Pa., Pittsburgh lagging in job growth

Many students will be graduating in December or April and are in the midst of deciding what… Many students will be graduating in December or April and are in the midst of deciding what they will do after graduation. To help students, Career Services has provided job and school fairs and other services. Some students will continue their education in graduate school or another institution of higher learning with hopes of becoming lawyers, doctors or dentists and some will move back home to mooch off of their parents.

But for most students, a four-year degree is enough and they will be looking for a job after graduation. For these students, their timing could not be better.

According to a National Association of Colleges and Employers survey, employers will hire 16 percent more new college graduates this year than last year nationwide. This year is the fifth year in a row that employers have forecasted double-digit increases in new graduate hiring. This prolonged increase in new graduate hiring points to a strong and growing economy.

But if you are looking for a job after graduation, you will have to look outside of Pittsburgh and the state of Pennsylvania.

Pennsylvania does not provide the dream corporate climate that many companies would like. Pennsylvania has the second highest corporate tax rate in the country. In addition, it has the second highest capital stock tax, a tax on intangible personal property like bonds and trademarks. Pennsylvania has the fourth highest gasoline tax and the highest diesel fuel tax in the country. And lastly, it has the fourth highest property taxes in the country. All of these things chase companies out of Pennsylvania and they take their jobs with them.

These are a few reasons why Pennsylvania has consistently underperformed compared to national averages in job creation. For the past 15 years, Pennsylvania has ranked in the bottom 10 to 15 states in job creation. Between 1990 and 2005 the United States experienced almost 1.5 percent average annual job growth. Pennsylvania on the other hand had 0.7 percent average annual job growth over the same period, making it the state with the fourth lowest job creation rate in the country. If Pennsylvania had grown at the same rate as the U.S. average it would have almost 600,000 more jobs, today.

The conditions that the state creates and horrible management at the city level have led Pittsburgh to an even worse situation than Pennsylvania as a whole. From 2000 to 2006, the U.S. population grew by 18 million people. During the same time, the Pittsburgh metropolitan area, the seven-county area surrounding the city, saw almost 60,000 people leave, 96 percent of whom were from Allegheny County. This is the largest decline in metro population in the country except for New Orleans, according to Ralph R. Reiland, an associate professor of economics at Robert Morris University.

During the 1990s, Pittsburgh matched the Pennsylvania job growth rate, but between 2000 and 2006 Pittsburgh lost jobs at a rate of 0.14 percent per year compared to Pennsylvania’s 0.18 percent rate of job growth. Very recently this trend has reversed course a small degree according to the Bureau of Labor Statistics. All of this has led Pittsburgh to being ranked 84 out of America’s top 100 job markets in private sector job creation by the Pittsburgh Business Times.

So, how do cities like Phoenix, the city with the country’s largest private sector job growth, attract jobs while Pittsburgh barely breaks even? The answer is simple: strong local and state leadership that provides an environment designed for economic growth. For example, employers located within the 100-square-mile City of Phoenix Enterprise Zone (COPEZ) can earn state corporate income tax credit for each net new job created in the zone. Furthermore, the city of Phoenix is the administrator of Foreign Trade Zone No.75, which allows companies to reduce or defer payment of customs duties on imported products. Companies operating in the zone can benefit from an 80 percent reduction in real and personal property tax.

Instead of having the second largest corporate income tax, they give corporate tax credits for new jobs. Instead of having insanely high property taxes, companies get a property tax reduction. And lastly, Phoenix does not tax people $52 for getting a job. It takes strong leadership to implement programs that reduce direct income to the city but brings in jobs.

Pittsburgh has almost $2 billion in debt. People and jobs are leaving the city thus decreasing the tax base. If Pennsylvania and Pittsburgh want to spur job growth, large changes must be made at both state and local levels. These changes can only be made by the strong leaders, a type of leader Pittsburgh hasn’t yet seen.

Joe is ready for change. Are you? E-mail him at jjm43@pitt.edu