-quality economic growth [with] broad-based employment across an array of high-tech, high-pay advanced industries.”
Rather, Pennsylvania ranked sixth among nine comparable states for advanced industry job growth between 2010 and 2019, the new research shows. In that decade, the number of Pennsylvanians employed in fields such as precision manufacturing, vehicle automation, and software development rose by 11% – eight percentage points below the same figure nationally, according to the study. It found that the state achieved above-average employment levels, relative to its scientific leadership, only in the pharmaceutical and life sciences sector.
A priority for the next governor?
Brookings completed the 100-page study with funding from Pittsburgh’s Henry L. Hillman Foundation. The report builds on research the non-partisan think tank has previously conducted in Pittsburgh and across the state. Its authors repeated calls for more public investment in businesses that stem from innovation.
“Advanced industries have really important economic effects for not just the state but the nation as a whole,” said Robert Maxim, one of the authors and a senior research associate at Brookings Metro, which focuses on local communities across the country.
Aside from increasing exports and driving research and development, competitive firms boost employment, he said. “They really support jobs throughout the state. … It's not just Pittsburgh, the city itself, or even Allegheny County, but the surrounding metro area and smaller communities across the state.”
“This is one of the remaining areas around which we have some consensus in the country and, I believe, in the state,” added co-author Mark Muro, a senior fellow at Brookings Metro. “Our hope is that the next governor, whoever it is, really piles on to this [idea] and celebrates what is happening [in Pennsylvania], suggests a direction and makes himself visible and present in the regions [throughout the state] to talk about it.”
The state runs a series of programs to assist entrepreneurs who seek to form companies based on research and innovation. The Ben Franklin Technology Development Authority and Pennsylvania Life Sciences Greenhouse Initiative fund young and growing companies while also providing business and technical expertise. Small businesses, meanwhile, can participate in state-supported loan programs.
“There is a lot of really top-quality strategic thinking going on in [the state’s] regions … and a real readiness and ability to design great plans, but again, little funding for it,” Muro said. “So we think that a fusion of state support with bottom-up regional development strategies is really important.”
Matt Smith, President of the Greater Pittsburgh Chamber of Commerce, praised Democratic Gov. Tom Wolf for working with lawmakers this summer to lower the state’s corporate net income tax rate from 9.99% to 4.99% by 2031, and said, “We're really hopeful that the next governor takes the next few steps forward.” To read more, click here.
As PA is similarly wrestling with the impact of declining enrollment in Higher Ed seen on the national level, the implications are several fold. Not only do higher ed institutions - which impact our local economies and employment significantly within our region - have to anticipate their budgets, sustainability, return on investment and remaining valuable to students, but Government must anticipate prudent budgetary investments as the impact of inflation is reflected in next year's budget.
This evolving issue is important to note because of the widespread implications it has across budgetary and policy planning for legislators, businesses who have contracts with regional higher ed employers, and students/young adults looking to plan their futures. We look forward to continuing to analyze and watch Higher Education's continued nimble response to a quickly changing landscape. To read more, click here.