A new study from the Federal Reserve Bank of Philadelphia studied 13 smaller cities in the region to answer how they can rebound after losing a manufacturing-based economy.
View full sizeBethlehem's post-industrial economy is among the region's best while Allentown ranks in the lower half, a new study from the Federal Reserve Bank of Philadelphia has found.Fed visiting scholar Alan Mallach studied 13 smaller cities surrounding Philadelphia and named Bethlehem as a rebounding city — his highest ranking — and Allentown a coping city, the second-lowest ranking. Easton was not part of the study because Mallach looked only at cities that had at least 50,000 people in 1950.
Mallach, who has researched economic development for more than 40 years, hopes his study will help answer how smaller cities can rebound after losing a manufacturing-based economy, as all the cities in his “In Philadelphia’s Shadow” study did.
“We’re really trying to drill down around the questions as to what works to rebuild a small city’s economy,” he said.
But sometimes what works for one city doesn’t work for another, Mallach said. While Lehigh University has been a major asset for Bethlehem, Widener University in Chester, Pa. and Rutgers University in Camden have done little to boost their cities, Mallach said.
Casinos, arenas have mixed results
Another disparity is how major anchor attractions, such as casinos and sports arenas, assist in the economic recovery of smaller cities, Mallach said.
While Mallach said he doesn’t usually support casinos as an economic development tool, Bethlehem has had success with Sands Casino Resort Bethlehem because of the city’s proximity to New York and New Jersey and a sufficient local work force to staff it.
Mallach noted that in spite of losing 80 percent of its manufacturing jobs since the 1950s, Bethlehem scores better than almost all cities in his study on most measures of prosperity, including high household income levels and home values.
Mallach advised that Bethlehem continue on its path of redevelopment through tourism, the arts and private investment.
“The whole Bethlehem Steel thing is still a work in progress,” he said. “They have many more years and many more pieces to go before they declare ‘mission accomplished.’”
Bouncing back from enormous loss
Bethlehem Mayor John Callahan said he is proud to receive the recognition, especially in light of the city’s major loss of Bethlehem Steel, which stopped its local steel making in the 1990s.
Fellow ‘rebounding’ cities of Lancaster, Pa., and Wilmington, Del., may also be doing well but “they haven’t gone through what the city of Bethlehem went through as far as a loss of enormous industry.”
“There are very few cities that have weathered a blow like that and have come back,” Callahan said. “It’s nice to be called out as a city that’s headed in the right direction.”
Mallach doesn’t hold as high hopes for Allentown’s hockey arena. A city needs much more than a sports arena to succeed, he said, pointing to Reading, Pa., which has a hockey arena but was among his lowest-ranking cities.
Allentown needs a mix, study says
Allentown’s hockey arena needs to be coupled with new downtown housing and middle-class jobs instead of only service-sector jobs, Mallach said.
Allentown Mayor Ed Pawlowski said both of those components are part of the city’s redevelopment plan, which he, too, agrees has to contain much more than just the arena. There are already plans under way to bring hundreds if not thousands of new office jobs downtown on top of the arena development, he said.
“You can’t look at it and say ‘housing is the answer or office buildings.’ If any of those pieces don’t exist, it can stall the synergy for a while,” Pawlowski said. “Those cities that can put the pieces together and figure it out are the ones that thrive. We’re a little bit behind the game but we’re putting the pieces together.”
Allentown’s slower redevelopment compared to Bethlehem’s was noted by people Mallach interviewed, including one Allentown business official who told him “downtown Bethlehem is eating Allentown’s lunch.”
“Allentown has relied on this past prominence and been slow to devise new development strategies,” Mallach noted in his study. “If Allentown is to maintain its role as regional hub, and its ability to employ its ever-growing population, the city must revitalize now.”
CASTING A SHADOW
“In Philadelphia’s Shadow: Small Cities in the Third Federal Reserve District” ranked 13 Philadelphia-area small cities on economic vitality:
Rebounding cities: Bethlehem; Wilmington, Del.; Lancaster
Declining-but-stable cities: Altoona, Pa.; Scranton; Wilkes-Barre
Coping cities: Allentown; York, Pa.; Harrisburg
Struggling cities: Trenton; Reading; Camden; Chester, Pa.