Rep. wants state study on automation, closings

HARRISBURG — A Lehigh Valley lawmaker is calling for a full-scale study of the impact that workplace automation and a wave of retail store closings is having on Pennsylvania’s economy.

Rep. Mike Schlossberg, D-Lehigh, recently introduced House Resolutions 438 and 439 authorizing two economic studies on automation and store closings, respectively, by the Legislative Budget and Finance Committee.

He cited the introduction of robots and artificial intelligence as part of manufacturing processes, and the closing of stores, malls and shopping centers and shopping malls as customers buy more merchandise online, as the catalyst for his legislation.

“We need to better understand how these shifts affect Pennsylvania,” Schlossberg said. “To plan for the future, we need to understand what jobs currently anchoring communities will not exist, what new skills workers will need to compete in the changing economy, the demand for services and how tax revenue will need to change.”

Schlossberg said the studies could produce solutions to help the economy weather the changes and outline the type of education and skills needed by future workers. His legislation would create an advisory committee to consider the impact of automation.

Pennsylvania counts for more than 500,000 manufacturing workers, but if estimates by some researchers bear out, an estimated 212,000 to 280,000 manufacturing jobs could be lost due to automation during the next two decades, according to Schlossberg’s office.

Nationwide, department stores have lost 448,000 jobs since 2002, while the e-commerce sector has only added 178,000 jobs in the last 15 years, the office said.

The number of retail jobs statewide increased by an estimated 2,800 from May to June based on a sample of employers, according to the Department of Labor & Industry.

“Despite the June gain, retail jobs declined in eight of the past twelve months resulting in an over-the-year decline of 5,600 from June 2016,” said department spokeswoman Lindsay Bracale.

It can be hard to pinpoint how many retail jobs have been lost due to the recent store closings, said Mark Ryan, deputy director of the state Independent Fiscal Office.

Pennsylvania lost 8,861 manufacturing jobs and 8,768 mining jobs in 2016, according to the IFO’s Monthly Trends Report for June 2017. Pennsylvania’s health sector added more than 21,000 jobs in 2016.

While not commenting on the study proposal, the Pennsylvania Chamber of Business and Industry views government business mandates as contributing to automation.

“One-size fits all government mandates — such as minimum wage and mandated leave and scheduling policies — significantly raise costs for businesses across all industry sectors,” said Sam Denisco, chamber vice president. “As job creators struggle to comply with the impacts of these mandates, we have seen a growing trend — both on the national and state level — toward automating services as a way of streamlining services and reducing overall operating costs.”

Pennsylvania officials are considering how the shift to internet sales has impacted state sales tax revenue.

A provision in a proposed budget-related bill, approved by the Senate last month, seeks to address third-party vendors who sell goods through internet marketplaces like Amazon and eBay. The provision within that Tax Code bill, House Bill 542, would require them to pay the state sales tax. Senate Majority Leader Jake Corman, R-Centre, said this would be a way to achieve tax fairness with businesses selling merchandise in physical stores.

Schlossberg’s proposal echoes another House-commissioned study on economic changes confronting Pennsylvania more than three decades ago.

In the wake of the relatively quick collapse of the steel industry, then-House Majority Leader James Manderino, D-Westmore­land, hired an outside economist to prepare an economic recovery plan in 1983. The study outlined what were described as sunrise and sunset industries in Pennsylvania.

This study led Democratic leaders to propose a $1.3 billion economic recovery plan, dubbed PennPRIDE, that called for major government intervention to fix the economy.

The plan itself wasn’t enacted, but elements became part of a compromise economic development bond issue. The Casey administration later developed a policy of favoring targeted sunrise industries like pharmaceuticals and food processing.