Mid-Year Review of Jobs Data Shows Pennsylvania Job Market Still Sluggish

Slow Growth, Higher Unemployment Translate into Wage Stagnation

PA Manufacturing Wages Drop By 2.7% Over Past Year

Harrisburg, July 19 -- A new review of Pennsylvania jobs data for the first six months of 2004 by the Keystone Research Center finds that the state’s economy remains sluggish from the perspective of Pennsylvania workers, with mediocre performance in terms of job growth, the unemployment rate, and wages.

“Some 31 months after the official end of the 2001 recession, we still have too many workers chasing too few jobs,” said KRC economist Stephen Herzenberg. “That labor market slack translates into flat wages and continuing high unemployment.”

For the first six months of the year, 59,200 jobs were created in Pennsylvania. According to data released today by the PA Department of Labor and Industry, in June Pennsylvania still has 73,900 fewer jobs than when the recession began in March 2001, a decline of 1.3 percent.

Pennsylvania still has fewer jobs (3,600 fewer) than at the end of the last recession in November 2001, a marked contrast to the state’s experience in past recoveries. The same number of months after the end of the 1990-1991 recession, Pennsylvania had 39,100 more jobs than when that recession began, an employment increase of 0.8 percent.

“We also need more jobs over time,” adds Herzenberg,”because we have more workers over time. Since March 2001, the working-age population in Pennsylvania has grown by 1.7 percent. For job growth to have kept pace with population growth since March 2001, Pennsylvania would need another 170,629 more jobs in June 2004.”

With job growth trailing the number of workers who want jobs, wages have lagged. Nationally, as the New York Times reported yesterday, hourly earnings of production or non-supervisory workers fell 1.1 percent in June, after accounting for inflation. According to the Times, this was “the steepest decline since the depths of recession in mid-1991,” and followed a 0.8 percent fall in real hourly earnings in May.

The closest equivalent statistic available for Pennsylvania measures the hourly earnings of production workers in manufacturing. These dropped 0.9 percent in June after accounting for inflation. They dropped 2.7 percent compared to a year ago, a fall from $15.45 to $15.03. This adds up about $16 per week for someone who works 40 hours. Nationally, manufacturing hourly wages since June 2003 have fallen 0.6 percent.

The new Labor and Industry data show the Pennsylvania unemployment rate jumped to 5.6 percent in June from 5.1 percent in May. “While this one-month jump may be a statistical aberration, it leaves the unemployment rate for the first half of the year at 5.3 percent, right where it was in the fourth quarter of last year,” Herzenberg said. “The unemployment rate has not dipped below 5 percent since July of 2002.”

“While the Pennsylvania economy is finally adding jobs,” concluded Herzenberg, “lack of real wage growth will dampen the economic expansion.”

The new jobs data for June have been posted to the Keystone Research Center’s economic snapshot page at www.keystoneresearch.org/snapshot.

On Labor Day, the Keystone Research Center will release its annual comprehensive review of the Pennsylvania economy The State of Working Pennsylvania. The general public can register to receive a copy of the report via email by visiting www.keystoneresearch.org/swp2004. Reporters or Editors who wish to receive an embargoed pre-release copy of the report should email KRC Communications Director Peter Wiley at press@keystoneresearch.org.