The State of Working Pennsylvania 2003

David Bradley
Peter Wiley
Stephen Herzenberg
Publication Date: 
September 1, 2003

Every year since its founding in 1996, the Keystone Research Center has published the State of Working Pennsylvania. While the form and specific focus of the report has varied from year to year, its broad objective has always been the same: to look beyond the aggregate statistics commonly used to gauge the health of the economy in order to document the condition of Pennsylvania’s middle class and the structure of economic opportunity in the state. Our analysis has generally been focused on one core question: is our economy producing the broadly-shared prosperity long identified with fulfillment of the American Dream and our national values of liberty and equality?

The State of Working Pennsylvania 2003 differs from previous editions by being shorter and focused on two stand-out trends in current economic data bearing on quality of life for the state’s middle class. This is also the first State of Working Pennsylvania written after a national recession and at the beginning of a new administration in the Commonwealth. For these reasons, this State of Working Pennsylvania serves as a baseline against which the progress of any new initiatives designed to help Pennsylvania return to robust economic growth might be measured.

Two economic circumstances stand out in the data examined for this year’s report.

Wages Have Stagnated Again for Pennsylvania Workers and the State is “Growing Apart” Once More

The State of Working Pennsylvania 2002 reported that wages continued to rise and wage inequality continued to drop in Pennsylvania through 2001, in spite of the onset of recession in March of that year. By 2002, both trends – rising wages and declining wage inequality – had stopped. Pennsylvania wages are already beginning to lose what little ground they gained in the 1990s.

  • Hourly earnings of middle-wage Pennsylvania earners declined by 1 cent per hour in 2002, compared to a slight rise of 13 cents per hour nationally. This follows a gain of 50 cents per hour from 2000 to 2001 in Pennsylvania.
  • In the first six months of 2003, the median hourly wage in Pennsylvania was $13.09, a drop of 56 cents, or 4.1 percent, from the first six months of 2002.
  • Hourly earnings for low-wage Pennsylvania workers fell by 3 cents per hour from 2001 to 2002, compared to a small rise of 8 cents per hour nationally. High-wage workers continued to gain in Pennsylvania, seeing an increase of $1.24 per hour from 2001 to 2002, compared to a gain of 46 cents per hour nationally.

After a decline from 1995 through 2001, wage inequality (the ratio of the hourly wage of high-earners to low-earners) is rising again in Pennsylvania, more so than nationally. With the exception of 1996, wage inequality in Pennsylvania is now at its highest level since 1979. In 2002, high-wage earners in Pennsylvania earned 4.32 times per hour more than low-wage earners, compared to 4.13 in 2001. While Pennsylvania once had one of the most equal wage distributions in the country, wage inequality is virtually the same today in Pennsylvania as in the United States as a whole. Pennsylvania has lost ground in this respect even as the nation’s level of inequality has escalated.

Like the Rest of the Nation, Pennsylvania has Experienced a “Job Loss” Recovery

Our national recession officially ended in November 2001. The current recovery is the first since 1945 in which the number of private sector jobs in the United States has actually contracted 20 months into an economic expansion. U.S. manufacturing alone has lost 1.2 million jobs since the end of the recession.

Employment contraction has extended to nearly every sector of the economy, including those once heralded as the vanguard of a “new economy.” The Silicon Valley of California, for example, lost 127,000 jobs between the first quarters of 2001 and 2002, or one out of every 11 jobs. The service sector workforce has come under pressures once thought of as unique to cut-throat manufacturing. In 2003 IBM began active consideration of moving high-paying white-collar jobs overseas, citing estimates that some three million U.S. service jobs would be shifted overseas by 2015.

Pennsylvania has followed the national pattern. Since the recovery started in November 2001, Pennsylvania has lost 20,400 jobs, making recent growth a “job loss” recovery. During the 24 months beginning with the start of the recession (March 2001 – March 2003), private-sector payroll employment declined by 107,800 in Pennsylvania, or 2.2 percent of all private-sector employment. The good news, if you can call it that, is that Pennsylvania did roughly as badly in the early 1990s recession – only now has the national experience slipped back to the level of the Commonwealth’s trend-setting distress.

  • Total non-farm payroll employment is down in Pennsylvania by 90,100, or 1.6 percent, since the start of the recession in March 2001 (March 2001 – July 2003).
  • Manufacturing has been hit the hardest. From March 2001 to July 2003, Pennsylvania lost 118,200 (14 percent) manufacturing jobs.
  • Since the economic recovery started in November 2001, Pennsylvania has shed 61,900 manufacturing jobs.

With the national economy sputtering, Pennsylvania’s short-term job creation ranking has actually improved relative to other states between 2001 and 2002. While the Commonwealth lost one out of every 200 jobs, 31 other states lost an even higher share. Long term, Pennsylvania’s employment creation record still places it near the bottom – behind only West Virginia and New York from 1979 to 2002.

This document is an on-line summary of a Keystone Research Center report. The entire report is available for download as a PDF file at the KRC Web site © 2001 Keystone Research Center