Economic outlook for Cumberland, Dauphin, Franklin Counties ‘very encouraging’

Thomas A. Barstow, Contributing Writer//September 9, 2020

Economic outlook for Cumberland, Dauphin, Franklin Counties ‘very encouraging’

Thomas A. Barstow, Contributing Writer//September 9, 2020

In Franklin County, business leaders have been trying to find ways to boost economic activity during the pandemic, even leaning into the crisis to support opportunities.

For example, a major manufacturer is looking to deepen its local supply chain management, said L. Michael Ross, president of the Franklin County Area Development Corp.

“We think that is very encouraging,” Ross said.

Worldwide, supply chains were interrupted by the various shutdowns and prolonged closures that touched, in one way or another, every business, especially when it came to getting the materials or goods they needed to either make their products or sell them. The idea that the crisis might lead to more companies looking locally, rather than to other countries or regions for those supplies and services, might mean a long-term boost to numerous businesses, Ross and others said.

“They can take over and have more control and better pricing,” Ross said.

That is just one way that business leaders in Dauphin, Cumberland and Franklin counties have been working to move forward this fall and into 2021 without having to wait for a vaccine that could bring jobs back full throttle. In June, the unemployment rate for Cumberland County was 10.3%, while it was 11.6% in Franklin County and 13.3% in Dauphin County, said Jesse McCree, CEO of the South Central Workforce Development Board, or SCPa Works. The workforce development board serves those counties as part of a larger region that also includes Adams, Juniata, Lebanon, Perry and York counties. For the overall region, the unemployment rate was 11.9%.

A year ago, the unemployment rate was hovering around 4 percent or lower in Dauphin, Cumberland and Franklin counties, so the spike caused by COVID-19 needs to be viewed with an eye to the future, McCree and others said. The big questions that remain are what industries will bounce back first and which ones will be slow to recover.

And this downturn is unique and not like the last one more than 10 years ago, said David Black, president and CEO of the Harrisburg Regional Chamber and CREDC.

“Underlying this pandemic, I think there is a very hot economy,” Black said. “It’s not like what we saw in the big recession. This is kind of an artificial recession.” McCree, Ross, Black and Jamie Keener, CEO of the Cumberland Area Economic Development Corp., said that construction, warehousing and logistics companies have weathered the crisis better than other industries. A number of businesses in those sectors continue to look for workers, sometimes paying wages of $15-$17 per hour or more, Keener pointed out.

Healthcare and nursing have been coming back strong as elective procedures resume, and the expectation is that worker shortfalls in healthcare before the pandemic will become acute once again. But other industries — such as hospitality, bars and restaurants — likely will take years to recover, McCree said. So far, the data shows that the top five industries hurt the most are accommodations, food services, arts and entertainment, retail trades and administrative services, he said.

Franklin, Dauphin and Cumberland counties also have Interstate 81, which was a boon to the local economies before and during the pandemic and is likely to remain so, the experts said. The pandemic has not changed the fact that central Pennsylvania still is within a few hours of major cities and transportation hubs along the East Coast, making it attractive to companies that need that access.

“One thing that the pandemic has not changed is that Central Pennsylvania is still a great place to live and work,” McCree said. Th at is one reason why he is excited about possible moves to beef up supply chain and logistics avenues along the interstate.

“These conversations are exciting for our region,” McCree said.

Black said that, anecdotally, there is a lot of talk about the benefits of moving production back to the U.S. and that the country had been too reliant on China and other countries for too long.

“American ingenuity will sell,” he said.

McCree and others cautioned that no one can predict what will happen, especially since the full impact of the shutdowns still isn’t known. “We are not sure what the labor market will look like until the unemployment benefits are either extended long term or taken away,” McCree said. The other obvious factor is the timing
of a vaccine, he and others said. And the unemployment statistics don’t capture who is no longer looking for work or who has gone part-time or otherwise is working at reduced benefits or wages, he added.

“The big concern is that we are not seeing the full picture,” McCree said.

As government unemployment assistance dries up, some people working in hard-hit industries might decide to take jobs in sectors that they previously wouldn’t have considered but that are currently hiring, Black said. “If my job isn’t going to come back no matter what, maybe I need to start looking elsewhere.”

Signs of hope

Companies that started hiring in the region over the summer were looking for retail sales clerks, stockers, registered nurses, truck drivers and fast-food workers, McCree said. Hopeful signs can be seen with the various construction projects throughout the counties. And construction companies are among those who are still hiring, he added.

Ross pointed out that interest in residential real estate remains high because of companies shifting to work-at-home rules. He sees Franklin County benefiting from that trend as workers in larger cities in Maryland or even Washington, D.C., realize they can get a home office by buying north across the Pennsylvania line. That dynamic would be a natural extension of a regional marketing agreement with communities along I-81 in northern West Virginia and western Maryland that already cooperate with Franklin County, Ross said.

Keener agreed that residential sales and construction could accelerate through the pandemic and beyond. And he would like to see a diversification in housing stock. For now, though, the market has been strong.

“Residential is hot,” Keener said. “If it is priced right, it is not on the market for more than a week.”

But the flip side is that the fate of commercial office space isn’t clear. Cumberland County, with its proximity to the state capital in Harrisburg, has a large share of office properties. One idea has been for municipalities to develop tools and the flexibility that would allow the conversion of office buildings into residential units. A model for that thinking would be the conversion of the old Lemoyne Middle School into residential units, a project that started before the pandemic, Keener said.

Another way business leaders have helped is by supporting marketing programs targeting people who live within a few hours drive for an overnight stay or a weekend trip. Such efforts would especially boost areas where colleges have not re-opened, such as Dickinson College in Carlisle that went to remote learning for the fall semester, Keener said.

Black noted that the hotel industry has slowly been getting better. Occupancy rates were at 17 percent at the height of the pandemic but were hitting 46 percent by the middle of the summer. While those numbers still are not great, Black said, “that is trending in the right direction.”

Keener, Black and Ross said that they think it is possible that by this time next year the pre-pandemic problems could be back — namely employment was so tight that everyone was having trouble finding workers.

“And I would rather have that problem than the 10 percent unemployment we have now,” Keener said.