This was a grim forecast for the future of the valley’s manufacturing sector. From 2000 to 2010,manufacturing employment dropped by 41.3 percent – nearly 20,000 jobs were lost.
Luckily for the two counties – Lehigh and Northampton – the health and education sector had a relative explosion,adding nearly 20,000 jobs – an increase of 36 percent.
“So,we’ve experienced the downturn,but the fact that our economy has become much more oriented toward health and education is one kind of cushion,” Lehigh University economics Professor Tom Hyclak,said.
Who has the downturn affected
A former maintenance manager for Sure Fit Inc.,a slipcover manufacturer in Lehigh,became one of the many from the manufacturing sector without a job when he was laid off in November 2007.
After 38 years of rising through the ranks from yarn boy to maintenance manager making nearly $65,000 a year,the only thing his boss,a man who had been with the company for five years,offered him was a meager severance package. While it maintained his medical and dental insurance,the package dried up in less than a year.
By 2009 he had landed another job at a pump company,but he had fallen behind on his mortgage payments to Bank of America. In March 2011,he was laid off once again and has yet to find a new job.
A lower-paid job just can’t cut it. “All the bills are set on what I used to make,” he said. “If I take anything else,I’ll have to work two jobs.”
He and his wife applied for public assistance,but were turned down,as he had been making too much to qualify. It’s frustrating that after paying in for all those years,nothing was available to help him out,he said.
Since his initial try at public assistance he hasn’t returned. It’s already embarrassing enough,he said. And while he is training for a commercial driver’s license,that is months away from becoming a money maker.
This has led to the nearly inevitable – foreclosure. Peter and his family stand on the brink of eviction from their home if something is not done by June 8.
He said he could declare bankruptcy through Title 13 of the bankruptcy law and stall the foreclosure. But before that can happen,he would need to pay a lawyer $3,600. He is worried about where he will find that money in his income from unemployment insurance. Those payments will run out in early September.
From 2006 to March 2011,bankruptcy filings in the federal bankruptcy court for the Allentown area have fluctuated from about 4,100 to 4,700 per year.
Piled on top of these financial worries,Tina has a disease known as Reflex Sympathetic Dystrophy. RSD evidences itself through swelling below the skin and extreme pain or sensitivity to even the slightest touch. Peter said it could lead to permanent immobility.
She has partial disability payments and qualifies for Medicare Part A,which pays for hospital and some other care. But the medical bills are piling up,and she may need to go to a nursing home. Peter worries about who will watch her and who will pay for her care.
The couple has three children – two live on their own,and the third,19,is training to become an emergency medical technician. The son suggested that they move in with his father’s parents – but Peter hasn’t told them about the foreclosure yet.
Unemployment v. Employment
The family is not alone. Since the onset of the recession,Lehigh Valley,like many other areas across the country,has seen years of layoffs and extended unemployment.
Unemployment rates rose from 4.9 percent in January 2007 to 10.3 percent in January 2010. That serves as testament to how painfully and swiftly the recession affected the valley. While the rate fell to 8.9 percent in January,this is nowhere near the number needed for a stable economy.
Although these rates may seem high,Hyclak said Lehigh tends to track the nation as a whole. Since 2001,the valley has never been more than half of a percentage point off the national unemployment rate.
To Hyclak this is neither bad nor good – it is what it is. On one hand,the recent recession was bad news across the board,and Lehigh didn’t escape. On the other hand,Lehigh didn’t see the major swings in unemployment that many other counties faced.
How is this possible? Hyclak said it could be due to the spread of available jobs.
Major local employers,including the Lehigh Valley Hospital Center and St. Luke’s Hospital,provide jobs for the entire gamut of pay grades. High variances in pay grades mean wider ranges of employable persons – both janitors and doctors are needed to keep a hospital running.
This is probably what accounts for such high levels of growth for the Lehigh Valley health industry. From 2007 to 2010,the health and education sector was the only one from the top four to have more jobs – growing nearly 9.3 percent.
The other three – manufacturing; trade,transportation and utilities; and professional and business services – dropped 12 percent,5.1 percent and 1.2 percent respectively.
Adding to the spread of available jobs is the area’s prime location. According to the Lehigh Valley Economic Development Corporation the county is a “one day drive to reach 1/3 of U.S. and 1/2 of Canadian consumers.” For Lehigh Valley,this means company headquarters. Two Fortune 500 companies are headquartered in the county – Air Products & Chemicals,Inc.,a manufacturer of industrial chemicals and gases,and PPL,an energy company.
Last year the top five employers in the valley were the two hospitals,Air Products,PPL and Sodexo,a food services and facilities management company.
The almighty NIZ
The valley’s largest city,Allentown,has not escaped the region’s economic turmoil.
Jennings attributes Allentown’s struggles largely to the history of zoning.
He said many older manufacturing municipalities,including Allentown,were planned and built long before the rise of zoning laws in the early 20th century. This resulted in high density,substandard housing arrangements. Substandard translates to low cost,and low costs draw poorer tenants. Poor tenants mean less money to spend at surrounding restaurants and businesses.
It’s this perpetual cycle that causes the boarded-up storefronts and business migration to the suburbs,Jennings said.
So why don’t some of Allentown’s poor residents move to suburbia and allow space for some wealthier residents to move into Allentown?
Jennings said it isn’t that simple. Though the city developed before zoning laws,the suburbs didn’t. This means that Lehigh’s suburbs can use zoning laws to make housing too expensive for poor city residents. The poverty rate is 10 times higher in Allentown than in the surrounding county,he said.
This is where the NIZ comes in,Jennings said. The NIZ provides the city with a “big ass toolbox” to kick-start the local economy. The primary tool is a $158 million multipurpose arena under construction in the heart of downtown.
T. Anthony Ianelli,president of the Greater Lehigh Valley Chamber of Commerce,said he is not sure what the effect will be,but he does expect to see something.
“I mean,there’s got to be some economic spinoff,and frankly there has been already,” he said. “We’re going to have some new office buildings,and we’ve got a number of tenants now moving downtown that wouldn’t have otherwise.”
He likened the arena’s possibilities to Coca-Cola Park,Lehigh Valley’s minor league baseball stadium. Since the park’s grand opening in 2008,it hasn’t become an economic force,but it is a “happy place.” Ianelli expects the arena to be more profitable due to its location and adaptability to many uses.
Hyclak,the Lehigh University economist,said there could be a significant amount of redevelopment and economic spillover,but it’s hardly set in stone.
“This is not the first effort to revive downtown Allentown,” he said “And this is not the first city to try to do it with tourist or entertainment-related public investments.”
In fact,numerous mid-size cities across the country have put a lot of energy and resources into similar projects. An article written by the Federal Reserve Bank of Minneapolis argues that the cost-benefit ratios are low.
But if it succeeds in Allentown,new,wealthier residents would keep the cash flow moving outside of the normal 9 to 5 business hours. “The critical thing is getting people to live there,” Hyclak said.
Reach reporter Elijah Herington at [email protected] or 202-326-9865. SHFWire stories are free to any news organization that gives the reporter a byline and credits the SHFWire.