Texas Grows On Pennsylvania’s Woes
In what amounted to a complete non-surprise, Pennsylvania was just ranked near the economic bottom of the nation. Forty-third, to be exact.
Why the dismal showing for what was once the major industrial powerhouse, not just of the country, but the world?
More than anything else, crushing taxes and a hostile business climate.
Shackled with the nation’s second-highest corporate income tax, it is also 15th in personal income tax, 30th in property tax burden, and number one in estate and inheritance tax. Those figures are bleak enough in their own right, but because Pennsylvania rolls over to organized labor and trial lawyers, it comes in dead last last in labor competitiveness.
The result? A mass exodus. Businesses, and the Pennsylvanians who work for them, flee the state for the greener pastures of employer-friendly states.
And as our children and grandchildren — indeed our future — leave, so too does our political clout.
In the latest census, Pennsylvania has lost yet another electoral vote, giving it just 20. But again, this is nothing new, as the state has seen at least two electoral votes disappear in every census since 1960.
Pennsylvania is not alone in its demise. Neighboring states such as Ohio, Michigan, New Jersey and Illinois are in the same boat, with millions voting with their feet to escape ever-escalating taxes and an overbearing government.
While some businesses are outsourced overseas, many relocate to states that believe in welcoming rather than hindering. It is no coincidence that the recipients of Pennsylvania’s brain drain are primarily located in the south and west, states that are free of entrenched, business-as-usual politicians who would rather fall on the sword than make the effort to change the system.
And no state more so than Texas exemplifies the fruits of the strategy to attract the best and brightest.
Despite America experiencing one of the worst recessions in its history, the Lone Star state is booming. Huge numbers of people seeking opportunity are migrating to Texas, so much so that it just gained a whopping four seats in the Electoral College, bringing its total to 38— second only to California’s 55. In stark comparison to its rust belt competitors, Texas has experienced a period of nonstop growth, gaining at least one electoral vote in every census since 1930. (It is interesting to note that California’s economy shrank faster than all but three states over the last ten years; for the first time since 1920, it failed to pick up an electoral vote.)
A look at the numbers tells the story:
The Texas economy, nearly $1.3 trillion in output, ranks 13th — in the world. Some analysts see it eventually eclipsing California in that category.
Texas leads the nation in overseas exports, its railroads are ranked at the top, it has more miles of highway than any other state, and has state-of-the-art shipping ports and cargo airports.
In Forbes agazine’s “Best Cities for Jobs” list, Texas cities topped the lists for best big, mid-size and small cities.
Nearly 40 percent of all jobs created in the current “recovery” are in Texas, and it is one of only three states have more jobs now than when the recession began in December 2007. The others are North Dakota, Alaska — all, not coincidentally, big energy states.
Texas leads the nation with six cities on the top 20 Overall Strongest-Performing Metro Areas, according to the Brookings Institute’s “MetroMonitor” quarterly report.
Texas innately understands that fostering a business friendly atmosphere pays big dividends. So it has paved the way for achieving that goal: it is a Right To Work state (where it is not compulsory to join a union as a condition of employment), has no state income tax, and ranks 8th best for business tax climate. And its regulatory environment is not nearly as onerous to business as in many other states.
It has also aggressively passed legal reform measures (reducing litigation costs to historic lows), which is credited as a major factor in the unparalleled job growth Texas is experiencing.
Industries in Texas are quite diversified, from energy and mining, to timber, health care, bio-medical and tourism — industries that parallel those in Pennsylvania.
So why then does the Keystone State, despite its many similarities to Texas, continue to stagnate, seemingly content to limp along while its competitors are thriving?
Because the people, through the politicians they keep electing, are satisfied with mediocrity. Rhetoric aside about wanting to make the state great again, nothing of significance changes in Pennsylvania, no matter what party controls the governorship and legislature.
Tax rates? Among the highest in the nation, especially for businesses, with reductions almost nonexistent. Legal reforms? Few and far between, with no attempt made to pass what is desperately needed: caps on runaway jury awards. (While the Fair Share Act was just signed into law, limiting liability to one’s responsible share in a lawsuit, it took nine years just to revisit the issue after it passed in 2002 but was thrown out on a technicality.)
Regulations? More burdensome than ever. Educational achievement for the future workforce? Nearly half of all public school 11th graders cannot pass basic proficiency tests in reading and math.
And, of course, Pennsylvania has made absolutely no attempt to rein in the out-of-control public sector unions.
Year after year, teachers’ unions strike more than in all other states combined, with children becoming the victims in the unions’ never-satiated appetite for more taxpayer largesse. The mere discussion of eliminating collective bargaining was taken off the table by Gov. Corbett prior to entering into negotiations with the state workers’ unions — while getting nothing in return. And in an era where private sector employees are lucky to keep their jobs, with raises out of the question for most, Corbett just gave the public sector workers an 11 percent raise over four years with lavish benefits and no furloughs.
As far as becoming a Right To Work state, that possibility ended with the Corbett Administration stated it could never pass in Pennsylvania. Which was true — with Ed Rendell as governor and a Democratic House. But with Corbett as leader and major GOP majorities in both chambers, a strong push could well have made that economic godsend a reality. But it died before it even began. (And for the naysayers who say it couldn’t pass, just look to Wisconsin for what can be achieved with real leadership. In arguably one of the most liberal state in the country, collective bargaining was recently eliminated.)
The saving grace for Pennsylvania is that it’s sitting atop the second largest natural gas deposit in the world. Just as energy leads the way it Texas, it could also do so in
the Keystone State, as responsible drilling of the Marcellus Shale could pave the way for an unprecedented economic boom.
But given Pennsylvania’s history of chasing away business, the natural gas industry is still (wisely) hedging, waiting to see what the ground rules (no pun intended) will be. Corbett is right not to impose an extraction tax, as that only would serve to drive a nail into the coffin, but there are many other issues that need to be addressed. And if the highly mobile industry does decide to pack it up either because of a hostile business climate or low demand, Pennsylvania, unlike Texas, has no fallback position, pushing it that much closer to the abyss.
Perhaps the most telling difference between the states is not a statistical one, but an intangible. When in Texas, there is an unbridled sense of pride, a feeling that the American pioneering spirit is thriving, and that nothing is unattainable.
And you see the symbol of that pride everywhere: the Lone Star is embedded in concrete pillars of the modern infrastructure, in buildings, on car bumpers, and even in airport restaurants. That vibrancy, which is downright palpable, is not just because of Texas’ rich history, but comes from the security that only a booming economy can generate.
Sadly, that feeling has been nonexistent to most Pennsylvanians for decades. Whether we ever regain it will be decided over the next four years.
To Texans, everything they do is not just bigger, but better. That may seem arrogant to folks in the other 49 states, but as the old adage says, “arrogance ain’t arrogance if you can back it up.”
And looking at the Lone Star State’s success story, it most certainly backs it up.