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Economic Development in Pennsylvanias 10th District

OCTOBER 2014

Summary
Pennsylvanias 10th Congressional district covers over 6,500 square miles of land,
stretching from the Northeastern most part of the state across to the north central area of
the state. It encompasses Bradford, Juniata, Lycoming, Mifflin, Pike, Snyder, Sullivan,
Susquehanna, Union and Wayne counties and parts of Lackawanna, Monroe,
Northumberland, Perry and Tioga counties.
As of August 2014, the unemployment rate in Pennsylvanias 10th district was 6.3%,
compared to the state rate of 6.1%.1 Nationally, the unemployment rate fell to 5.9% in
September 2014.2 The growth rate in private, non-agricultural employment, from 1998 to
2012, has been 0.28%, compared to a growth rate of 0.44% in the state.3 According to
2012 data, the annual average private wage was $27,980 and the poverty rate was 13.96%
and rising.4 In the state, according to 2012 data, the annual average private wage was
$44,768 and the poverty rate was 13.70% and rising.5 Pennsylvanias 10th district is
underperforming compared to the rest of the state, in all areas, from unemployment to
poverty.
Overall, many residents are struggling with unemployment, underemployment, and
insufficient wages; they are unable to provide for themselves or their families as they
desire. These economic problems have harmful ripple effects for the rest of the region and
country, as these residents are less likely to drive consumer demand by spending money at
local businesses, and are more likely to drive government spending by relying on public
assistance programs.
Accelerating economic growth to create jobs and boost wages should be a top public
policy priority of our U.S. Representative. A previous paper on the economy addressed
actions the federal government can take to enhance overall growth; this paper is
specifically focused on the challenges and opportunities in Pennsylvanias 10th District,
based on existing research and over a dozen interviews with industry experts in the
district.
Pennsylvanias 10th district has unique opportunities for economic development, primarily
because of its relatively lowtax business environment, abundant natural resources, and
beautiful rural landscape. The district also faces some related challenges including lack of
infrastructure and unrealized or insufficient human capital, along with more general
obstacles of unnecessary government regulation, uncoordinated and parochial
development efforts, and weak political influence in attracting public investment.
These opportunities and challenges will be examined in the context of three high-potential
industries within the district: agriculture, eco-tourism, and natural gas.

Pennsylvanias Tenth District. The Reinvestment Fund. Policy Map. My District data.
The Employment Situation September 2014. Bureau of Labor Statistics. Oct. 3, 2014.
3
U.S. Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School. PA-10.
4
Ibid.
5
Ibid.
2

Industries
Agriculture
Agriculture has always been one of the backbones of the American economy, including in
Pennsylvanias 10th district. In the 15 counties that make up the 10th district, as of 2009
data, there were a total of 11,587 farms.6 Agriculture can encompass a wide variety of
activities, but this section focuses on crop production and animal production.
Lackawanna, Lycoming, Mifflin, Monroe, Northumberland, Perry, Snyder, and Union
counties all have active crop producing industries, with Northumberland and Lycoming
counties being the top two crop producers in the district.7 With regard to animal
production, Bradford, Juniata, Lycoming, Mifflin, Monroe, Northumberland, Perry,
Snyder, Tioga, and Union counties all have active producers, with Juniata and
Northumberland counties being the top two producers.8 As a point of clarification about
the data, the BLS data is only for farms that operate professionally. Small family farms
that are not used as a primary source of income are not included in the analysis.
Agricultural production, specifically farming, has changed greatly over the past century.
In the beginning of the 20th century over 41% of the American workforce was employed
in agriculture, but by the turn of the 21st century, less than 2% of the U.S. labor force was
employed in agriculture.9 This drastic decrease was the result of the industry moving from
small family farms that used labor as the major input to large-scale farms that took
advantage of economies of scale and began to substitute more capital for labor.
During the 1930s, the U.S. federal government began to intervene in the agriculture
industry in order to make sure production remained sufficient during the Great
Depression. Since that time, the government has had an active hand in assisting farmers
through what are colloquially called Farm Bills. Until the most recent iteration, which was
passed earlier this year, the U.S. government subsidized farmers production of certain
crops through direct payments for crop or income loss.10
The largest change in the governments policy in the new Farm Bill was the abolition of
direct subsidies. To replace the program, Congress decided to subsidize crop insurance.
As a result, farmers being able to purchase insurance will mitigate the risk associated with
farming.11 For Pennsylvania farmers, the new Farm Bill decreases the personal risks
associated with farming, especially those that grow crops such as corn. Without the
insurance, farmers would produce less and choose to save in order to have a safety net if a
failure were to occur. If a farmer buys subsidized insurance because they can now afford
it, they will be able to plant and produce at a higher level because they know they are
protected from risk.

6

Pennsylvania: Farm Numbers, Land In Farms, Average Size and Land Area, 2009. USDA, National Agricultural Statistics Service. 2010.

Quarterly Census of Employment and Wages. Bureau of Labor Statistics. 2013.


Ibid.
Dimitri et. al. The 20th Century Transformation of the US Agriculture and Farm Policy. USDA. 2005.
10
Ibid.
11
Desjardins, Lisa. 5 Things the Farm Bill Will Mean for You. CNN Politics. Feb. 2014.; Curry, Tom. Farm bills effects to be felt
far and wide. NBC News. Feb. 2014.
8
9

Local communities in the 10th district are predominately made up of small yet increasingly
specialized family farms that are struggling to make ends meet. Cookie-cutter regulations
on a state and federal level inhibit farmers ability to adequately develop and protect their
properties. Participation in agricultural cooperatives, whereby farmers essentially
purchase their materials at a retail level and sell their products at a wholesale level,
exercise price controls that are producing diminishing returns. At the same time, the
proliferation of larger industrial farms is making it more difficult to compete in the
marketplace.
As a result, farmers and their families are experiencing significant hardship, and many
lack adequate health care coverage and retirement savings. The number of farms has
declined, it's been hard for a lot of farmers to make a profit, and many young people don't
want to take over the family farm from their parents, said Dan Rhodes, education
coordinator for the Bradford County Conservation District.12 If this hardship continues
and worsens, it will not only pose a challenge to the 10th districts economy, but also our
societys ability to provide for itself. As one local farmer commented, Everyone takes for
granted where their food comes from.
Eco-Tourism
Tourism is a major economic driver in Pennsylvanias 10th district. Most of this tourism is
eco-tourism, focused on the beautiful landscapes and nature in the region. The
Pennsylvania Visitors Bureau divides the state into 11 distinct tourism regions.13 The 10th
district includes counties in six of these regions. The first region is the Pocono Mountains,
which contains Wayne, Pike, and Monroe counties, and is known for its mountains and
the Delaware River.
The next region is Upstate Pennsylvania, which includes Lackawanna, Susquehanna,
Bradford, and Sullivan counties, and is home to multiple wooded mountains and state
parks. The Pennsylvania Wilds region includes Lycoming and Tioga counties, which
attracts those interested in wildlife that is native to northern Pennsylvania.
To the south of Lycoming County, visitors enter Northumberland, Union, and Snyder
counties, which are part of the Valleys of the Susquehanna tourism region. This region is
home to rolling hills and historic towns such as Lewisburg and Milton. Mifflin and Juniata
counties are part of the Alleghenies tourism region, which is focused on the natural beauty
and recreational activities associated with the Juniata River, as well as almost 12,000 acres
of State Gamelands that attract hunters from all around. Lastly, Perry County extends into
the Dutch Country Roads tourism region, which includes many state parks, including
Little Buffalo State Park.
All of these tourism opportunities are essential to the local economy, specifically in
providing revenue and jobs. According to a report by Tourism Economics for the
Pennsylvania Visitors Bureau, tourism industry spending was over $4.5 billion in the

12

Loewenstein, James. Helping local agriculture prosper: Agriculture Coalition of Bradford County working to protect and grow local
agriculture industry. The Daily Review. March 28, 2013.
Pennsylvania Region and City Map. Pennsylvania Department of Community and Economic Development. 2014.

13

counties of the 10th district, during the 2012 calendar year.14 In 2012, the hospitality and
tourism industry employed 12,642,15 while another report found that over 35,000 jobs in
these counties were related to the tourism industry.16
The money spent on tourism goes to multiple sources. Most importantly, the largest
portion of the money (between 18% and 19%) becomes income for the people who work
in tourism related industries.17 In turn, this income creates a multiplying effect that drives
and grows the local economy. In addition to labor income, some of the revenue generated
by tourism related industries becomes tax revenue for the local, state, and federal
government. In 2012, federal tax revenue from the tourism industry in the 10th district was
equal to almost $225 million.18 During the same year, state and local tax revenues from
tourism in the district totaled just under $260 million.19 Some of these taxes, such as local
room tax, are reinvested in programs that are directly associated with the tourism industry
and help maintain its competitiveness, which is the largest challenge for the industry.20
Maintaining competitiveness to attract more visitors is critical to all local economies in the
10th district, but is especially important in the Pocono Mountains region. This area sees the
largest share of tourism industry spending revenue in the district.21 Further, in 2012, the
region had the highest proportion of labor income (47.9%) and employment (34.9%)
supported by the tourism industry, in the whole state.22 Inherent challenges in the tourism
industry include its largely seasonal nature and dependence on consumers disposable
income, which is disproportionately impacted in economic downturns.
Natural Gas
The Marcellus Shale formation, a sedimentary rock buried thousands of feet beneath
ground, stretches from upstate New York to Ohio, passing through Pennsylvania and West
Virginia. Natural gas, a byproduct of decomposition, is trapped in tiny spaces and fissures
within the rock.23
Natural gas development in the district has significantly benefited the local economy and
helped many counties weather the storm of the economic recession.
In Pennsylvanias 10th district, Marcellus Shale exists in all 15 counties, but only five
currently have active wells.24
Bradford County: 1,071 active wells (highest in the state)
Susquehanna County: 957 active wells (3rd highest in the state)
Lycoming County: 788 active wells (4th highest in the state)
Tioga County: 640 active wells (6th highest in the state)

14

The Economic Impact of Travel and Tourism in Pennsylvania. Tourism Economics. Dec. 2013.
U.S. Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School. PA-10.
16
The Economic Impact of Travel and Tourism in Pennsylvania. Tourism Economics. Dec. 2013.
17
Ibid.
18
Ibid.
19
Ibid.
20
60.16 Local Sales, Use and Hotel Occupancy Tax. The Pennsylvania Code.
21
The Economic Impact of Travel and Tourism in Pennsylvania. Tourism Economics. Dec. 2013.
22
Ibid.
23
The Marcellus Shale, Explained. State Impact Pennsylvania. NPR.
24
Pennsylvania Counties With Active Wells. State Impact Pennsylvania. NPR.
15

Sullivan County: 68 active wells (14th highest in the state)

Directly, the industry has created new jobs, increased demand for existing products and
services, and altogether catalyzed new businesses, such as businesses that clean the
drilling rigs and recycle the wastewater. In 2012, oil and gas production and transportation
employed 4,056, compared to only 210 in 1998.25 In the span of 14 years, 3,846 jobs were
created in the district.26 Indirectly, the industry has stimulated economic activity through
consumer spending and the lease and royalty payments paid to local landowners.
It is estimated that further development is expected to contribute $42.4 billion annually to
Pennsylvanias economy by 2035, according to HIS Global Insight.27 Researcher Anna
Woodrum said, We have seen in communities across all five states increased retail and
food consumption, higher educational enrollment rates and larger tax revenues via
severance and property taxes in the first couple years of drilling.28
However, the natural gas industry has presented many challenges to the community, only
some of which have been properly mitigated. A top challenge and concern is the
environmental impact of the drilling process (hydraulic fracturing), gas extraction, and gas
transportation.
These counties also have some of the highest numbers of regulatory violations.29

Susquehanna County: 776 violations (highest in the state)


Bradford County: 759 violations (2nd highest in the state)
Lycoming County: 591 violations (3rd highest in the state)
Tioga County: 497 violations (4th highest in the state)
Sullivan County: 84 violations (9th highest in the state)

The top five most common violations include failure to properly store, transport, process
or dispose of a residual waste; violating a permit; failure to minimize accelerated erosion
and stabilize site; failure to adopt pollution prevention measures required or prescribed by
DEP by handling materials that create a danger of pollution; and failure to properly
control or dispose of industrial or residual waste to prevent pollution of the waters of the
Commonwealth.30
Possible contamination of drinking water and air quality are the largest issues and are the
subject of ongoing studies by the Environmental Protection Agency (EPA) and other
organizations. Bradford County was chosen as a case study in a 2011 EPA environmental
impact study because of homeowner complaints about the appearance, odor, and possible
health impacts associated with water coming from wells.31
In addition to putting local residents as risk, this environmental impact has a dampening
effect on another major driver of the local economy, eco-tourism.

25

U.S. Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School. PA-10.
Ibid.
27
Handley. Meg. An Energy Lifeline: Fracking a Game-Changer for U.S. Economy. U.S. News and World Report. Jan. 3, 2013.
28
Remington, Chris. Differing views on frackings impact. PBS. April 24, 2013.
29
Pennsylvania Counties With Active Wells. State Impact Pennsylvania. NPR.
30
Violations. State Impact Pennsylvania. NPR.
31
Study of the Potential Impacts of Hydraulic Fracturing on Drinking Water Resources. Progress Report. EPA. December 2012.
26

Other challenges associated with the natural gas industry include the boom and bust cycle
associated with development, whereby industry quickly enters and then leaves, as prices
rise and fall. This uncertainty and fluctuation is not conducive to sustainable growth and
planning.
Nicks Plan
Before diving into specific federal policies that can support the 10th districts high
potential industries, it should first be acknowledged that state and local governments have
the most influence in these areas. Of course, the federal government can and should play a
supportive role through proper resource allocation, coordination, and regulation.
Further, a growing national economy will generally benefit the 10th district, too. Key
proposals in Nick Troianos Getting Our Economy Working Again32 paper included
stopping manufactured political crises to boost business investment, reducing unnecessary
regulations to lessen the burden on entrepreneurs, reforming our tax code to increase our
countrys economic competitiveness, and protecting investments in education,
infrastructure, and research to enhance human and physical capital.
Finally, a U.S. Representative can support local economic growth beyond particular
legislation. Nick Troianos Improving Constituent Services paper, for example, calls for
the hiring of an economic development coordinator who will work with local businesses,
municipal governments, economic development organizations, and individuals to identify
opportunities for supporting small business, attracting new industry, and improving basic
infrastructure particularly where federal resources can be brought to bear.
Agriculture
Local farms play a vital role in food and animal production well beyond the 10th district,
so it is essential that these farmers receive the support they need to continue their hard
work, are able to make a decent living, and can sustain their farming operations for
generations to come.
The greatest role the federal government plays is in the drafting and passage of so-called
Farm Bills. Additionally, a Congressional office can provide necessary information about
relevant federal legislation to local communities and organizations, such as conservation
groups and farm bureaus. It can coordinate with these organizations to help create a larger
plan for counties in the district to protect and enhance agriculture, including a marketing
study to show the product demands of local residents.
A U.S. Representative can also help educate the public about the role family farms play in
feeding our society and, by elevating the role of the farmer in our community and helping
remove any negative stigma associated with young people going into farming as a
profession.


32

Visit: www.NickTroiano.com/economy

Congress should:

Continue to support crop insurance subsidies rather than direct payments, thereby
removing government intrusion and allowing market mechanisms to be the driving
force of the agricultural economy;
Reduce agricultural subsidies that go to well-off factory farms and instead
targeting support to small, local farmers;
Eliminate or streamline one-size-fits-all regulations that prevent farmers from
improving or protecting their land;
Provide support for farmers that desire to become energy independent through
renewable fuels, such as anaerobic digestion;
Enact greater conservation practices to protect farmland and mitigate issues such
as soil erosion;

Eco-Tourism
The federal government traditionally played a role in eco-tourism with respect to
planning, regulation, promotion, and monitoring. Beyond particular policies, a U.S.
Representative can serve as a resource for state and local agencies to help with better
coordination and efficiency. It can also help develop a framework for measuring tourism
in the region by identifying core and supplementary indicators, such as tourism
performance and impacts, among others.33
Congress should:

Encourage promotion of eco-tourism on federal lands with public-private


partnerships through agencies including the National Park Service, National Forest
Service, U.S. Fish and Wildlife Service, and Bureau of Land Management;
Remove or streamline regulations that unnecessarily restrict eco-tourism
opportunities;
Invest in infrastructure to ensure that high quality transportation options are
available to facilitate eco-tourism in the 10th district;
o For example, parts of the 10th district are mere hours from major urban
centers such as New York City and Philadelphia, which combined have
populations totaling more than 10 million.34
Aid in the creation of a more exhaustive and integrated data system to provide
information about tourism trends, including spending patterns and federal revenue
figures;
o This would allow for more transparency and facilitate more evidence-based
decision-making

Natural Gas
Expanding and accelerating natural gas development in the 10th district will spur greater
growth throughout our local and regional economy; it will also help achieve national goals

33
34

Dupeyras, Alain. Measuring Competitiveness in Tourism: the OECD perspective. OECD. 2014.
Population Estimates. U.S. Census Bureau. 2013.

in transitioning away from dirtier sources of fossil fuels and becoming domestically
energy secure. But we must work to better ensure that this development is
environmentally safe, with regard to protecting our air and water, and economically
sustainable, with regard to maintaining or growing consumer demand.
Congress should:
Ensure environmental safety by:

Requiring the disclosure the amount and type of chemicals used before, during,
and after the hydraulic fracturing process;
Removing the exemptions that exist in federal policies that regulate the industry;
o For example, in 2005 the Energy Policy Act amended the definition of
underground injection in the Safe Drinking Water Act (SDWA) to
specifically exclude the underground injection of fluids or propping
agents (other than diesel fuels) pursuant to hydraulic fracturing operations
related to oil, gas, or geothermal production activities.35 An exemption
also exists in the Clean Water Act (CWA) where oil and gas drilling
activities are exempt from the regulations governing storm water
discharges.36
Requiring the submission of a cement bond log, a record of data to test the quality
of cement injected around a wellbore, to the Bureau of Land Management to
ensure precautions are in place to prevent fluids from entering the water supply;

Ensure economic sustainability by:

Continuing investments in infrastructure, specifically for pipelines;


o For example, the U.S. Department of Transportation Pipeline and
Hazardous Materials Safety Administration have provided federal funding
to states to develop, support, and maintain gas and hazardous liquid
pipeline safety programs.37
Supporting research and development of natural gas vehicles;
o A report from the Bipartisan Policy Center found that natural gas vehicles
stand to make significant gains in market share by 2030.38 If demand for
natural gas were increased beyond current uses, increased production
would be a boon to local economies.
Growing natural gas exports, which would stimulate economic growth
o A study from National Economic Research Associates found that with
higher levels of exports there is an increase in U.S. households real
income and welfare.39
o Currently, the U.S. lacks facilities for liquefied natural gas (LNG) exports,
but federal regulators have the ability to allow the creation of such facilities


35
36
37

38
39

Fracking. Federal Law: Loopholes & Exemptions. Environmental Defense Center. 2011.
Ibid.
Heitkamp, Heidi. Heitkamp Announces Significant Federal Funding to Support Statewide Pipeline Safety Programs. Sept. 19, 2014.

Natural Gas Vehicles Gaining Traction. PIRA Energy Group. August 27, 2012.
Macroeconomic Impacts of LNG Exports from the United States. NERA. Dec. 3, 2012.

so the Department of Energy should accelerate the approval of pending


applications.40
Other
There are other opportunities for the 10th district congressional office and U.S.
Representative to assist and support local and regional economic growth by focusing on
ways to:

Increase the availability of vocational and technical education and training in parts
of the district currently without access;
Foster a greater connection between local economic demands and secondary and
higher education within the district;
o e.g. Promoting an annual economic survey and summit of educational and
industry leaders
Provide additional support for those trying to start or sustain small businesses;
o e.g. Leveraging using congressional office staff and resources
Encourage a more regional and less parochial approach to soliciting and attracting
new industry and business to the district;
o i.e. Leveraging the reach and access of the congressional office


40

Mufson, Steven. The natural gas revolution reversing LNG tanker trade. The Washington Post. Dec. 7, 2012.