Four Reasons Why: Pennsylvania Should Invest in Tech Innovation
Updated: Jul 22, 2020
By RoseAnn B. Rosenthal, President and CEO
For more than 35 years, Ben Franklin Technology Partners has served as the gold standard of tech-based economic development. However, despite our success, state funding for Ben Franklin has dropped more than 50 percent since 2007-08, from roughly $28 million per year to $14 million per year.
The impact of that reduction will be felt by deserving enterprises seeking seed capital to launch and grow their advanced technology enterprises, by the communities in which they reside and, ultimately, by the Commonwealth. Because of Ben Franklin, Pennsylvania once led in technology-based economic development. But we are now falling behind other states that are investing aggressively, and in many cases, deploying the lessons learned and approaches perfected by the Ben Franklin Partnership over the years. If we are to regain our competitive strength, we have to reverse the current downward trend by making support for homegrown innovation in Pennsylvania a budgetary priority, starting now.
Based on a recent analysis of economic impacts of Ben Franklin, here are four reasons why Pennsylvania should invest in growing its innovation economy:
1. Ben Franklin Investments Pay Dividends: Ben Franklin Technology Partners’ investments generate $3.90 in additional PA tax revenue for every state dollar invested. The program boosted Pennsylvania’s economy (Gross State Product) by $4.1 billion. That’s an excellent return on investment for our commonwealth.
However, even though Ben Franklin maintains its high commitment to efficient operations, and continues to generate results even in the face of such drastic reductions from the state, competition is fierce. Other states have adopted technology-based economic development programs of their own. Among the 12 most competitive states in this sector, their spending is now nearly triple Pennsylvania’s.
2. Ben Franklin Lifts PA’s Tax Base: Pennsylvania received $350 million in additional tax receipts as a direct result of Ben Franklin investments in client firms. Another $36 million in state tax receipts flowed from related Ben Franklin client services, for a total of $386 million.
Client revenues, purchasing, and investments rippled throughout the Pennsylvania economy, giving rise to higher employment across the state. Ben Franklin generated an additional 7,225 spinoff jobs beyond the 4,182 in client firms for a total of 11,407 new Pennsylvania jobs. That leads me to my next point…
3. Ben Franklin Creates High-Paying Jobs: Ben Franklin investments generated 4,182 jobs in client firms. These jobs are in industries that pay average annual salaries of $79,364 per year --- 52 percent higher than the average private nonfarm salary in Pennsylvania. Those are the kinds of jobs that young people seek to keep them working here.
Regional economies that stress innovation and create well-paying, sustainable jobs must be fed by grants and nurtured by expert hands. We simply cannot afford to fall behind other states in this competition. Once we lose employers, the jobs they create, and the residents to fill those positions, it’s nearly impossible to draw them back to Pennsylvania. What we risk losing, we risk losing forever.
4. Ben Franklin Works for PA: Client revenues, purchasing, and investments rippled throughout the Pennsylvania economy, giving rise to higher employment across the state. We LIVE with our investments beyond the concept stage, until they are established. That requires more than just an initial financing; it requires coaching, resources, planning, and more. All of those essential services are why Ben Franklin is a leader in innovation and growth.
As our elected leaders deliberate on the appropriate allocation of scarce public resources, I urge them to consider the long-term consequences of their decisions, and the messages being sent by those decisions.
Is Pennsylvania investing in its future? Are we taking steps to foster the enterprises of the future that will offer employment opportunities for a trained and educated population? Are we willing to help support, with private investors, the creation of those emerging enterprises that will open new markets and attract new talent and investment to Pennsylvania?
Are we willing to invest in our own future, by supporting Pennsylvania’s homegrown talent across the Commonwealth?