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One study not enough

January 08, 1997

January 010, 1997

In the last five years Pennsylvania has lost 510 companies and 6,500 jobs, the fifth-worst record in America, according to a study released this week by Dun & Bradstreet, a New Jersey-based business information company. Both political parties issued quick statements - the Democrats calling it a sign that Gov. Tom Ridge's economic-development plans have failed and Republicans calling the study "100 percent false."

If you like simple answers, we're sorry, but the subject is more complicated than anyone suggests. Both sides are wrong in their premature conclusions about what the study means.

How can we be sure? Because of the way the study was done. Dun & Bradstreet officials compared addresses of companies over a five-year period. Companies which listed a Pennsylvania address in 1991 and an address in another state in 1995 were counted as companies lost. In the same way, companies whose address changed from (for example) New York to Pennsylvania were counted as companies and jobs gained.

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Dun & Bradstreet officials admitted their study doesn't measure growth of existing companies or the start-up of new ones. But a study based solely on addresses won't note that a company can move its corporate headquarters from one state to another (as Allegheny Power recently did) without necessarily moving a great number of jobs.

That said, however, there probably is some job movement out of Pennsylvania. But using this study as anything but a wake-up call would be foolish.

What Pennsylvania officials need to do is survey the firms that left and ask them why. Did Ridge's package of business tax cuts, enacted in the last two years to benefit bigger businesses, come to late to prevent these job losses? Or was it, as Democrats suggest, aversion to the state's 2.8 percent personal income-tax rate, already one of the country's lowest?

Whatever the answer, this one study won't provide it. The citizens of Pennsylvania would be better served by elected officials who work together to find answers than by those who take every opportunity to score points on each other.

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