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After ‘plodding’ along for years, Pittsburgh business leaders think Shapiro will be different

Matt Rourke
Democrat Josh Shapiro was sworn in as Pennsylvania governor Tuesday, Jan. 17. During his campaign, he said he would focus on encouraging more businesses to locate and expand within the state.

Two days following Pennsylvania Gov. Josh Shapiro’s inauguration, Pittsburgh-area business leaders voiced optimism that the Democrat will usher in a new era of economic competitiveness.

The state has struggled to turn research and innovation that occurs at its universities into broad-based job creation, research shows. But Shapiro has given signs he prioritizes the issue, encouraging local economic development groups they could soon receive more support to implement strategies to expand high-tech industries in the Pittsburgh region.

On the campaign trail last summer, Shapiro embraced policies to encourage business investment and workforce development. Once elected, he formed a transition team to develop a broader economic development strategy.

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“We have a governor who wants to work with us and is going to lay out the plan to get there. And we as a region have positioned ourselves to respond and partner accordingly,” Allegheny Conference on Community Development CEO Stefani Pashman said during a webinar that her organization hosted Thursday.

Pashman and other boosters have crafted thorough proposals in recent years to expand the region’s autonomous mobility and advanced manufacturing sectors. In September, they won $63 million in federal funding to help local businesses to integrate robotics technologies into their operations.

Shapiro, meanwhile, has advocated to lower the state’s corporate net income tax rate beyond a series of cuts the legislature passed last summer. The governor also has called for quicker permitting processes for businesses and more investment in job training.

Last week, he announced that he would nominate Carnegie Mellon University administrator Rick Siger to lead the state’s Department of Community and Economic Development – a promising development for local robotics and advanced manufacturing companies because Siger has extensive experience trying to grow their industries.

If lawmakers confirm his appointment, he will oversee programs that help researchers and inventors to turn their work into business ventures. The state has slashed funding for such initiatives by two-thirds since the Great Recession, according to a study the Brookings Institution released in the fall. Over the last decade, the research shows, Pennsylvania ranked sixth among nine comparable states for advanced industry job growth.

“Pennsylvania is struggling with plodding, sub-average productivity and income growth,” Brookings Metro senior fellow and report co-author Mark Muro said during Thursday’s webinar. He served on the innovation subcommittee of Shapiro’s transition team on economic development.

Despite the headwinds Muro observed, his co-author, Robert Maxim, said the local economy has advantages – especially since COVID-19 revealed the fragility of global supply chains.

“One asset that the Pittsburgh region has, and it's one that actually other [places] don't necessarily have, is [its] manufacturing base,” said Maxim, a senior research associate at Brookings Metro. “There's a lot of potential, not just for new product development and process development in the region, but for actually building a lot of that stuff here as well.”

However, Muro noted state leaders still drive much of the economic development that happens at the local level, given their visibility to the general public and influence over funding.

“It is likely very difficult for a state to succeed at this game without an active, supportive state government. Even the most small-government red states in the South are all over these issues,” Muro said.

Unlike Pennsylvania, he said, competitors such as Ohio and Indiana have adopted unified visions for economic development and passed ample funding to implement them.

“It's taken for granted that states have an important role,” he said.

Shapiro won’t succumb to that pitfall, predicted Matt Smith, chief growth officer at the Allegheny Conference. He chaired Shapiro’s transition committee on economic development.

“What struck me,” Smith said Thursday, “was the level of interest from a broad array of stakeholders from across the state in moving this particular issue forward.”