10-02-2025
Erie economy is growing, but slowly. What's changed in the past 40 years
Ken Louie, a professor of economics at Penn State Behrend, has been following the Erie economy since he arrived in town for a job interview in 1984.
At the time, Behrend's Economic Research Institute of Erie was two years into its mission to collect, analyze, interpret and disseminate data and forecasts for the Erie economy.
In the past 42 years, the institute has published studies, conducted scores of media interviews, briefed members of the business community and published the quarterly Erie Leading Index, which predicts turns in the economy.
The institute also holds annual conferences and has conducted studies on topics such as automation, brain drain and the effect of immigrants on the local economy.
It's an important role, said Behrend Chancellor Ralph Ford, who believes that work created a roadmap for the region's economic recovery.
"The institute helps community leaders understand and better anticipate shifts in the local economy," he said. "That data tells us what's working, what isn't, and where there are opportunities for the community to move forward.'
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Manufacturing no longer economy's main driver
In the early days of the institute, Louie said, Erie and its economy were dominated by manufacturing, especially GE Transportation, Erie's top employer for decades.
More than 40 years later, Erie's locomotive plant, now owned by Wabtec Corp., remains an important force. Though union employment there has declined by more than 70% since the early 1980s, the company still ranks as Erie's third-largest employer.
But the focus of the economy, once heavily dependent on manufacturing, has shifted.
A look at Erie's gross domestic product — the value of goods and services produced in a given year — offers insight into those changes.
As recently as 2001, manufacturing accounted for 25% of Erie's GDP, more than any other sector.
In second place was the sector that includes finance, insurance and real estate. The third-largest sector was education, health care and social assistance, followed by government employment in fourth.
A lot has changed in the past two decades.
As of 2023, manufacturing had slipped to third place at 15.6% of local output. The sector led by finance now occupies the top position, followed by the education and health care, Louie said.
How important is it that Erie make things?
Just how important is it that Erie continue its tradition of manufacturing things?
"There seems to be continued disagreement of how important it is to have a vital manufacturing sector," Louie said. "I tend to argue that manufacturing is important and that you need to produce things or an economy will stagnate."
Not only do manufacturing jobs bring new dollars into the local economy, but those jobs have historically paid family-sustaining wages, he said.
Growth of Erie economy lags behind nation as a whole
Despite uneven progress over the last two decades, U.S. GDP has grown 59% since 2001, Louie said. Pennsylvania's GDP, in real dollars, has grown 38%, he said.
Meanwhile, Erie's output has grown about 2.5%.
"The line for Erie is basically flat," he said.
But the size of Erie's economy remains significant.
At roughly $11 billion, the value of all the goods and services produced by the Erie economy is more than three times that of Greenland, the autonomous island territory of Denmark that President Donald Trump hopes to acquire.
Erie's economy is larger than 36 of the world's nations.
Is a diverse economy a healthier economy?
Jim Kurre, an economist and the former director of the institute, often observed that recessions tended to hit harder and last longer in Erie than in most other places.
A reliance on one sector — manufacturing — might have contributed to those deep recessions locally. The argument could be made that a more diverse economy will be good for Erie.
But Louie can't say for sure.
"It's also important whether an industry can turn itself around after a major setback," he said.
Scott Slawson, president of Local 506 of the United Electrical, Radio and Machine Workers of America at Wabtec, doesn't question the advantages of a diverse economy.
But he also laments the decline of manufacturing in Erie that has seen union membership at what was GE Transportation decline from between 7,000 and 8,000 in the early 1980s to about 1,500 today.
"I think Erie over the years tried to reinvent itself a number of times in a number of different ways," Slawson said.
Slawson said he suspects that lower manufacturing wages and the absence of good training programs contribute to the stagnant output tracked by the Economic Research Institute.
More:Wabtec to receive $48 million in grants. What they hope to build with the money
He wonders if there's a way to reverse course.
More:Erie hospitals have staffing shortages. How are they recruiting potential workers?
"One concern I have is the upcoming generation," Slawson said. "Will they want to do this kind of work?"
And will they have the skills to do it?
"If companies don't start setting up training programs for this younger generation, it could spell difficult times down the road," he said.
Contact Jim Martin at jmartin@
