Study: PA Should Grow Its Own High-Tech Jobs, Shun Tax-Break 'War Among States'

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Jan 13, 2010, 10:30 ET

PITTSBURGH, Jan. 13 /PRNewswire-USNewswire/ -- Pennsylvania will best grow its high-tech economy by focusing on its existing employers and shunning the "economic war among the states" involving costly tax-break competitions.

That's the finding of a major study released today by Good Jobs First. Ohio, New Jersey, New York, Maryland, North Carolina and West Virginia are the states compared.

The study's conclusions are based upon two unique analyses—applied here for the first time to any aspect of the state's economy. One details where the state's high-tech jobs have come from since 1990; the other reveals the effective tax rate for high-tech companies in all seven states. It finds only minimal differences among tax rates—even when the states' most lucrative economic development incentives are accounted for.

"Over time, all the growth in Pennsylvania high-tech jobs comes when existing workplaces expand and new ones are born—not from smokestack-chasing," said Greg LeRoy, executive director of Good Jobs First and primary author of the study. "We also find that Pennsylvania's effective tax rate and incentives are right in the middle of the pack and are therefore not an issue." The Keystone Research Center advised on the study.

Instead of competing with other states for specific companies, Pennsylvania's resources will best be spent strengthening small, young, and locally owned businesses, and improving the skills of workers to match industry needs, the study concludes. Indeed, the study finds that Pennsylvania has high concentrations of engineering and biomedical talent that give it distinct advantages in certain high-tech niches.

Although interstate movement of high-tech jobs is almost negligible, the study finds that offshore job flight is a far more significant issue. It recommends redress be sought through federal trade policy, not to be confused with state tax policy.

The study also provides eight original case studies of big-ticket incentive deals including Dell, Google, AMD, Westinghouse, two pharmaceuticals, a plastics factory, and a research lab.

The study was funded by The Heinz Endowments, which has been a regional philanthropic leader in developing funding strategies to spur high-tech job growth. The public announcement of the study came just before a meeting sponsored by the Endowments to discuss implications of the findings with participants from the seven states and other economic development organizations. Good Jobs First is a non-profit research center based in Washington, DC promoting best practices in economic development. The full study is online at www.goodjobsfirst.org/PAhightech.cfm.

Contact Michelle Lee 202-232-1616 ext. 210

SOURCE Good Jobs First