Executive summary
Southeastern Pennsylvania, located at the confluence of the Schuylkill and Delaware rivers, includes Philadelphia and the surrounding counties of Bucks, Chester, Delaware, and Montgomery. It represents one of the oldest and largest metropolitan economies in the United States. With a history rooted in colonial trade, agriculture, early manufacturing, and shipbuilding, the region has evolved into a national hub for life sciences, healthcare, education, and professional services.
Despite consistent job growth, Southeastern Pennsylvania faces challenges in competing with high-performing regions like Atlanta, Boston, and Phoenix. Specifically, its tradeable industries—those that sell goods and services beyond regional borders—have not kept pace with national growth in recent years, limiting the region’s productive potential and wage growth. If tradeable industries had matched national performance, the region would have added over 104,000 more jobs between 2013 and 2023.
This job deficit has had significant consequences for workers. Of the 104,000 jobs that could have been added, 70% would have provided opportunities for workers to support themselves and their families. Additionally, as growth in industries such as manufacturing and wholesale trade has declined, the region has become increasingly reliant on non-tradeable sectors like healthcare and hospitality. While there is some growth in advanced sectors such as financial services, these jobs often require a four-year degree, contributing to a growing divide between high-wage and low-wage employment and reducing pathways into the middle class for those without college degrees.
Structural challenges further limit the region’s capacity to respond effectively. Southeastern Pennsylvania is one of the most jurisdictionally fragmented areas in the country, yet its economy is highly integrated, with shared industry strengths, workforce, innovation assets, and infrastructure that cross political boundaries. However, the region lacks a unified, tactics-level strategy to guide economic and workforce development efforts. In contrast, leading peer regions rely on business-led initiatives with greater flexibility and long-term commitment, supported by well-resourced regional economic development organizations and clear operating agreements.
To address these challenges, leaders in Southeastern Pennsylvania must align behind a shared strategy that leverages the region’s economic, innovation, and human capital assets to create more middle-class jobs in globally competitive industries. Analysis over the past decade, along with engagement with business leaders and economic developers, has identified three key industry clusters for future growth:
1. **Enterprise digital solutions**: Business-to-business software tools and customization services that optimize back-office and middle-office functions in operations, compliance, and strategy (e.g., Business Process as a Service and Integrated Platform as a Service). These industries benefit from the region’s strengths in technology and regulated sectors, offering applications across both service and manufacturing industries.
2. **Materials machining/fabrication and electronic components value chain**: Production and distribution of precision metalworking and polymer components, industrial equipment, high-tolerance electronic connectors, communications systems, and control devices. This sector is anchored by small- and middle-market firms.
3. **Biomedical commercialization**: Manufacturing diagnostics, therapeutics (including biologics), and medical devices. The region is shifting focus from research to commercialization, aiming to retain more life science startups through early and growth stages.
In conclusion, Southeastern Pennsylvania is well-positioned to become more economically prosperous, resilient, and inclusive—but only if regional leaders adopt an opportunity-oriented mindset and build new capacity to address shared challenges. Through strategic partnerships, industry prioritization, and alignment between economic and workforce development stakeholders, the region can chart a new path forward that reaffirms its centuries-long legacy of productivity, innovation, and prosperity.
— news from Brookings
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Southeastern Pennsylvania market assessment for growing opportunity industries and economic mobility
Executive summary n nSituated at the intersection of the Schuylkill and Delaware rivers, the Southeastern Pennsylvania region—comprised of Philadelphia and the surrounding Bucks, Chester, Delaware, and Montgomery counties—represents one of the oldest and the largest metropolitan economies in the United States. Nearly 350 years after its establishment as a colonial center for global trade, agriculture, early manufacturing, and shipbuilding, the region is now viewed as a national hub for life sciences, health care, education, and professional services. n nHowever, despite years of job growth, Southeastern Pennsylvania has experienced challenges in competing with high-performing peers such as Atlanta, Boston, and Phoenix. In particular, the region’s tradeable industries (those that sell goods and services beyond the region’s borders) failed to keep pace with national growth in recent years, therefore not fulfilling the region’s productive potential and stifling wage growth. Had Southeastern Pennsylvania’s tradeable industries matched their national performance, the region would have added over 104,000 more jobs between 2013 and 2023. n nThis jobs deficit has proven immensely consequential for the region’s workers. Of the 104,000 jobs that Southeastern Pennsylvania would have added if it had kept pace with the nation, 70% would have been expected to offer opportunity for workers to support themselves and their families. Additionally, as growth in industries such as manufacturing and wholesale has eroded, Southeastern Pennsylvania’s economy has become increasingly reliant on growth in non-tradeable (“locally serving”) industries such as health care and hospitality, coupled with mild tradeable industry growth in advanced sectors such as financial services, where jobs disproportionately require a four-year degree. As a result, the regional labor market has become increasingly split down the middle between high-wage and low-wage jobs, with pathways into the middle class becoming increasingly scarce, particularly for workers without a college degree. n nThe region’s capacity to respond effectively is limited by structural challenges. Southeastern Pennsylvania is one of the most jurisdictionally fragmented areas in the country, yet its economy is highly integrated with shared industry strengths, workforces, innovation assets, and infrastructure that cross political boundaries and institutional responsibilities. Meanwhile, the region lacks a unified, tactics-level strategy and workplan to guide economic and workforce development efforts. This absence hinders the ability of stakeholders to prioritize, align, and coordinate actions for maximum collective impact. In contrast, leading peer regions rely less on public sector program delivery and more on business-led initiatives that offer greater flexibility and long-term commitment. These peers also benefit from significantly better resourced regional economic development organizations, supported by clear operating agreements that define roles and relationships among partners for centralized or distributed functions. n nIn light of these challenges, Southeastern Pennsylvania leaders must align behind a shared strategy that leverages the region’s immense economic, innovation, and human capital assets to create more middle-class jobs in industries where the region is well positioned to compete in the global economy. Growth trends over the past decade as well as qualitative engagement with business leaders and economic developers across the five-county region reveal three key industry clusters through which Southeastern Pennsylvania can chart this new path forward: n nEnterprise digital solutions: Business-to-business software tools and customization services to optimize back-office and middle-office functions in operations, compliance, and strategy (such as “Business Process as a Service” and “Integrated Platform as a Service”), where historic regional strengths in technologies and regulated sectors converge to spur applications for a range of both service and manufacturing industries. Example firms: SAP, Boomi, SEI, Qlik, Citco, EPAM, Envestnet, InstaMed, Savana, Guru n nMaterials machining/fabrication and electronic components value chain: Production and distribution of precision metalworking and polymer components, industrial and process equipment, high-tolerance electronic connectors and instrumentation, communications systems and control devices, and related assemblies, anchored by small- and middle-market firms. Example firms: TE Connectivity, R-V Industries, Nicomatic, Rhoads Industries, Teledyne Judson Technologies, Acero Precision n nBiomedical commercialization: Manufacturing diagnostics and therapeutics (including biologics) and medical devices—continuing a shift in emphasis from research and emerging technology platforms such as cell and gene therapy, as well as retaining more life science startups through early and growth stages. Example firms: Janssen Biotech, Iovance, Globus Medical, GlaxoSmithKline, Trice Medical, TELA Bio, Axial Medical, DePuy Synthes n nIn sum, Southeastern Pennsylvania is strongly positioned to become more economically prosperous, resilient, and inclusive—but leaders in the region must adopt an opportunity-oriented mindset toward future growth and build new capacity for addressing challenges together. This report, which resulted from a multiyear collaboration among Southeastern Pennsylvania economic and workforce development leaders, provides the region with a shared rationale and evidence base on which to act in service of this goal. Through dedicated strategic partnerships, industry prioritization, and alignment between economic and workforce development partners, Southeastern Pennsylvania can chart a new path forward that reaffirms its centuries-long legacy of productivity, innovation, and prosperity. n nSection I n nIntroduction n nSoutheastern Pennsylvania—encompassing Philadelphia and the surrounding suburbs of Bucks, Chester, Delaware, and Montgomery counties—is a global economic heavyweight. Its world-class universities, cutting-edge laboratories, financial services giants, and other assets support more than 2.7 million jobs1 and generate more than $355 billion per year in output—a level of economic activity that would rank it among the 60 largest national economies in the world.2 n nHowever, signs increasingly indicate that the economy has shifted in ways that make it more difficult for the region’s firms to compete and for its workers to get ahead. For instance, landmark research released in 2024 by Harvard-based Opportunity Insights placed Southeastern Pennsylvania at the bottom of the nation’s largest regions in enabling low-income residents the opportunity to advance beyond the previous generation’s economic status.3 The continuation of historic racial inequities and dramatic declines in economic mobility for lower- and middle-income white residents, including in suburban counties, both fed this trend. n nThese dynamics point to deeper challenges with the region’s growth and job creation engine, which may at first be obscured by its significant assets. Like most older U.S. industrial regions, Southeastern Pennsylvania’s manufacturing economy lost traction in recent decades when matched against lower-cost domestic and international competitors. Since the Great Recession, its professional services edge has also eroded. In turn, the weight of Southeastern Pennsylvania’s economy has skewed away from producing high-value goods and services for sale beyond its borders and toward offering services such as health care and retail predominantly for its own residents, dampening its ability to produce high-paying jobs. While local-serving sectors (such as construction and health care) do contain some high-paying jobs, they concentrate these jobs at lower rates overall, and growth in these sectors is only indirectly influenced by regional economic development efforts.4 n nThese challenges are not unique to Southeastern Pennsylvania. The convergence of technological change and global competition in recent decades has fueled a splitting of the labor market into high-wage and low-wage jobs, with fewer traditionally middle-class opportunities in between. These macroeconomic trends have also drawn clearer lines between a modest set of higher-performing regions with stronger footholds in innovation-, talent-, and technology-driven industries and a broader array of population centers held back by legacy industrial bases, scale, and other competitive deficits.5 Regions that are successfully repositioning themselves amid these headwinds are acting with intention: identifying competitive and emerging regional industry advantages; investing in comprehensive ecosystems of talent development, innovation, commercialization, industry-relevant infrastructure, and governance, which are core to industry success; and taking deliberate action to ensure access and inclusive growth.6 n nAmid this more competitive landscape, Southeastern Pennsylvania cannot rely on a “business-as-usual” approach to economic development, historically characterized by fragmented efforts across jurisdictions at lower levels of collective investment than many other U.S. regions. Rather, it must align behind a shared, tactics-level strategy with the requisite civic capacity and that links economic and workforce development priorities, which can enable it to maximize its untapped potential and grow more jobs that allow its residents to prosper. n nThis market assessment is not a research study to spark consideration—it provides regional civic and business leaders with the rationale and evidence base to act. As part of a multiyear collaboration among Southeastern Pennsylvania economic and workforce development leaders (see sidebar), practitioners and supporters reviewed this assessment’s findings, which will inform the development of a shared, tactics-level strategy focused on cultivating the industries and job base needed for a vibrant, inclusive economy. n nSoutheastern Pennsylvania: An interconnected economy n nFollowing the COVID-19 pandemic, the Pew Charitable Trusts convened Philadelphia civic, business, and government stakeholders to consider how to promote an inclusive recovery. After benchmarking against other places, participants identified greater regional economic and workforce collaboration as an opportunity. In late 2023, Brookings partnered with Pew to explore that concept with leaders in surrounding jurisdictions, leading to the formation of the Southeastern Pennsylvania Economic Collaborative, which consists of organizations in Bucks, Chester, Delaware, Montgomery, and Philadelphia counties, as well as the Chamber of Commerce for Greater Philadelphia, Visit Philadelphia, and the Delaware Valley Regional Planning Commission. For over a year, this group engaged and expanded to inform development of this analysis, advance shared functions such as economic research and international engagement, and prepare for undertaking a common strategy. n nFocusing first on Southeastern Pennsylvania was a practical choice for effective organizing and execution. The full Philadelphia-Camden-Wilmington metropolitan statistical area (or MSA, a federally set geography defining a functional economic area) includes additional counties in New Jersey, Delaware, and Maryland. However, the five Pennsylvania counties account for 69% of the jobs and 70% of the gross domestic product (GDP) of the tri-state metro area. Working with counties in a single state provides a common base of existing structures and planning requirements, and avoids the added complications of dealing with three different economic and workforce systems with separate policies and funding streams. Furthermore, action in Southeastern Pennsylvania was timely to align with the commonwealth’s new 10-year Economic Development Strategy launched in 2024. n nNote: While this market assessment focuses primarily on Southeastern Pennsylvania, portions of analysis presented in the accompanying data book also include breakdowns for the entire MSA, along with the Southeastern Pennsylvania unit and its individual counties. n nWorking across these jurisdictional boundaries in Southeastern Pennsylvania is imperative to addressing core issues of competitiveness and economic mobility. While Philadelphia is the globally recognized brand, it represents 37% of the region’s population, 35% of its jobs, and 34% of gross regional product, plus the main campus of all three Tier 1 research universities. The surrounding four counties, meanwhile, hold the majority of the region’s jobs in key industries such as financial services, life sciences, and manufacturing; Tier 2 research universities; and community college students. Among residents in Southeastern Pennsylvania, 87% stay within the five counties for work, and 38% cross a county border to reach their job. The five-county region functions as the true economic unit—competing at scale as an integrated system with a shared workforce, industry value chains, and innovation and infrastructure assets that drive their collective economic trajectory. n nDespite the value of working at this scale, Southeastern Pennsylvania has often struggled to overcome the commonwealth’s exceptionally high fragmentation of local governments compared to other states and regions. Large metro area peers have significantly greater public-private regional economic development organization capacity, as well as tactics-level written strategies and operating agreements to guide centralized or distributed initiatives. Advancing efforts by the Southeastern Pennsylvania Economic Collaborative, alongside renewed state attention to regional economic action, represents a step toward addressing these gaps. n nSection II n nEconomic performance and opportunity in Southeastern Pennsylvania n nIn many ways, Southeastern Pennsylvania appears to be a region on the rise. The population is growing, and employment is growing with it.7 Economic activity has rebounded in the wake of the COVID-19 pandemic.8 And prominent economic development organizations, consultancies, and tourism and travel organizations are increasingly highlighting the Greater Philadelphia region as one of the world’s best places to live,9 work,10 visit,11 and open a business.12 n nThe economic progress Southeastern Pennsylvania has demonstrated in the years since the Great Recession—particularly in contrast to its well-documented difficulties of the late 20th century13—is welcome news not just for the region itself, but for the entire commonwealth of Pennsylvania and the U.S. overall. As of 2023, the five counties together would rank as the 14th-largest metropolitan economy in the country, hosting more than 2.7 million jobs and producing more than $355.5 billion in output.14 Nearly 4.2 million people live in Southeastern Pennsylvania, making the region larger by population than nearly half of all U.S. states.15 The region is also indisputably a global innovation powerhouse, spending billions of dollars every year16 on research and development, which has yielded some of the country’s most important innovations of the past century, ranging from the first computer17 to the mRNA technology enabling the COVID-19 vaccine.18 n nYet underneath Southeastern Pennsylvania’s rebounded economy is a more complex picture of economic competitiveness and resilience. The composition and trajectory of the region’s economic growth reveal that it is not maximizing the potential of its formidable assets, thus limiting benefits for firms and residents. Brookings Metro analysis of economic growth between 2012 and 2023 determined three central points of tension for Southeastern Pennsylvania’s economy: n nMany of the sectors in which Southeastern Pennsylvania experienced the highest job growth between 2012 and 2023 grew at a slower rate than the nation as a whole, indicating that the gains the region has made have largely been a byproduct of national tailwinds rather than distinct regional competitive advantages. n nThe jobs that Southeastern Pennsylvania added between 2012 and 2023 were disproportionately concentrated in locally serving industries, which provide goods and services to consumers within the confines of the regional economy but do little to inject new wealth from outside of the region. Conversely, the tradeable industries that serve as Southeastern Pennsylvania’s anchors into national and global supply chains through interregional trade have been lagging behind. Because tradeable industries have higher productivity and pay higher wages than locally serving counterparts, this stagnation has dampened earnings growth and prevented the region from becoming more productive overall. n nSoutheastern Pennsylvania’s competitiveness challenges have contributed to a gap in the “opportunity jobs” (see Key Terms below) that workers rely on to pay living wages, cover health benefits, and offer opportunities for upward economic mobility. In 2023, just half of Southeastern Pennsylvania’s jobs provided this type of economic opportunity to the region’s workers—a lower share than two-thirds of the nation’s other 50 largest metropolitan areas. Research from Opportunity Insights similarly found that children born into low-income families in Southeastern Pennsylvania are less likely than children in any of those other large metro areas to achieve economic stability in adulthood. This suggests that the region’s deficit of opportunity jobs is part of a larger pattern of erosion facing Southeastern Pennsylvania’s working middle class across demographics and geography. n nThese trends and the factors underlying them represent underperformance rather than decline. They reinforce the need for a stronger regional approach to more effectively leverage the region’s world-class economic, innovation, and human capital assets to generate more accessible opportunities. n nAbout this analysis n nThis market assessment reviews industry performance in Southeastern Pennsylvania using a method called “shift-share analysis,” which gauges the region’s industrial competitive advantages between 2012 and 2023 by holding national growth rates constant. This method calculates the rate at which a regional industry is likely to grow over a period of time based on the national growth rate (expected growth), compared to the rate at which it actually grew (actual growth). The difference between actual growth and expected growth represents the industry’s “change due to local shifts,” and illustrates the degree to which inherent characteristics or market conditions within a given region are causing an industry to underperform or overperform the nation as a whole. This measurement of competitiveness is not an indicator of whether an industry is growing or shrinking—rather, it represents what an industry’s growth trajectory would have looked like if it were completely independent from the headwinds and tailwinds of the U.S. economy writ large. All metrics in this shift-share analysis are calculated at the detailed industry level and aggregated by sector to provide a bottom-up accounting of employment shifts for each region. n nThis report also analyzes economic opportunity in Southeastern Pennsylvania based on its share of “struggling families” and “opportunity jobs.” In this report, “struggling families” are defined as families with incomes that do not cover the typical basic costs of living in the regions where they live, while “opportunity jobs” are defined as jobs that provide health insurance and pay a wage sufficient for covering these costs of living (“good jobs”) or offer strong career pathways into these types of jobs within 10 years (“promising jobs”). n nFor more information, see the attached technical appendix. n nKey terms n nSoutheastern Pennsylvania missed out on 188,200 new jobs between 2012 and 2023 n nThroughout the 19th century, Southeastern Pennsylvania was among one of the strongest manufacturing hubs in the country, leading other fast-growing cities such as New York in the production of chemicals, metals, textiles, and trains. Access to the Schuylkill and Delaware rivers made the region a prime location for fabric, lumber, iron, and steel mills, which relied on those water sources for both power and access to trade routes that connected the economy to other major U.S. and European ports. It is this rich history of innovation, production, and interregional commerce that earned Southeastern Pennsylvania the nickname “the workshop of the world.” n nWhile Southeastern Pennsylvania continues to hold tremendous economic influence and innovative prowess, the sectors driving its regional economy are very different now than they were even three decades ago. Following the emergence of the third industrial revolution in the mid- to late-20th century, Southeastern Pennsylvania—like many other Rust Belt metro areas—significantly deindustrialized. While manufacturing remains a sizable source of employment, with growth in some segments, job creation in the region’s modern economy is anchored around health care services and higher education (“eds and meds”), as well as high-skill and largely white collar industries such as professional and scientific services, finance, and insurance. Between 2012 and 2023, Southeastern Pennsylvania’s health care sector added more than 96,400 jobs (the most of any sector by far, accounting for more than 25% of net job growth), while manufacturing, wholesale and retail trade, agriculture, mining, and the public sector saw net job losses. n nThough Southeastern Pennsylvania’s job growth over the past decade may appear to suggest that the region is becoming more economically competitive (particularly within its highest-growth sectors), national data indicate otherwise. This is because as Southeastern Pennsylvania has been adding jobs, so too has the national economy writ large. If Southeastern Pennsylvania’s economy had kept pace with national growth between 2012 and 2023, it would have grown its regional employment base by 24%—8 percentage points higher than its actual growth rate of 16%. This reveals significant untapped potential in Southeastern Pennsylvania and demonstrates that the economic conditions at play in the region are running counter to national tailwinds. n nThis job growth deficit—which amounts to approximately 188,200 missing jobs—has several important implications for the future of Southeastern Pennsylvania’s economy. If the region’s economy is growing more slowly than the nation after controlling for its industry mix, there must be other regions that rely on these industries that are growing faster. Of Southeastern Pennsylvania’s closest regional peers (Boston, Dallas, Atlanta, Detroit, and Phoenix), only Detroit had weaker job growth between 2012 and 2023.19 This indicates that several of the metropolitan economies Southeastern Pennsylvania competes with in the global marketplace are benefitting from social, economic, and political conditions that are enabling them to flourish and grow more than Southeastern Pennsylvania. n nImportantly, shift-share analyses do not provide insight into what conditions are fostering growth in other regions yet weakening growth in Southeastern Pennsylvania (e.g., tax competitiveness, housing supply, land use). But such analyses do demonstrate that these conditions exist. And while weakened growth in Southeastern Pennsylvania does not suggest that the region’s major industry sectors are backsliding, it does suggest a gradual loss of market share to other regions, which puts future job growth at risk. Continuing to lag national growth in this way could also have adverse effects on the region’s ability to attract and retain businesses and talent. While most of Southeastern Pennsylvania’s largest industry sectors are growing now, the region’s competitiveness challenges may to lead to increasingly stagnant job growth or even outright decline if left unchecked. n nSoutheastern Pennsylvania’s growth deficit is most pronounced in its tradeable industries, stalling regional wage growth and productivity n nBeyond this high-level assessment of industry competitiveness, measuring the health of Southeastern Pennsylvania’s economy requires an in-depth evaluation of how the region’s tradeable industries are performing. Tradeable industries (those that sell goods and services outside the region) bring new wealth into the economy, which spurs added economic activity and bolsters worker productivity and wages. Though tradeable industries accounted for just one-third of employment in Southeastern Pennsylvania in 2023, they were responsible for 44% of total employee wages and generated more than half of the region’s total economic output. These outsized economic contributions create high returns on investment for workers in these industries, who are 2.5 times more productive and earn nearly twice as much in average annual wages compared to workers in locally serving industries (which primarily sell goods and services in the regions where they operate).20 n nWhat counts as ‘tradeable’? n nTradeable industries are industries that participate in national and global supply chains by buying and selling goods beyond the borders of a given regional economy. Conversely, industries that are “locally serving” provide goods and services to consumers within the confines of the region where they operate. Locally serving industries exist in nearly every regional economy, while tradeable industries are more likely to concentrate in regions with many firms operating across their supply chain, creating “industry clusters.” The multiplier effects of tradeable industries on wages and productivity and their ability to provide regions with competitive niches that may not exist in other regions make them much stronger candidates for regional economic development efforts. n nIt is important to note that industries can fall on a continuum of tradability depending on regional conditions. For example, because of institutions such as the University of Pennsylvania and Children’s Hospital of Philadelphia, Southeastern Pennsylvania’s health care and social services industry (which accounts for approximately 17% of the region’s jobs) is deeply interconnected with the region’s tradeable higher education and professional research sectors. Still, most of the productivity and wage multipliers this connectivity creates are likely to concentrate in tradeable areas of the economy. This report classifies the education sub-sector of colleges and universities as tradeable but the rest of educational services as locally serving, along with all sub-sectors of health care and social services. n nFor these reasons, Southeastern Pennsylvania’s tradeable industry performance should give the region’s leaders cause for concern. Between 2012 and 2023, locally serving industries such as health care, real estate, and personal services added more than three times more jobs than tradeable industries. Southeastern Pennsylvania added fewer than half of the jobs in tradeable industries than it would have if it had kept pace with the nation—a gap equivalent to more than 104,000 jobs, 70% of which would have been expected to offer opportunity for workers to support themselves and their families. n nThis pronounced lag in tradeable industry growth poses significant concerns for not only Southeastern Pennsylvania’s future growth prospects, but also for the well-being of its workforce. Between 2012 and 2023, earnings for workers in tradeable industries were expected to rise along with employment; therefore, as the region’s job growth has lagged the nation, so too have earnings, resulting in real wage growth for these Southeastern Pennsylvania workers nearly 10% lower than expected (an equivalent of $10,867 in missing annual wages per tradeable industry worker). Additionally, because workers in tradeable industries earn significantly higher wages than workers in locally serving counterparts, lagging wage growth in tradeable industries has led to wage stagnation across Southeastern Pennsylvania’s entire economy. The average worker in Southeastern Pennsylvania earned only $460 more per year in 2023 than they did in 2012 after adjusting for inflation—an increase of just over half a percentage point. Workers in the tradeable industries that comprise such a large share of total earnings in Southeastern Pennsylvania earn an average of $70 less per year than they did a decade ago. n nSoutheastern Pennsylvania’s industry underperformance is eroding pathways for economic mobility n nThese competitiveness challenges have significant implications for regional economic opportunity. Opportunity jobs—which include both “good jobs” and “promising jobs”—represent the region’s strongest pathways to economic mobility. “Good jobs” are defined as those paying at least $29.76 per hour and providing health insurance. “Promising jobs” don’t yet meet that standard, but offer a clear career pathway into a good job within a decade. Together, these jobs form the bedrock of economic opportunity for the region’s working families.21 n nImportantly, not all sectors offer the same access to these jobs. Tradeable industries offer opportunity jobs at a nearly 50% higher rate than locally serving industries. This makes Southeastern Pennsylvania’s stagnant growth in tradeable industries especially concerning—not just for the region’s competitiveness, but also for the quality of jobs available to residents. n nAccess to opportunity jobs is profoundly influenced by access to education and skills. As of 2023, about one-third of the workforce held a good job, while another 19% held a promising job. But access to these jobs is increasingly skewed: More than half of opportunity jobs now require a college degree, even though only 43% of adults in Southeastern Pennsylvania have one. As growth has weakened in traditionally high-opportunity sectors such as manufacturing, workers without a four-year degree have been left with fewer opportunities for upward mobility and pathways into the middle class. n nThese rising barriers to opportunity job access for workers without a college degree are inextricably linked to changes in Southeastern Pennsylvania’s industrial structure. As Southeastern Pennsylvania’s economy has pivoted toward professional services, health care, and hospitality over the past generation, there have been fewer opportunity jobs available to workers without a college degree. Instead, the skills needs for these sectors increasingly resemble a barbell, with lots of high-skill, expert-level job opportunities and lots of low-wage work in services and maintenance, and few opportunities in between.2223 n nThe consequences of this labor market divide are already being felt by the region’s workers and their families. Nearly 38% of Southeastern Pennsylvania’s population—including more than a quarter of all workers—now live in a family that struggles to cover their basic costs of living (including housing, child care, food, transportation, health care, emergency savings, miscellaneous necessities, and taxes).24 This economic divide disproportionately impacts Black and Latino or Hispanic workers, who have long been underrepresented in occupations that offer the strongest pathways into the middle class. n nCharting a new course for Southeastern Pennsylvania will require addressing the region’s competitiveness and economic mobility challenges n nAt present, Southeastern Pennsylvania’s challenges with competitiveness and opportunity appear to be creating mutually reinforcing economic weaknesses for the region. Lagging growth in tradeable industries and overemphasis on locally serving industries such as health care are contributing to a deficit of the opportunity jobs that the region’s workers need to thrive. Workers who cannot afford to make ends meet in the places where they work, or match to job opportunities that provide them the means to do so, are less productive25 and more likely to look for work elsewhere.26 These factors often directly hinder regional economic growth, as businesses face higher hurdles for attracting and retaining talent. n nWith coordinated and strategic intervention, however, Southeastern Pennsylvania has the means to invert these mutually reinforcing economic weaknesses into mutually reinforcing economic strengths. By recognizing that sector-agnostic job growth is not in and of itself a sufficient solution to economic mobility and income inequality,27 regional leaders can direct attention and resources toward industries with higher shares of opportunity jobs accessible to a broader range of education levels, while fostering stronger talent pipelines to connect workers in the community to these jobs. The region can further increase its likelihood of success in these strategies by focusing on industries that show emergent competitive strengths, even at a small scale, alongside the larger “anchor” industries that Southeastern Pennsylvania needs to accelerate to preserve its competitive foothold in the national and global economy. n nAdditionally, each of the region’s five counties must recognize that economic competitiveness and opportunity are neither uniquely city nor uniquely suburban problems. While Southeastern Pennsylvanians living in the suburbs are significantly less likely to struggle to make ends meet than their neighbors in the city of Philadelphia, the latter place contains a higher share of opportunity jobs and has experienced stronger, more competitive job growth since 2012.28 Workers already view the labor market as regional in nature, relying on jobs available throughout Southeastern Pennsylvania for economic opportunity, particularly when they have been unable to match to opportunities in the counties where they live.29 Businesses source their talent and innovation supports and build their value chains irrespective of local governmental lines. Charting a new course for economic growth will require each of Southeastern Pennsylvania’s five counties to be able to tap into the economic and human capital assets available across the regional ecosystem to meaningfully address their shared competitiveness and opportunity challenges. n nSection III n nAdvancing regional prosperity by collective action in prioritized opportunity clusters n nDespite its challenges, Southeastern Pennsylvania holds substantial economic assets that can support a more competitive and prosperous future if the region acts more collectively and purposefully to fully realize its potential. This means aligning around a shared, evidence-based strategy that narrows from what is doable to what is desired—focusing on sectors showing economic potential and competitive positions that also concentrate creation of quality jobs accessible to a broad range of residents. n nExtensive analysis undertaken over late 2024 and early 2025 considered a range of quantitative and qualitative factors to reveal priority clusters for Southeastern Pennsylvania that are both broad enough to have meaningful impact and focused enough to organize for action.30 This analysis included: n nNovel mapping of region-specific industry clusters utilizing firm- and industry-level data sources, including firm descriptions, occupation-to-industry staffing matrices, and input-output models, to enable visibility into emerging specializations beyond traditional industry verticals, which are often obscured by national economic models. n nConsideration of the growth, competitiveness, specialization, scale, opportunity job share, and upward mobility within each cluster, to narrow the set of possibilities. n nEvaluation of the match between cluster talent needs and the region’s workforce and educational offerings, along with presence and performance of relevant innovation ecosystem assets and activities (e.g., university research channels, growth capital, intellectual property, and foreign direct investment). These factors provide additional context for decisionmaking. n nEngagement with companies, intermediaries, and other stakeholders in possible industry categories through interviews, roundtables, and presentations to assess business strategy, gather market intelligence on challenges and opportunities, and confirm sector options. n nThese qualitative and quantitative factors are in alignment with the Harvard Institute for Strategy and Competitiveness’ Porter’s Diamond Model, a framework for cluster development that posits that many factors (not only existing demand conditions such as scale and specialization) matter in developing a quality business environment where industry clusters can thrive. While these are important preconditions for cluster identification and prioritization, they are often insufficient without robust and supportive supply chains, alignment with existing regional innovation and talent capacity, and strong civic momentum. n nFollowing these considerations, this analysis identified strong opportunities for growth in three of the region’s largest value chains: 1) enterprise digital solutions; 2) materials machining/fabrication and electronic components value chain; and 3) biomedical commercialization. By focusing on these clusters for economic and workforce development intervention, Southeastern Pennsylvania will be well positioned to evolve its legacy assets in finance and insurance, software development, life sciences research, and advanced manufacturing into new clusters that can compete in the global economy. n nOne rung out from these priority clusters is a myriad of other industries that support them. These secondary “enabling” industries are critical in providing the talent, intermediate materials, infrastructure, and other distribution assets that all three priority clusters need to thrive. While these industries provide many of the same economic benefits as the priority clusters identified above, their presence and strength in Southeastern Pennsylvania is often contingent upon the scale and growth trajectory of the priority clusters themselves. n nPrioritizing these clusters for economic development in Southeastern Pennsylvania does not suggest that other industries do not hold economic value for the region. Chester County, for instance, hosts a distinct agriculture industry that is not widely shared across Southeastern Pennsylvania’s full geography; localized strengths such as these are best stewarded by individual jurisdictions versus a regionwide economic development strategy. In the same vein, several locally serving industry sectors such as construction and health care often contain a high volume of opportunity jobs, and should still be considered in workforce-based efforts for connecting workers into economic mobility pathways (for more information on the consideration of locally serving industries in regional economic development strategies, see “What counts as ‘tradeable’?” sidebar above). Regional leaders should acknowledge the important role industries such as these play in job growth and local communities, while also recognizing that they are not the primary focus of the type of shared, regionwide economic development strategies that Southeastern Pennsylvania needs to compete in the modern economy. n nPriority sector #1: Enterprise digital solutions n nSector definition n nEnterprise digital solutions as a priority sector for Southeastern Pennsylvania comprises business-to-business (B2B) cloud-based software tools and platforms, with customization and deployment services, that manage and optimize back-office, middle-office, and customer experience, and are applied across a range of knowledge-based and manufacturing industry segments. Although the region is home to some of the world’s largest and highest-growth enterprise digital solutions companies, the sector has not been generally recognized as a driver of the Southeastern Pennsylvania economy or as defining its technology niche. n nDespite lacking a formal vertical industry classification, network analysis of the region’s firms and occupations surfaced enterprise digital solutions as a braiding and blending of activities into a distinctive regional cluster opportunity. It emerges from regional strengths in data processing, computer programming, and Software as a Service (SaaS), connected to a long-standing adjacent industry presence in financial transactions and asset management, clearinghouse activities, and manufacturing. n nThe region’s enterprise digital solutions firms operate in both general domains such as Business Process as a Service (BPaaS) for automated operations or Integrated Platform as a Service (iPaaS) for data integration and system connections, and specialize within industry verticals such as financial technology, health technology, and governance, risk, and compliance. While a broader definition of “enterprise tech” could encompass B2B information technology activities from storage and networking equipment to managed IT services and hosting, Southeastern Pennsylvania’s position is targeted to the processes and data that power internal operational, administrative, and strategic