Philadelphia Doesn’t Need a Manufacturing Renaissance, It Just Needs to … – Keystone Politics

There’s a joke that a modern factory contains two employees – a man and dog. The man is there to feed the dog, and the dog is there to keep the man away from the machines.

There’s really no employment future in manufacturing. You may have heard that more companies are “on-shoring” manufacturing operations in the US, and there has indeed been a trend there. But the reason they’re doing this is to save on transportation costs of goods to market, since labor costs are barely a thing anymore.

That is why it’s so frustrating to see Philadelphia and other cities falling over themselves to subsidize an activity that’s just not going to create many jobs, especially in the long run, or tax revenue for the city – especially if that subsidy takes the form of local tax breaks.

Insofar as this manufacturing task force plan involves voluntarily giving up some tax revenue by exempting manufacturing uses from the city’s Use and Occupancy Tax – implying increases of other taxes are in the offing to make up the difference – then this is a plan to make Philadelphia poorer.

The highest tax-yield land uses are office buildings and large mixed-use residential buildings:

The real “manufacturing” agenda needs to be about lowering barriers to manufacturing more of these high-yield land uses.

Current city policy does a bad job of that. Taxes on property (and especially land) are curiously low for a big city, but taxes on actually using office buildings (by employing people, or locating your business) are high.

And zoning restrictions on the construction of new large office and residential buildings are high, not so much in Center City proper, but definitely in the emerging secondary central business district in University City, as well as in appreciating neighborhoods to the South and in the river wards, where outdated industrial zoning classifications hamstring more mixed-use construction.

These are the key reasons why Philadelphia proper lags behind the SEPA suburbs as a location choice for new businesses.

It would be so perverse to subsidize low tax-yield uses like automated manufacturing facilities by raising taxes on high tax-yield uses like downtown offices and mixed-use residences. Like Tom Corbett’s “New Industrial Revolution” agenda, this is a plan to make us poorer. We do not need a new industrial revolution, we just need to urbanize more.