The State of Working Pennsylvania 2001

Authors: 
David Bradley
Authors: 
Stephen Herzenberg
Publication Date: 
September 1, 2001

EXECUTIVE SUMMARY

The State of Working Pennsylvania 2001 contains the results of Keystone Research Center’s annual checkup on the Pennsylvania economy.

From our review of the economy’s vital signs, a two-fold message emerges.

Through the year 2000, economic expansion continued yet its benefits remained meager for most workers and their families. In the first half of 2001, the Pennsylvania economy slowed and the labor market softened.

If these new conditions persist, they will bring greater difficulty to workers and families already struggling.

Signs of Trouble

Many different economic indicators point toward the pressures that remain in the lives of working Pennsylvanians, despite our nation’s longest recorded period of sustained growth.

  • Inflation-adjusted wages, by far the most important determinant of living standards for middle-class and low-income Pennsylvanians, continue to stagnate. (Throughout the report, the wage figures used are adjusted for inflation and expressed in 2000 dollars.)
  • The median wage in Pennsylvania declined in the past year from $12.36 per hour to $12.27 per hour, reversing a modest four-year positive trend (Table 1).
  • While 60 cents per hour above the 1995 level – the low point for Pennsylvania wages in the last two decades — the median wage still trails its 1979 peak by 51 cents per hour. U.S. wages, by contrast, have caught up to 1979 levels. Four of Pennsylvania’s neighboring states have wages 24 cents to $1.31 per hour above their 1979 levels.
  • Low-wage Pennsylvania earners (defined as those earning less than 90 percent of all workers) enjoyed a seven cent per hour wage increase from 1999 to 2000. They now earn 47 cents per hour more than they did in 1995, but 69 cents less than in 1979.
  • Men in Pennsylvania enjoyed a nine cent rise in hourly earnings from 1999 to 2000, but their median wage is still $1.40 below 1979 levels. Pennsylvania women saw a nickel an hour fall in wages from 1999 to 2000, but make 81 cents more than in 1979 and 46 cents more than in 1995 (Table 2).
  • Black men in Pennsylvania earned 66 cents more per hour in 2000 than 1999, but their wages remain less than in 1995 and nearly $3.00 per hour less than in 1979 (Table 2).
  • The inflation-adjusted wages of Pennsylvania workers without a four-year college degree remain stuck. Both men and women without a high-school degree and men with some college education (but no four-year degree) earn less than they did in 1995. Since 1979, men without a four-year college degree have seen their wages plunge by $2.79 per hour or more (Table 3).
  • Pennsylvania once had one of the most comprehensive employer-based health and pension benefit systems in the nation. But that system now covers a smaller share of workers than in the late 1970s.
  • The share of Pennsylvanians who get health insurance through an employer – their own or a family member’s — has dipped from 77 percent in 1979-81 to 72 percent in the late 1980s to 66 percent in the late 1990s. The number of Pennsylvanians without health insurance equaled 1.1 million in 1999, up from 844,000 in 1987 (although down from 1.25 million in 1998).
  • Since the late 1970s, the share of workers with employer-provided pensions has slipped from 61 percent to 57 percent, dropping Pennsylvania from first in the nation to sixth. This decline took place mostly because of an 11 percentage point decline in the share of men with employer-provided pensions.
  • With their wages and family income little improved, an estimated 24 percent – nearly one in four – of Pennsylvania families with young children cannot afford what it actually costs in their community to pay for basic needs (such as food, housing, clothing, health care).

    These families in economic hardship include 535,000 people. Roughly one third of such families face critical hardships such as going without food, having to "double up" in housing with another family, or not having access to medical care during an acute illness. The majority of families with income below a basic-needs budget are two-parent families, often with one or more workers.
  • Pennsylvania families with children work increasingly long hours, exacerbating the tension between work and family responsibilities. Partly in response to stagnant wages, middle-income Pennsylvania married-couple families with children worked 550 additional hours at the end of the 1990s than they worked at the end of the 1980s. Pennsylvania workers face much higher rates of large-scale layoff than U.S. workers. In the several years that layoff statistics have been collected, the fraction of Pennsylvania workers affected by "mass" layoffs has been one-and-a-half times the national average.
  • The educational attainment of Pennsylvania workers has improved but still ranks only in the middle of the pack.

The share of Pennsylvania workers with high school diplomas and graduate degrees has caught up with and slightly surpassed the national average since 1979. Yet Pennsylvania still trails when it comes to the critical middle of the educational attainment curve — a substantially larger share of Pennsylvania high school degree holders than U.S. have no education beyond high school.

Metropolitan Philadelphia and York workers have done better, but those in metropolitan Pittsburgh, Erie, Reading, and rural Pennsylvania have not.

Workers in the five-county Metropolitan Philadelphia area earn nearly a dollar more per hour than in 1979 and 1989 and now have a median wage of $14.00 per hour, roughly $2 per hour more per hour than in the rest of the state.

Workers in metropolitan Pittsburgh still earn $2.29 less per hour in 2000 than they did in 1979, having lost ground in the second half of the 1990s despite a strong economy.

Workers in Erie, Reading, and rural Pennsylvania earned between 9 and 12 percent less in the year 2000 than in 1989. Of the state’s smaller metropolitan areas, York enjoyed the biggest hike in wages in the 1990s.

Pennsylvania job growth has been sluggish

While slightly higher than the national average in the year 2000 itself, the rate of job growth in Pennsylvania rate has been only 40 percent that of the nation over the entire 1979-2000 period. Since 1995, three of our neighboring states have much higher job growth rates and three others have rates close to Pennsylvania’s.

What Kind of Future ?

This summary has highlighted trends up to the end of the year 2000, which, measured by the unemployment rate, had the most favorable climate for workers since 1969.

The evidence for the first half of 2001, however, indicates that the economic winds have now turned in harsher directions for workers.

  • In the second quarter of 2001, the U.S. economy (measured by Gross Domestic Product) expanded at an annual rate of only 0.7 percent. In 2000, the United States gained 1.76 million jobs; between April and June 2001, it had a net loss of 271,000 jobs.
  • The unemployment rate in Pennsylvania rose to 4.5 percent in July 2001 (and 4.8 percent in June 2001), up from 4.0 percent in April 2000.
  • In 1999, the share of Pennsylvania workers filing for unemployment benefits each year as a result of mass layoffs reached its lowest level since 1995. This share increased only a little in 2000. But in the first half of 2001, this share jumped (at an annualized rate) by 0.7 percent of Pennsylvania workers, twice the climb nationally.
  • The number of manufacturing jobs in Pennsylvania plummeted 3.8 percent from July 2000 to July 2001, the biggest drop in any 12-month period since 1991.

Pennsylvania workers face the prospect of an economic downturn in their weakest position since the 1930s.

In the 1950s to 1970s, when unemployment increased, wages rarely fell because of union influence and a relatively high minimum wage. But today, in Pennsylvania, unions represent only one in six workers. and the minimum wage has fallen to well below most low-wage earnings. The only factor holding up most wages has been low unemployment. If the labor market loosens, we can expect wages to fall, more workers to lose benefits, and more workers to lose good jobs without finding another job as good.

What is to Be Done?

The State of Working Pennsylvanian 2001 spells out the unsatisfactory consequences for ordinary Pennsylvanians of two decades in which public policy has been guided by a faith in unfettered markets. Moving forward, Pennsylvanians have a choice. We can hold on to the dominant view that markets alone should determine labor market outcomes, with government doing little even if less favorable conditions bring less favorable outcomes.

Or we can recognize that achieving broadly shared prosperity in the new economy demands a new set of economic and labor market rules – a New Deal for a New Economy. Such a New Deal could accomplish in the 21st century what Roosevelt managed in the 1930s – it could establish a framework within which people generally reap the benefits of a dynamic new economy and the economy itself becomes even more dynamic.

The Keystone Research Center’s Steal this Agenda: A Blueprint for a Better Pennsylvania summarizes how to begin crafting a New Deal for a New Economy in Pennsylvania. Many of these ideas are summarized on the key ideas page of this Web site.

Of course, some voices may tell us we have no choice. If, in a global new economy, inequality rises and economic insecurity spreads, they say, Pennsylvanians must grin and bear it. More accurately, a small slice of Pennsylvanians can grin and ordinary Pennsylvanians must bear it.

We think it’s possible to create a future that is less of a burden and more of a joy for the majority of Pennsylvanians.
In such a future, the majority would recover a sense of control and hope regarding their economic opportunities. With this foundation, good will, families, and communities would flourish.

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