HARRISBURG, PA (March 20, 2009)—The Pennsylvania economy shed 41,000 jobs in February, boosting January’s 7% state unemployment rate to 7.5%, according to data released Thursday by the Pennsylvania Department of Labor and Industry. In February, the U.S. unemployment rate stood at 8.1%.

Since the recession began in December 2007, Pennsylvania has lost 112,500 jobs — a decline of 1.9%. In February, the weakest sectors were manufacturing, which shed 15,200 jobs, and financial activities, which shed 4,100 jobs. 

The state’s current unemployment rate is well above the peak following the 2001 recession when it reached 5.8%, and over the next several months the unemployment rate will surpass the 7.8% peak reached following the 1990 recession. 

Reforming Unemployment Insurance Will Draw Stimulus Funds to Pa.

As the rapidly deteriorating U.S. economy takes its toll on Pennsylvania, it is critical that the Commonwealth obtain every dollar of economic recovery funds available to it, noted Mark Price, Ph.D., labor economist for the Keystone Research Center.

“Pennsylvania will qualify for millions of dollars in federal stimulus funding if it adopts reforms to how unemployment benefits are calculated,” Price said. “That funding will allow the state to extend benefits to tens of thousands of out-of-work Pennsylvanians so they don’t lose their homes or their savings.”

“The federal stimulus dollars will help unemployed Pennsylvanians afford housing, groceries and other basic necessities, giving our struggling economy the boost it needs,” Price added.

Pennsylvania will receive $291 million in federal stimulus funding for unemployment compensation reform, according to the National Employment Law Project (NELP). Pennsylvania already has some of the reforms in place.

The state will have to adopt what is known as the “alternative base period” method for calculating a worker’s benefits. The method takes into account a worker’s recent earnings when needed to qualify for benefits. Currently, 22,000 unemployed Pennsylvanians are excluded from receiving benefits, despite paying unemployment taxes, because this method is not in use.

Claims Data Show Labor Market Continues to Be Weak

Data released Thursday by The U.S. Employment and Training Administration (ETA) indicate that the labor market continues to be very weak. The four-week moving average of initial claims for unemployment insurance in Pennsylvania is up 52% over a similar period in 2008.  In the most recent four-week period included in the report, an average 38,463 initial claims for unemployment insurance were filed each week. (See figure).

“This just shows how important it is for Pennsylvania to move aggressively to maximize its share of economic stimulus funds for unemployment compensation,” Price said.