Steal This Agenda: A Blueprint for a Better Pennsylvania

Authors: 
Stephen Herzenberg
Publication Date: 
September 1, 2000

Steal this Agenda argues that Pennsylvania needs to alter its labor market and economic development policies to better fit the Commonwealth’s growing post-industrial economy.

The policy changes recommended would help foster a more prosperous and secure future in which the benefits growth would be more broadly shared.

The proposed innovations, many of which have been enacted with bipartisan support in other states, directly address the most pressing economic needs of the majority of Pennsylvania’s workforce.

This on-line summary outlines the core arguments presented in Steal This Agenda together with a summary of the report’s major policy proposals: a blueprint for a better Pennsylvania.

Optimism and Insecurity: Pennsylvania’s Economy in the late 1990s

In the mid to late 1990s it looked as if Pennsylvania was finally beginning to shrug off the economic malaise that had persisted through two decades.

The Commonwealth’s Gross State Product by more than 9 percent between 1995 and 1998. Productivity expanded at 3 percent from 1995 on. Wages for low and middle-income Pennsylvanians rose four years in a row 1995-1999, and more were employed than at any time in recent memory.

While, however, statewide economic statistics indicated a nearly unprecedented boom, measures of the relative economic security of working families suggested a different story.

At the end of the century, in spite of recent gains, the typical Pennsylvania worker still earned less in inflation adjusted dollars than he or she did in 1979. Most families, nearly 80 percent, found two incomes essential to meeting the rising costs of important services: child care, health insurance, health care, and higher education.

The number of people without health insurance rose, to 1.25 million Pennsylvanians, as did the number of people without good employer-sponsored pensions.

For many workers, job security declined. Even with the economy picking up speed, between 1993 and 1995 one in nine workers lost a job — a rate almost matching that of the early 1980s recession. Those re-employed by 1996 found jobs with wages paying and average of 14 percent less than the jobs they had lost.

Personal indebtedness rose to unprecedented levels. In 1999, for the first time in history, total household debt surpassed total household disposable income. One in seven middle-income families had total debt payments greater than forty percent of their income.

Paradoxically, in the midst of "good times", middle-income families had a lot to worry about.

While more parents worked longer hours to ensure adequate health care and educational opportunity for their kids, they worried that their children were being hurt by their absence. The long-cherished American goal of "family" seemed harder to reach.

For people without or with inadequate health insurance and pensions, illness, injury, or retirement were possibilities that could mean substantial decline in their standard of living.

For families with increasing debt, raises would go not to savings or necessities but to interest payments. Job loss or job change might require taking on more debt or, in the worst case, bankruptcy.

What looked like economic progress measured broad economic indicators did not feel like progress to many middle-income Pennsylvanians. The boom did not appear to offer greater economic security, but less. In households across the state the much-lauded "new economy" was giving rise to a new

Public Policy Lags the New Economy

The growing insecurity of working families can be attributed, in part, to the fact that the Commonwealth’s labor market and economic development policies have lagged behind changes in Pennsylvania’s economy.

The state’s minimum wage has not been raised to keep pace with inflation or productivity growth.

The average minimum wage worker brings home 54 percent of his or family’s weekly earnings and is employed full-time. Had the minimum wage been raised to keep pace with productivity gains it would now be about $12.00 an hour.

The impact of economic change on Pennsylvania’s cities and older suburbs has not been systematically or comprehensively addressed.

The flow of enterprise from Pennsylvania’s cities have contributed to multi-jurisdictional sprawl that has concentrated poverty in older communities, eroded the value of real estate, stressed urban school districts, and wasted existing public and private infrastructure.

State policy has not adequately addressed the impact of employment changes on the availability and quality of heath care.

Good health is a requirement for productive work and essential to stable family life. The restructuring of Pennsylvania’s labor market has reduced access to health care for many workers. Since 1997 the number of Pennsylvanians without health insurance grown from 844,000 to 1.25 million.

State policy has not addressed the broader impacts of employment changes on civil society and the family.

In 1990 only 21 percent of two-parent families managed to make ends meet with one income. The schedules of dual-income families leave little time for community-sustaining volunteerism and reduce the time parents have to take active roles in the education of their children.

Pennsylvania’s economic development policies have not been revised to help boost productivity growth and the creation of living-wage jobs in the new economy.

For decades, through a variety of tax incentives, tax abatements focused on individual businesses, Pennsylvania’s state government encouraged and subsidized productivity growth in manufacturing. Similar support has not been made available to service sector business even though the service sector now accounts the bulk job creation in the state.

Wanted: A New Deal for the New Economy

There is ample evidence that Americans and Pennsylvanians want their government to directly address problems of the new insecurity and improve the quality of life in their communities.
Recent national polls suggest that Americans feel government spends too little on education, heath care, and solving the problems major metropolitan regions (table 1).

Steal this Agenda outlines a program of practical policy innovations aimed at easing the new insecurity most Pennsylvania workers face.

The program would also help grow Pennsylvania’s economy by fostering the development of a labor market attractive to the "high-road" businesses — enterprises that seek profit through innovation, high quality, and good service.

The KRC blueprint would:

Promote New Economic Security by making work pay, building career ladders linked to occupations and industries instead of individual firms, making health insurance more accessible to more working people, fostering the development of new unions.

Promote Higher Productivity Growth by redirecting state business subsidies to the creation of "high road" jobs refocusing economic development policies on raising the performance of industries not firms.

Promote Family-Friendly Jobs and Communities by enacting a paid family leave program, making quality child care more accessible, promoting life-enriching elder care, working to stop the decline of established cities and towns.

Lay a Strong Foundation for Future Growth by promoting high-quality education for all Pennsylvania’s children, increasing public accountability of economic development policies, ensuring the state has adequate funds for essential public investment and social needs, revitalizing Pennsylvania’s Democracy.

Some observers see the new insecurity as an unavoidable outgrowth of the "new economy" and believe that public policy cannot and should not do anything about it.

The KRC believes Pennsylvania can and should be more optimistic.

The economic world is a human construct, not a state of nature. The success of individuals in the labor market, like the success of firms in the global market, is based on competition guided by rules.

Today, the rules encourage low-wage, low-skill competition and fail to encourage performance improvement is the Pennsylvania’s growing service sector.

The KRC believes that better rules can and will lead to a better future for all of Pennsylvania’s citizens.

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 www.keystoneresearch.org © 2001 Keystone Research Center