Penn State Study Underscores Large Business Importance in Pennsylvania

Big firms are fundamental building blocks of the Pennsylvania economy. In the 19th century, the state stood apart from its neighbors with its huge steel mills, mines, an industrial factories. In the 20th century, its large firms in material processing, producer goods, and commercial industries defined the magnitude of the state’s
wealth. At the dawn of the 21st century, big firms and their establishments remain a critical structural component of the state’s economy.

The analysis further shows that large plants in Pennsylvania substantially influence local economies by not only providing a significant share of all jobs, but by paying higher average wages and exhibiting higher levels of productivity compared with smaller establishments. Employees working in big establishments (>250
employees and >500 employees) receive high relative wages. The pattern of high wages associated with large plants is surprisingly consistent across industrial states, including Pennsylvania, from the early 1960s through the recession of 1982. These premiums have continued to increase over time and on average represent a 15 percent difference in wages compared with other smaller establishments. Productivity differences between big and small establishments also are evident at the national level.

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