Pennsylvania Losing Out to Neighboring States
Pennsylvania’s nickname of the Keystone State, as variously reported, originates with the deciding vote for independence by a Pennsylvania member of the Continental Congress or in the commonwealth’s central location among the 13 colonies.
The state’s prominence continued through the 19th and 20th centuries when its oil, coal and manufacturing prowess were major economic forces. Today, with Pennsylvania situated in the nation’s most densely populated region, the commonwealth’s geography and resources continue to enhance its national role.
Yet if modern Penn’s Woods is to live up to its heritage, it needs to do better. Matching the superior performance of neighboring states like Ohio and West Virginia and repairing its reputation for a challenging business climate would be a good start.
Population loss has been a persistent symptom of Pennsylvania’s struggles. The state’s rural population “is declining at a rate faster than projected,” according to a 2024 report from the Center for Rural Pennsylvania. Forty-two of its 67 counties and more than 1,700 of its 2,400 incorporated communities reported more people leaving than arriving between 2020 and 2023, reports the U.S. Census Bureau.
Meanwhile, after more than a century of steady decline, West Virginia’s population has registered net in-migration for the first time, reports the American Legislative Exchange Council (ALEC). In addition, the Mountain State has climbed over the last two decades from a lowly 38th place in ALEC’s index for economic outlook to 16th, as Pennsylvania languishes at 36th. (Ohio ranks 25th.)
West Virginia Gov. Patrick Morrisey’s “Backyard Brawl” — which includes robust energy policies, infrastructure improvements, spending cuts and regulatory reform — has helped the state outpace others economically.
A contrast to Morrisey is Pennsylvania Gov. Josh Shapiro, whose inclination is to spend big, tax more, kowtow to public sector union leaders, and pick winners and losers in the marketplace.
Equally disturbing, the budget proposal does not address the stifling effect imposed on businesses by the state’s 164,000 regulations — the 14th most nationally, according to the Mercatus Center. Eliminating unnecessary rules could go a long way in improving the business climate.
However, the governor’s instinct is to add to government intervention rather than subtract. Famously saying that he was “sick and tired of losing to Ohio,” the governor’s conventional response is to propose corporate welfare programs to attract specific industries.
Regrettably, the governor misses opportunities to help key businesses — such as coal, natural gas and steel — through reasonable bipartisan governance.
Many expect the much-heralded investment of Japan’s Nippon Steel in Pittsburgh-based U.S. Steel to be a boon to Pennsylvania. However, the deal may not even have been necessary had the domestic company been able to get timely approval of permits for $1.5 billion in upgrades at an Allegheny County plant. Instead, U.S. Steel canceled the Pennsylvania project as it proceeded with the construction of a $3 billion state-of-the-art facility in Arkansas.
Rachel Gleason of the Pennsylvania Coal Alliance speaks for many industries when she lists “overregulation and permitting roadblocks” among her organization’s top concerns. There is a need for “fewer bureaucratic and politically motivated state and federal agencies,” she says.
Rational opportunities to kick-start the Keystone State are numerous — if only its leaders would take them.
Gordon Tomb is a senior fellow with the Commonwealth Foundation.
