PA CITIES IN ECONOMIC TROUBLE, SECURITY FOR WORKERS STILL ELUSIVE

Report Underscores Need for Smart Growth Policies and a New Initiative to Promote Opportunity in Postindustrial Pennsylvania

Harrisburg -- The 1990s boom slowed the widening of economic disparities in Pennsylvania in all respects except one – the gap between Pennsylvania’s cities and affluent suburbs, according to the Keystone Research Center’s annual labor-day report on the condition of Pennsylvania’s middle-class.

Statewide, 18 of 22 Pennsylvania cities lost population in the 1990s, with Pittsburgh, Wilkes-Barre, Chester, and Johnstown each losing 10-15 percent of their population. While middle-class family income climbed nearly $4,000 (or 8.7 percent) in the 1990s, it fell by $2,000 to over $4,000 (5 to 12 percent) in seven Pennsylvania cities. These cities have a total population of 1.9 million people and include Reading, Allentown, Harrisburg, York, and Philadelphia.

While place-based inequities yawn wider, the polarization of individual workers’ earnings stopped increasing after 1995. Low-wage, middle-wage, and high-wage workers all enjoyed wage increases of about 10 percent or higher since 1995 – $3 per hour for high-wage workers, $1.17 per hour for middle-wage workers, and $0.87 cents per hour for low-wage workers. Even in 2001 wage growth remained strong in Pennsylvania, despite the onset of recession.

"Pennsylvania has suffered less than the nation in this downturn." said KRC Policy Analyst and report author David Bradley. "But we still had 48,000 fewer jobs in June of 2002 than 12 months earlier and 80,000 less manufacturing jobs than two years earlier." The Pennsylvania unemployment rate has risen from 4 percent to 5.4 percent since its low point in March 2001.

"Considering a number of long-term trends" said Bradley, "economic opportunity and security for workers remain elusive."

Less than two thirds of Pennsylvania private sector workers now get health benefits through a job, down from more than three quarters two decades ago.

Only one in five private-sector (U.S.) workers now get a guaranteed pension, offering a defined benefit.

As a consequence of declining pension benefits, over two in five U.S. households approaching retirement (in the 47-64 age group) now have a projected retirement income below half their current income, up from three in 10 only a decade ago.

Pennsylvania families with children now work harder for the money than ever before, leaving them less time to parent -- an extra 14 40-hour weeks per year than two decades ago in two-parent families and 17 weeks more in single parent.

Despite progress on the wage front, black men, white men, men with less than a four-year college degree, and women without high-school diplomas all earn less in Pennsylvania than in 1979. Black men in Pennsylvania, disproportionately employed in manufacturing, earn $3.05 per hour less. Women earn $3.76 per hour less than men.

The KRC report also notes one significant promising trend in Pennsylvania’s economy.

"The good news is that productivity is nearly 50 percent higher now than in 1979," said Stephen Herzenberg, an economist and executive director of the Keystone Research Center. "Productivity seems to be holding steady on a higher growth trajectory." Economists consider productivity gains the foundation for higher living standards.

"The challenge we now face," says Herzenberg, "is to enact state policies that will translate a larger economic pie into tangible improvements in the lives of workers, families, and communities."

To help cities and other struggling older communities rebound, the KRC report advocates the development and implementation of "Smart Growth" policies – stronger regional planning, the use of state infrastructure and transportation dollars to combat community decay, and regional tax-base sharing. The report also calls for more state funding for education to help stem the flight of population from overtaxed communities with cash-poor schools. "Across the board," said Bradley, "we need to reverse the ‘dumb growth’ state policies that now accelerate the downward spiral of Pennsylvania cities, towns, and inner suburbs."

To restore more broadly shared prosperity, KRC recommends a 12-point Pennsylvania Postindustrial Opportunity Initiative. The PPOI would bring Pennsylvania policy into alignment with its 21st Century economy. It would also implement policies that encourage businesses to take the high road to profitability, based on improving productivity, quality, the rate of innovation, and service.

The State of Working Pennsylvania 20002 is available from the KRC Web site ate www.keystoneresearch.org.