New Geography

Author: Dennis Powell

  • Pennsylvania – Political Positioning or Realistic Chance?

    The keystone of the McCain campaign’s victory scenario during the final weeks was a surprise victory in Pennsylvania despite that fact that polls (Real Clear Politics had the gap at 7 points on Election Day) clearly showed Obama comfortably ahead. Why?

    Pennsylvania has a Democratic Governor from Philadelphia who was elected twice with sizable margins. Democrats have gotten a big boost over the past two years in voter registration. The political shift from Republican to Democratic in the Philadelphia suburbs is nearly complete – at least when it comes to statewide and federal offices.

    This said, no Democratic candidate has ever held the statewide office of Attorney General. The State Senate had a 29 – 21 Republican advantage going into the election and until 2006 Republicans in the State House held 110 seats to the Democrats 93 (currently 102 – 101 Democratic).

    In other words, statewide the sum of Republican parts remains greater than Republican voter registration. It was this anomaly that very likely gave McCain hope for winning Pennsylvania by running more a regional than statewide campaign.

    This strategy was likely bolstered by what was perceived to be still disaffected Hillary voters. Senator Clinton carried the state by more than 200,000 votes and captured nearly 55 percent of the vote. In Pennsylvania, the divisions between the electoral bases of the two Democratic primary candidates were most clear. Clinton carried the older, rural and lower income Democrats while Obama won the better educated, urban and minority bases. The Clinton Democrats are the same “swing voters” Republicans need to win in the more hotly contested districts.

    Obama won 7 of 67 counties in the Primary Election. Obama’s only significant victory was in Philadelphia County which he carried by 130,000 votes. Obama won only two of the four Philadelphia collar counties. Meanwhile, Clinton won many of the state’s rural counties by margins of 2 – 1 or greater.

    Yet potential weakness for Obama did not overcome the huge challenges facing the McCain campaign. Democrats now outnumber Republicans by 1.1 million registered voters statewide. According to the Pennsylvania Department of State, Democratic registration grew by 855,000 or 14 percent over the past year while GOP registration shrank by 4 percent or 145,000 voters. In 2000, the difference between the parties was less than 500,000. George W. Bush lost Pennsylvania in 2004 having a much more favorable electoral environment than did McCain in 2008.

    The framework for statewide Democratic victories was established by Governor Ed Rendell in 2002. In that race, Rendell won the five counties that comprise the Greater Philadelphia region by 515,000 votes. The vote in the rest of the state, which he lost, didn’t really matter. This is in large measure the model Obama would follow to victory.

    McCain has a far more difficult road to victory. He needed to emulate Republican U. S. Senator Arlen Specter’s 2004 victory, which was based on limiting his losses in Philadelphia County to 270,000 votes and winning Delaware, Bucks, Chester and Montgomery Counties (collar counties) by 145,000 votes. This enabled him to achieve a nearly 600,000 vote victory statewide – the highest margin for any statewide Republican candidate in recent history.

    The other victory scenario was that used by Republican Attorney General, Tom Corbett in 2004. Corbett won statewide by around 100,000 votes. Corbett lost Philadelphia by almost 400,000 votes, but he won all four collar counties albeit with 90,000 less votes than Specter.

    On Tuesday, McCain ended up looking more like a far more strident conservative candidate, former U. S. Senator Rick Santorum who lost to now Senator Bob Casey by more than 700,000 votes in 2006. In that election, Santorum got only 15 percent of the vote in Philadelphia County and lost the collar counties by 175,000 total votes. This was a swing of nearly 320,000 votes compared to those won by Specter two years earlier.

    So why did McCain play the Pennsylvania card? Maybe it was the belief that the state’s “Hillary Voters” still felt disaffected from Obama. It may also have been that he had to believe in Pennsylvania in order to have even the most remote chance at victory. Hoping for an October surprise, he thought Pennsylvania would keep him in the game. Without Pennsylvania the election was almost surely lost with states like Virginia, Ohio, and Florida trending toward Obama.

    In the end, McCain lost Pennsylvania by more than 600,000 votes and one Republican incumbent in Congress lost in the Erie region. Obama won Philadelphia and it collar counties big, basically replaying Rendell model.

    But does this mean that Pennsylvania is now a solid “Blue State?” The answer here is mixed. Republican incumbent Attorney General won statewide by nearly 400,000 votes. The Republican State Senate has seemingly increased its caucus by one Member to 30 – 20. The State House, at this writing, remains in Democratic control by a margin of 104 – 99. Certainly this was not a big change election.

    What we saw here was an anti-Bush vote in Pennsylvania that followed the national trend of wanting a change of direction. Locally, voters seem just fine with a status quo that may tilt a bit blue, but still has room for dashes of red.

    One thing for sure, at least for now the politically powerful southeast collar counties hold the key to winning statewide in Pennsylvania. A candidate must win at least one of these counties to have any hope of a statewide victory.

    Dennis M. Powell is president and CEO of Massey Powell an issues management consulting company located in Plymouth Meeting, PA.

  • The Entrepreneur is the True Face of Capitalism in America

    “Joe the Plumber” has gotten a lot of media attention over the past week. Depending on which side of the political fence you’re on, he is either a phony who is not even a registered plumber or a symbol for the unintended consequences of wealth redistribution policies. A Rasmussen survey taken on October 19th showed “Sixty-nine percent (69%) of Democrats think [Obama] is right on [spreading the wealth], but 78% of Republicans disagree.”

    It is easy to rail against corporations like Exxon-Mobil while surging gas prices force average Americans to make tough choices with the family budget. In 2007, they reported $39.5 billion in profits which represented 11.4 percent of revenues – up 9.3 percent over 2005.

    Not surprisingly, building popular support to tax windfall profits is easy politically. So, too, is the idea that these taxes should be redistributed to working families. On the other hand, making the case that profits will spur new energy development and reward shareholders seems almost impossible.

    CEO pay, and especially bonuses, are also easy targets for populists. In 2007, major financial firms in New York paid $39 billion in bonuses to themselves. Overall, CEO bonuses increased 27.1 percent in 2006 according to Business Week. The public has trouble understanding how the CEO at Lehman Brothers can make almost $450 million since 2000 and provide millions of dollars in “golden parachutes” to executives even as the firm was failing.

    But the media and the electorate often miss a key distinction. CEOs are not entrepreneurs. They are high paid managers who run the companies that true entrepreneurs built generations ago. Many are graduates of elite business schools who have extensive networks of contacts in business, government and among the “movers and shakers” of our nation. Quite a few are from the nation’s wealthiest families.

    On the other hand, “Joe the Plumber” is a symbol of entrepreneurism – the “little guys” with big dreams. They want to be their own boss. They feed off the soft underbellies of corporations too big or too inflexible to react to changes that create opportunities. Most are hard-working and honest. They don’t have stock options, bonuses or golden parachutes at retirement. In fact, most have many payless paydays when building their businesses.

    Entrepreneurs are America’s job creators. According to the Small Business Administration, from 2003 to 2004 companies with less than 20 employees created roughly 1.6 million net new jobs. Companies with 20 to 499 employees created around 275,000 net new jobs. Meanwhile, employment at companies with more than 500 employees shrank by 214,000.

    The University of Michigan and Florida International University study entrepreneurial activity in America. The metric they use is the number of people who start new businesses or manage firms less than four years old. In 2005, they reported that 23 million people were in this category. Some of the demographics of this group are interesting:

    • 18- to 34-year-olds account for about 44 percent of new firm creations.
    • 57 percent of those starting a new business have high school education.
    • Only 23 percent have finished college.

    Entrepreneurs are the risk-takers in America who know that they are bucking long odds in pursuing their dream. In his book Illusions of Entrepreneurship: The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By, Professor Scott Shane compiled data tabulated by the Bureau of the Census produced for the Office of Advocacy of the U.S. Small Business Administration and found that only 29 percent of business ventures that were started in 1992 where still around in 2002.

    The entrepreneur is the embodiment of the American spirit and validation of the American dream. Bill Gates epitomized this in the last few decades. He is now using his tremendous wealth for good by funding education and world health programs. On the foundation’s website, Gates lists 15 principals about the role of philanthropy. Principal #7 reflects Gates’s entrepreneurial roots: “We take risks, make big bets, and move with urgency. We are in it for the long haul.”

    The legacy of entrepreneurism can be seen in university buildings, hospital wings, libraries, research centers, foundations and companies that bear the names of entrepreneurs. Most started with a vision to do something new or make something better or more efficiently than ever before. Sadly, many of these institutions, particularly universities and non-profit foundations, seem committed not to fostering more entrepreneurs, but rather to teaching that capitalism is inherently unfair.

    When candidates rail against CEOs and corporate greed they need to be careful that their anger and the populist policies that grow out of it do not spill over into entrepreneurism and extinguish its flame.

    Let’s punish those whose greed for short-term profits has nearly destroyed our economy whether or not they are on Wall Street or in a corporate suite. But we must keep in mind that if we let our anger spill over to extreme new regulation and a new regime of higher taxes, we will also be targeting those “little guys and gals” who want to chart their own course to success. America needs its entrepreneurs perhaps now more than ever before in our history.

    Dennis M. Powell is president and CEO of Massey Powell an issues management consulting company located in Plymouth Meeting, PA.

  • Obama: A Campaign Model for the Information Age

    Senator Barack Obama has run the first campaign of the information age, and win or lose he has set the standard for how campaigns will be run from this point forward.

    He has parlayed his inspirational speeches and personal appeal to the millennial generation into a base of small donors likely unequaled in modern election history. His campaign understood the power of the Internet and social networking and successfully used it as a resource to create political buzz about him and build a fundraising juggernaut.

    It was the breadth of Obama’s fundraising base that positioned him to bring the Clinton campaign to its knees in the months following Super Tuesday. Clinton’s “big dollar” donors had “maxed out” expecting a quick and decisive victory in February. The lack of financial resources available to Clinton in the months after Super Tuesday allowed Obama to campaign in the marginally significant electoral states and build his delegate count using tens of thousands of $25 contributions.

    It was the Obama campaign’s ability to replenish its coffers, spend and reload again and again that was a — it not the major — factor in derailing the Clinton nomination that a year ago seemed all but inevitable. Obama was able to fight a protracted war, because he has built long supply lines. Clinton went for the early knockout and ran out of gas.

    Obama’s fund raising advantage has reflected more the way he built his base of support than the momentum he had at that point in the campaign. According to the Center for Responsive Politics, Obama had raised $454 million as of August 31, 2008. The website www.opensecrets.org reports that 94 percent of Obama’s funds come from individual donors and 51 percent of Obama’s contributions are $200 or less.

    When compared with John McCain’s base, Obama has much more in reserve. Obama has amassed 95,000 more small contributions than McCain. He has 10,700 more contributions of $2,300 plus than McCain, but this number represents only 30 percent of Obama’s total compared to 49 percent of McCain’s total in this category. And, 16 percent of McCain’s contributors are “maxed out” as compared to 9 percent of Obama’s.

    It is even more interesting when you break it down to gender. Female donors comprise 42 percent of Obama’s base and 28 percent of McCain’s base of financial support. Females donors account for 71.6 percent of the total contributed by males to Obama while McCain’s female donors reflect only is 38.3 percent of total male giving. In the category of donors from $200 – $499 Obama’s base of female donors outpaces McCain’s by a ratio of 3.4:1.

    Obama has built his political organization around his fund raising base rather than vice versa as is usually the case in political campaigns. This is critical in building his “machine” in states like Virginia, North Carolina, New Hampshire, and Colorado, where he is either winning or close to it.

    The beauty of this model is that after the television ads have gone dark and the radio ads ring hollow, Obama is only a mouse click away from continuing the conversation with his base.

    On Election Day, Obama will have more than 2.5 million investors who are almost certain to vote. The campaign infrastructure that he has built will enable him to contact them and focus them as a resource throughout Election Day. This may well decide the election for Obama. But win or lose he has set the bar for future candidates in terms of building a base of fund raising support.

    Dennis M. Powell is president and CEO of Massey Powell an issues management consulting company located in Plymouth Meeting, PA.

  • Dennis Powell

  • Pennsylvania: Where the Collar Counties Are the Big Dogs

    Pennsylvania, as with most states, can be analyzed politically by looking at a few key counties and how they break in a political campaign.

    Historically, the four collar counties of Philadelphia broke heavily Republican and neutralized the advantage Democrats had coming out of Philadelphia. Over the past decade this trend has reversed itself — and with it the political balance in the state.

    Over the past eight years Pennsylvania has gained some 500,000 voters but the Democrats have doubled their lead over Republicans to over one million. In short, since 2000 Democrats have outgained Republicans in Pennsylvania by a ratio of 39:1. The significant growth in Independents is now a major factor in GOP victory in statewide elections.

    The City of Philadelphia has been solidly Democratic for generations. The big changes are in the four suburban “collar counties” around Philadelphia which account for 17.6 percent of the state’s voters. Starting in 2000, Republican registration in the Philadelphia suburbs has dropped by 85,494 voters or 10.1 percent.

    On the Democratic side is a far different story. Registration increased by 220,149 voters or 45.5 percent from its 2000 level. The Republican advantage now stands at a mere 55,557 voters and the number of straight ticket voters has dropped.

    This surge in registration reflects a shift in voting patterns that have existed in these counties for decades starting at the top of the ticket and slowly working their way down to local levels of government. In 2000, Al Gore defeated George W. Bush by 204,840 votes in Pennsylvania with the four collar counties going to Gore by 54,346 votes. This region supplied Gore with 27 percent of his victory margin in Pennsylvania despite Republicans having a 357,200 voter registration advantage at that time.

    In 2002, Ed Rendell defeated Mike Fisher for governor by 323,827 votes. Rendell won all four collar counties and when Philadelphia is included the southeast region supplied Rendell with a 515,441 vote margin, negating the vote in the rest of Pennsylvania which Fisher, a former State Senator and then current Attorney General, won handily.

    In 2004, John Kerry defeated then President Bush in Pennsylvania by 144,248 total votes. Kerry did not win all our collar counties. He lost to Bush in Chester County and his margins in the three others were far less than Rendell’s two years earlier. But, other Republicans including Senator Arlen Specter survived by winning in this increasingly contested territory.

    Increasingly this trend has moved down the ballot. In 2006 when State Auditor General Bob Casey, Jr. trounced incumbent Senator Rick Santorum statewide by 708,206 votes, Casey won all four collar counties by significant margins. Also, two Republicans in the U.S. House of Representatives were replaced by Democrats as Patrick Murphy, an Iraq war vet, won the seat in Bucks County while Joe Sestak, a retired Navy admiral, defeated incumbent scandal-tainted Rep. Curt Weldon in Delaware County by a wide margin. Today, three of the four collar counties are represented by Democrats in Congress.

    The lessons are clear. Democrats are gaining in the collar counties, particularly when conservatives like Santorum head the ticket. Republican moderates like Specter, however, have remained competitive in these suburbs, and thus have survived the Democratic onslaught.

    Not surprisingly, the Obama campaign hopes to paint John McCain as a right-wing clone of President Bush. If he is successful, then McCain will likely lose the collar counties, and with them Pennsylvania. In a best case scenario for the Democrats, 2008 could mirror Governor Rendell’s 2002 triumph where wins in the collar counties and Philadelphia make up for losses elsewhere in the state.

    McCain, however, is not without hope. If he is able to position himself as a reformer willing to work against the interests of his party for the broader interests of the country, he could win two or even three of the collar counties. If he does that Pennsylvania could become the keystone of an unconventional victory in November.

    Dennis M. Powell is president and CEO of Massey Powell an issues management consulting company located in Plymouth Meeting, PA.

  • Boomers Go Back to College? – A Letter from Pennsylvania

    The “boomers” is a generation born between 1946 and 1964. They gave us the youth culture, hippies, Woodstock, peace movement, women’s liberation, computers, flexible work environments, consumer electronics and consumption on the grand scale to mention only a few.

    Boomers have enjoyed a wonderful economy in the main that has enabled them to build wealth and live middle class lifestyles. They stay fit. They eat healthy foods. They look young compared to people of previous generations at their age.

    But alas they are graying and have reached the point in their lives where choices need to be made about how to continue to live lives that are both enriching and fulfilling.

    There were 78 million boomers in the United States in 2005 according the census data. By 2006, 330 of them an hour were turning 60. Growing older means different choices and greater financial challenges for them. Fidelity Investments estimates that “boomers” on average have less than $40,000 in retirement savings. Few will have traditional pensions. Most of their wealth is tied up in real estate.

    Medical costs will increase by nearly 50 percent as they pass 65. The Social Security Administration estimates that there will be only 2.1 workers for retiree by 2031. This is down from 3.3 today. As a result many boomers will continue to work out of necessity while they seek a simpler and scaled down lifestyles.

    An annual survey conducted on behalf of Del Webb, a developer of retirement communities, found that 36 percent of boomers plan to move when they become “Empty Nesters” and 55 percent of boomers plan to move when they retire. One interesting finding in the study is that, “boomers are twice as likely as those currently aged 59 – 70 to prefer an active adult community that is part of a multi-generational neighborhood.”

    One key question facing empty nester and retired “boomers” may be where can they go to find a quality lifestyle, affordable living, part-time employment opportunities and multi-generational interaction? The answer may well be college towns that proliferate in places like Pennsylvania – a state with more than one hundred institutions of higher education. Many are located in beautiful towns.

    Websites like www.collegetownlife.com provide links to college towns where boomers may consider relocating. At www.bestplaces.net you can compare the demographics of where you currently live to those of a college town. I currently live in suburban Philadelphia. If I were to move to State College, Penn., home of Pennsylvania State University’s main campus, here is what I would find.

    First, I would be living in a town that is six times larger than my current community, but less than one percent the size of my current region. The median age would fall from 42 to 23 years. In my current community, nearly 40 percent of the population is 50 years or older, but in State College only about 10 percent fall into this demographic.

    A lot of things would remain the same in terms of gender and racial mix, but I would have to get use to a community in which 75 percent of the population is single with no children and the number of people who are married drops from 60 percent to 15 percent.

    In my current community the median home prices is $344,000 while in State College it is $235,000. My current cost of living index in 126 while in State it would stand at 100. Average income in my current community is $66,500 while in State College it is $22,500. My school district spends more than $9,000 per student in State College it is a little over $7,500 which reflects real estate taxes.

    State College offers robust cultural activities through Pennsylvania State University. The University has schools of music and performing and fine arts and a number of concert halls, museums, lecture halls, libraries, theatres and auditoriums with near daily attractions and activities. Also, the community is safe and offers a host of recreational activities.

    Pennsylvania State University is the largest in Pennsylvania and adds to the vibrancy of State College, but there are also more than one hundred other college towns and communities in Pennsylvania where “boomers” may find everything they are looking for and more as they transition for work to active retirement and toward their golden years.

    These towns offer everything from wooded rural locations to stylish suburban or urban neighborhoods. They represent a great alternative to those boomers who want to do far more than fade away.

    Dennis M. Powell is president and CEO of Massey Powell an issues management consulting company located in Plymouth Meeting, PA.

  • Rural Pennsylvania – Refocusing Economic Development Strategies

    James Carville, the gifted political strategist and pundit, once reportedly referred to Pennsylvania as, “Pittsburgh and Philadelphia with Alabama in between.” And to be sure, many urban sophisticates share this belief.

    But this perception comes from a different time when Pennsylvania’s cities boasted huge, overwhelmingly Democratic populations while the suburban and rural areas, albeit sparsely populated, were culturally aligned bastions of red state Republicanism.

    Yet over the past several decades Pennsylvania’s populations and politics have shifted. The southeastern cities of Philadelphia, Lancaster, Harrisburg, York, and the Allentown-Bethlehem-Easton corridor now comprise one vast urban region stretching from the Susquehanna to the Delaware River. The other three urban regions include Wilkes-Barre-Scranton, Pittsburgh and Erie. Beyond these urban areas, are the 48 counties that comprise rural Pennsylvania.

    The expansion of urban Pennsylvania has ushered in not only demographic changes but also political changes in suburban areas. Today there is only one Republican member of Congress whose district resides mostly in the four suburban southeastern counties of Bucks, Montgomery, Delaware and Chester. These counties have been solidly Republican for generations. The same political trend can be observed at the State Senate and State House levels where seats held by Republicans for over one hundred years are electing Democrats.

    In the process rural Pennsylvania has lost much of its traditional political clout in Harrisburg. Although their populations have grown faster that he rest of the state – mainly due to the in-migration of “downshifting” Baby Boomers — rural counties have also been losing their economic power as well.

    This can be seen by the fact that rural Pennsylvania is falling behind in terms of income and jobs. A Pennsylvania State University state titled, “Pennsylvania’s Rural Economy: An Analysis of Recent Trends,” found that in the 1960s rural workers earned 84 cents for every dollar an urban worker earned. By 1999, that number fell to 73 cents.

    Similarly, a March 2007 study by the Brookings Institute found a household income gap of nearly $9,000 per year between rural and urban Pennsylvanians. Brookings also shows an education gap. In 2000, 19.3 percent of rural residents had not completed high school and 15.4 percent had completed college compared with 17.7 percent and 25.1 percent in urban areas.

    Much of this has to do with a long-standing economic transition. Rural Pennsylvania, has been losing its former jobs — many of them well-paying union positions — in mining, textiles, stone, clay and glass and primary metals. These have been replaced by generally lower wage jobs in health care, education, restaurants, and social services.

    As a result, rural Pennsylvania has been shifting from a region that produced wealth to a region that consumes and services wealth. In 1969, 78 percent of income came from earnings. In 1999, this percentage has been reduced to 62 percent. Income from retirement doubled as a percentage while income from dividends, interest and rent increased from 11 percent to 18 percent over the same period as reported by Penn State.

    The shifting employment trends in rural Pennsylvania offer a glimpse into the spiraling downside of economies that either do not grow or have job growth without real wage growth. The region is left with a stagnant tax base where local governments can provide basic services only by continuing to raise taxes. These taxes make it difficult to attract new business and retain existing industry.

    The question is what can be done to reverse the trend. Rural Pennsylvania has untapped strengths: abundant natural resources, strong work ethic, solid communities and high quality of life. These are the qualities on which to build the future for this vast region.

    Sadly, however, these strengths are barely taken into account in Pennsylvania’s economic development strategies. These primarily have focused on tourism, entertainment, and attracting high tech jobs to the state. Billions have been invested to build new stadiums in our urban areas and convention centers across Pennsylvania. This kind of investment has done very little to capitalize on the inherent strengths of our rural communities.

    Nor has the state really addressed the economic impact of $4 gasoline on our economy and quality of life. Some people say that this shift will herald a return to our urban centers and mass transportation. Others see the rebirth of manufacturing in America as logistics costs coupled with rapid inflation in countries like China and Vietnam depreciate their advantage as cheap manufacturing centers.

    This possible shift in global trade offers a unique opportunity for rural Pennsylvania which has the workforce, the low land costs and a location — the area is within ten hours of 40 percent of the US economy — well-suited for global competition. But sadly the state — unlike many in the southeast and Texas — is taking little action to build new infrastructure to move goods and services quickly and efficiently between ports, rail and roads.

    Such jobs in trade, distribution and manufacturing could be critical to a revival in rural Pennsylvania’s economy. These are family wage jobs that often pay 10 percent higher wages than similar jobs in other industries according to The Business Roundtable. High energy prices also make the area’s resources competitive again. Coal is now in play as is new exploration for natural gas. Rural Pennsylvania can benefit from new coal gasification technologies as well as new gas exploration in its rural center.

    These jobs as well as those in manufacturing and logistics can only grow by implementing a new economic strategy which focuses not only on stadium and convention centers but upon basic infrastructure. Such a strategy would help link these communities with national and global markets and facilitate the expansion of manufacturing and mining as well as making it easier for high-tech service companies to locate in rural areas.

    It is time to make a basics-oriented approach the cornerstone of a determined effort to turn around rural Pennsylvania. These communities are great places to live and raise a family, and are populated by hard-working, motivated people. What they need now is a commitment to the kind of infrastructure investment that will allow them a decent shot at an economic renaissance.

    Dennis M. Powell is president and CEO of Massey Powell an issues management consulting company located in Plymouth Meeting, PA.

  • Suburbs Thriving, Cities Stagnating in Keystone State

    The headline in the Philadelphia Inquirer said it all, “Philadelphia’s population shrinking, though region’s is growing.” This in the midst of what is purported to be a condominium boom in its thriving center city.

    But facts are facts: Philadelphia’s population has dropped 4.5 percent. This ranks it first among the top-25 U.S. cities in population loss from 2000-2007. This data causes you to pause and rethink the real impact of major public investments in the city spurred on by a governor who is the city’s former two-term mayor.

    For one, gambling was supposed to bring good jobs to the city. The two winning bidders each created projects on the Delaware River, but these projects are stuck in a protracted political battle and their fate at these riverfront locations is uncertain along with the thousands of jobs they have promised.

    Part of the problem for the casinos is that a new vision has been created for the Delaware Riverfront. The Penn Praxis plan envisions recreation and greenways, not gambling for this area of the city. As a result, the gaming interests are being asked to consider building somewhere else within the city.

    There is also the Pennsylvania Convention Center. The first phase was built into the old Reading Railroad terminal on east Market Street. Supporters contend that it has spurred a hotel and restaurant boom in the city and there is validity to this position.

    But work rules issues have plagued the center since its inception. The result has been that most convention groups have chosen not to return because of arcane union rules that made it beyond difficult to do simple things like set up a booth or get electric power to a display. Negotiations have brought some relief, but problems remain to be solved.

    Despite these problems the convention center is now slated to expand about two blocks west of its current location. The costs have escalated dramatically and now exceed $800 million . This is an increase of nearly $100 million since the deal to move forward was approved and buildings were condemned and razed.

    On July 12, Governor Rendell hinted that he was having second thoughts about the viability of the expanded center when he said that the center is “getting to the point where the cost will outweigh the benefit.” These remarks were made while the governor was signing legislation that would increase the taxes on a hotel room in Philadelphia by more than 15 percent to pay for tourism promotion and the convention center.

    Stadium Economics
    Public dollars have also helped to fund a new football and baseball stadium in South Philadelphia. Citizens Bank Park is a real gem of a baseball stadium – a fun family entertainment venue where the Philadelphia Phillies play 82 games a year. Across the street is Lincoln Financial Field where the Philadelphia Eagles play their games as well as Temple University. There are only 20 – 25 games played there each year. The Phillies stadium cost $458 million and the Eagles complex $512 million, most of which came from public investment.

    What has been the economic impact of this investment? Has the neighborhood been revitalized by this investment? The short answer is no. They are basically commuter stadiums where fans come, see, and go.

    Rick Eckstein, who is a professor at a local university and author of Public Dollars, Private Stadiums: The Battle over Building Sports Stadiums, has studied the economic impact of public investment in stadium projects. He concludes, “I have been studying and writing about publicly financed stadiums for more than 10 years and cannot name a single stadium project that has delivered on its original grandiose economic promises, although they do bring benefits to team owners, sports leagues and sometimes players.”

    Over the years billions of dollars has been invested in tourism and entertainment projects and the results are clear: the projects required more dollars than originally thought and the promises of profound economic benefits have never materialized as expected.

    Philadelphia is a lot more fun than it was 20 years ago, but its economy remains stagnant and its core population continues to leave to find opportunity elsewhere.

    There is also another trend resulting from this kind of pubic investment. The more public money that is poured into a region the more taxes and fees follow.

    In Pennsylvania, these kinds of investment go far beyond Philadelphia. Pittsburgh has two new stadiums costing a total of more than $1 billion and a new $375 million convention center that is touted as, “the cornerstone of western Pennsylvania’s hospitality industry.”

    Erie has the Bayfront Convention Center at $44 million and funded it with a new five percent hotel room tax. The Altoona region has Blair County Convention Center & Sports Facility Authority a $50 million project funded with $48 million in federal and state grants. The City of York invested economic and political capital in securing a $28 million revenue bond to fund a minor league baseball stadium. The City of Chester just was awarded a soccer franchise and is planning a new stadium to go along with the new casino as core projects to revitalize its economy.

    When we look back at the billions of dollars that has been spent on these projects and the results, you are left to wonder whether or not these dollars could have been spent more wisely in other areas to build an economy on sturdier foundation.

    The results have not been encouraging. Population growth in Pennsylvania between April 2000 and July 2006 was a mere 1.3 percent. Private non-farm employment decreased 0.1 percent according to the U.S. Census Bureau. Pennsylvania’s senior population continues to be among the highest in the nation at 15.2 percent in 2006.

    Philadelphia lagged behind the national average of the percent of the population with a bachelor’s degree by 4.5 percentage points in 2000; Pittsburgh’s mean household income was nearly $12,000 below the national average. None of the major cities in Pennsylvania gained population during the early years of this century.

    Suburban Growth
    Meanwhile there is a very different story in suburban and rural counties. Montgomery County’s population grew at a rate nearly three times that of the State of Pennsylvania and Bucks County grew by nearly four times. In Berks County, the next county beyond Philadelphia’s four suburban collar counties, population growth was a healthy 7.4 percent and household income exceeded the national average.

    In rural Monroe County, located outside of Wilkes-Barre, population spiked by nearly 20 percent over six years while in Pike County, northeast of Scranton, we saw staggering growth of 25.7 percent and household income exceeding the national average.

    The people of Pennsylvania want what every other American wants for their families: a nice home, good schools, quality government services and a safe community. They are abandoning cities because they cannot keep this promise to their middle-income wage earners.

    However, they are finding what they want in Pennsylvania’s first and second ring suburbs and in rural communities that don’t invest in stadiums, convention centers or entertainment to build their economies. Instead these communities provide a quality of life that attracts people and the jobs are following.

    An economy built on tourism and entertainment provides very few family wage jobs. These funds would likely be better invested in quality of life and infrastructure in order to create high wage, blue collar jobs in the global economy.

    If not, people will continue to vote with their feet as they look for opportunity beyond the casino, restaurant and tourism industries and a better quality of life outside of cities that are increasingly being viewed as opportunity-free zones.

    Dennis M. Powell is president and CEO of Massey Powell an issues management consulting company located in Plymouth Meeting, PA.