Luke Bernstein: To grow again, Pennsylvania must compete

“Economic competitiveness” is not a phrase on most people’s minds, but it is the single most important determinant of a state’s long-term future.

Every day, Pennsylvania is competing with other states to attract and retain people, jobs, and investment. And our competitiveness impacts everything – from the long-term health of our local school districts, to the viability of neighborhood small businesses, and whether our kids will have career opportunities close to home. 

But when it comes to competing, Pennsylvania’s story is still being written.

A century ago, Pennsylvania was a political and economic powerhouse. We had 38 electoral votes, reflecting our growing population. We were the workshop of the world, with strong communities, a world-class economy, and an unbeatable workforce. But, our competitiveness has gradually slipped.

In comparison to other states, Pennsylvania has lost population in every U.S. Census for the last 100 years. As a state, we’ve lost half our representation in Congress as our population has failed to keep pace with the national average.

So, why the decline? Very simply, businesses and people are leaving Pennsylvania because other states have made it easier to invest, build, and grow opportunities there.

In virtually every national ranking that matters — business friendliness, economic growth, entrepreneurship, overall tax climate — Pennsylvania ranks in the middle or near the bottom of the pack.

When Intel was choosing where to build its $28 billion semiconductor plant a few years ago, they didn’t even look at Pennsylvania, in large part because we had the second-highest corporate net income (CNI) tax rate in the entire country and penalized investment due to uncompetitive net operating loss (NOL) policy.

Similarly, U.S. Steel chose Arkansas over Pennsylvania for its $3 billion facility explicitly because of that state’s streamlined permitting process. At the ribbon cutting, Arkansas’ governor bragged they had finished the project before Pennsylvania would’ve even issued a permit. 

We’ve already seen what can happen when urgency meets coordination. After the collapse of I-95 in Philadelphia, state and private-sector partners rebuilt the highway in just twelve days. That kind of speed and alignment shouldn’t be the exception — it should be the standard. If we applied that same mindset to economic development, Pennsylvania wouldn’t just compete. We would dominate.

The good news is we’ve already started moving in the right direction. 

In the past few years, we’ve started lowering our CNI tax and improving how we treat NOLs — two long-overdue changes that better align us with the states we’re competing against. We must stay on schedule to further lower our CNI and phase up our NOL cap, or expedite those schedules. We’ve also seen bipartisan momentum on permitting reform, investment in site development, and strong efforts to expand workforce development pipelines.

These early steps are beginning to pay off as companies are making billion-dollar investments across the Commonwealth.

Earlier this year, in Homer City — where a coal-fired power plant once stood — developers announced a $10 billion + plan to transform the site into a data center campus powered by natural gas. And just a few weeks ago, Amazon announced another $20 billion investment to construct new data center campuses across the commonwealth.

These are the kinds of projects that can change the trajectory of entire communities. If this is what progress looks like with the dial barely turned, imagine the results if we turned it all the way up.

In the early twentieth century, industries flocked to Pennsylvania coal country to be near the fuel that powered the industrial age. Today, data centers and tech infrastructure are following that same logic — they are building here because we have the natural gas and energy resources to power the digital economy. 

What we lack is a public policy environment that consistently encourages investment and business growth. That’s the obstacle holding us back.

This is a problem we can solve. And if we act now, we can turn it into our biggest opportunity.

We can create an economy that works for everyone by continuing to modernize our tax code, cut unnecessary red tape, lead on energy development, and focus on workforce training that prepares Pennsylvanians for the jobs of today and tomorrow.

That’s why the PA Chamber Foundation recently launched the Keystone Initiative, a roadmap to make Pennsylvania more competitive. This plan is about advancing practical solutions that work and leveraging PA’s strengths, based upon data and proven success from other states. 

We have the resources, talent, and location to attract investment. But to do that, we first need to make it easier for businesses to say “yes” to Pennsylvania. We need policies that will reward innovation, remove unnecessary barriers, and build a workforce ready to meet the demands of a 21st-century economy.

Imagine a Pennsylvania that is growing again. A Pennsylvania where businesses and people are moving in instead of out. Where entrepreneurs start companies, and investors bet on our future. Where we’re adding Congressional seats instead of losing them.

That future is possible. It’s within our grasp. But to get there, we have to make the choice, and have the will, to compete.

Luke Bernstein is the president and CEO of the Pennsylvania Chamber of Business and Industry.