State Recession Economics 101: Why a State Budget That Slashes Spending Will Mean More Joblessness Throughout Pennsylvania

Publication Date: 
July 9, 2009

In June of this year, the nation lost another 467,000 jobs and the national unemployment rate edged up to 9.5%. Even before June's disappointing employment report, as of May 2009, onethird
of Pennsylvania counties (22 in total), most of them in rural areas, already had unemployment rates of 9.5 percent or higher.

The disappointing June jobs numbers underscore the importance of the revenue and spending decisions that lawmakers are now considering to resolve the 2009-10 budget stalemate. Through May (the latest month for which state-level figures are available), Pennsylvania's
unemployment rate has been lower than the national rate by roughly one percentage point-- 8.2% in May versus 9.4% nationally. One percent translates into roughly 60,000 Pennsylvania jobs--only a third of the 182,000 jobs lost in Pennsylvania in the current recession but still a lot of jobs. In the budget debate, if Pennsylvania leans too heavily towards deep spending cuts, the state's unemployment rate is likely to climb back towards the national rate, with negative consequences
for tens of thousands of workers and hundreds of thousands of family members.