November 15, 2013 A Competitive Realities Report of Lehigh Valley, Pennsylvania Prepared for the Lehigh Valley Economic Development Corporation 715 Birkdale Drive | Atlanta, GA 30215 | p 770.716.9544 | f 770.719.8911 www.garnereconomics.com TABLE OF CONTENTS Introduction ............................................................................................3 Chapter 5: Economic Dynamics ......................................................... 60 Chapter 1: Stakeholder Input ............................................................... 6 Gross Domestic Product ................................................................ 60 Chapter 2: Assets and Challenges Assessment .............................. 21 Average Wage Per Job................................................................... 62 Chapter 3: Dashboard Indicators Summary .....................................34 Per Capita Income .......................................................................... 63 Demographic & Labor Dynamics ..................................................34 Components of Per Capita Income ............................................... 65 Economic Dynamics....................................................................... 36 Exports ............................................................................................. 66 Economic Dynamics, continued ....................................................37 Proprietor Employment ................................................................. 68 Local Specialization, Competitiveness & Growth ........................38 Major Industry Sector Composition .............................................. 70 Chapter 4: Demographic & Labor Dynamics ................................... 39 Total Employment ............................................................................ 71 Population Growth ......................................................................... 39 Unemployment ............................................................................... 73 Sources of Population Change ....................................................... 41 Cost of Living ................................................................................... 74 Population by Race and Hispanic Origin .......................................43 Broadband ....................................................................................... 75 Age ....................................................................................................44 Airport Statistics ............................................................................. 76 Unionization .....................................................................................47 Chapter 6: Local Specialization, Competitiveness & Growth .......... 77 Crime ................................................................................................48 Industry Earnings ........................................................................... 79 Education ..........................................................................................50 Major Occupational Change ........................................................... 80 SAT Scores.......................................................................................53 Occupational Earnings .................................................................... 81 STEM Degree Completions ............................................................54 Industry Cluster Specialization & Growth .................................... 83 College or Graduate School Enrollment ...................................... 56 Industry Cluster Competitiveness ................................................ 85 Population In-migration by Educational Attainment ...................57 Industry Sector Specialization & Growth ..................................... 86 Worker Flows ..................................................................................58 Industry Sector Competitiveness .................................................. 88 Occupational Specialization & Growth .......................................... 89 Appendices ........................................................................................... 91 A Competitive Realities Report of Lehigh Valley, Pennsylvania Page 2 INTRODUCTION The Lehigh Valley Economic Development Corporation (4) A set of implementable recommendations that the (LVEDC), an economic development organization representing leadership in the region can utilize to enhance the economic both Lehigh and Northampton counties, retained Garner well-being of the area, and make the Lehigh Valley a Economics, LLC in July 2013. Our task is to recommend an desirable business location and enhance its quality of place. economic development strategy that will build on the region’s This Competitive Realities Report (CRR) is the first of two reports rich natural, cultural, and historical resources and develop an that will be provided to the LVEDC. It documents the work of the action plan to strengthen existing industries and to identify first two elements of the project scope and summarizes the findings emerging ones to increase private investment and job of Phase I. retention. The focus of this engagement is for the region to understand ECONOMIC DEVELOPMENT STRATEGIC PLANNING PROCESS the product improvement, marketing, and organizational changes it must make to ensure that the LVEDC and the Phase III: Lehigh Valley strengthen their competitive positions and are Phase I: Discovery Phase II: Strategy Implementation Recommendations able to attract and retain the types of businesses that will create jobs and opportunities for their citizens. Evaluate the Lehigh Position LVEDC to achieve Actionable items Specifically, the scope of services for the overall project includes: Valley competitive success based on . Marketing and position from a site qualitative and promotion (Messaging (1) A comprehensive and holistic assessment of key forces selection perspective quantitative analysis to the targeted industry sectors) driving the economy and its shifting dynamics; . Economic Analysis collected in Phase I . Labor Analysis . Short- and long-term . Workforce (2) An Assets and Challenges Assessment (A&C) of the region . Assets and Challenges strategies (one- development Assessment (A&C) recommendations from the eyes of a site location consultant that facilitates through five-year) . Cluster Analysis/ including product . Organizational investment decisions; Business Target improvement needs recommendations Identification and industry targeting (3) Recommended business targets suitable for the region based on our research and analysis; and, finally, A Competitive Realities Report of Lehigh Valley, Pennsylvania Page 3 METHODOLOGY challenges or gaps exist, Lehigh Valley can take the steps necessary to ameliorate the situation, strengthen its overall “product,” and be The CRR is a compilation of local facts and a more attractive business location. Likewise, by knowing its data points with quantitative analysis and strengths, Lehigh Valley can better leverage them in its efforts to some subjective opinions noted in the attract businesses. Assets and Challenges Assessment (A&C). The objectives of the Assets and Challenges Assessment are to: Together, the Assets and Challenges Help regional leaders understand the Valley’s potential so that Assessment, Benchmarking Scorecard, and Stakeholder Input form a they can best develop realistic goals; body of knowledge and data around which the strategy and its recommendations will be built. Identify key strengths to emphasize in economic development marketing efforts; and The CRR offers no recommendations. (The final strategy report will Identify key weaknesses that may limit investment in the region consist of the business target recommendations along with so that remediation of these local challenges may occur. conclusions and recommendations of how the LVEDC can enhance its global competitiveness. It will be presented in early 2014.) The findings of the A&C will supplement the economic analysis to be Assets and Challenges Assessment conducted in the business targeting scope element. Our approach to creating the CRR began with the consulting team conducting an Assets and Challenges Assessment of the region. This was done through a windshield tour of the region and against a set list of 66 criteria that were used to evaluate the area from a site- Assets & Benchmarking selection perspective. Garner Economics assessed the region based Challengess and Economic Assessment on the qualities, elements, and infrastructure that a business will Analysis look for when considering Lehigh and Northampton counties as a place for its operations. Stakeholder The assessment is both an objective and subjective evaluation of Input the area. We applied many of the same criteria to assess Lehigh Valley that we use when engaged by a corporate client to evaluate communities for possible investment. The assessment allows us to Competitive Realities Report document challenges that exist in the region that constitute barriers for successful economic development to occur. By knowing what A Competitive Realities Report of Lehigh Valley, Pennsylvania Page 4 Benchmarking Stakeholder Input Because the Lehigh Valley must compete with other geographies— Finally, as a complement to the assessment of how the physical and including those globally—it is important to understand where the regulatory structure of the Lehigh Valley stands against its region stands