The State of Working Pennsylvania 2006
Following the brief 2001 recession, the United States and Pennsylvania economies have been growing now for nearly five years. U.S. productivity has grown more rapidly recently than at any point since the 1950s. Yet, over the same period, wages and income have stagnated across most income groups.
With one exception, the past five years represent a return to the economic trends of the 1980s and the first half of the 1990s—and a departure from the broadly shared prosperity of the latter part of the 1990s. The exception: The economic benefits of the past five years have accrued to an even narrower band at the top of the income scale. Wage stagnation, coupled with higher costs for health insurance and gasoline, and erosion of pension protection, help to explain polling data that indicate continuing economic insecurity, despite relatively robust economic growth.
Current policy debates center primarily around government’s role in creating conditions conducive to economic growth—levels of taxation and government spending, investment in economic development projects, and other policies. Our analysis points to the need for more attention to the link between economic growth and improving incomes. Simply put, in addition to policies that sustain growth, Pennsylvania families need policies that translate economic and productivity growth into higher living standards. They need this because, as the statistics below amply demonstrate, a more prosperous Pennsylvania economy is not currently translating into greater individual and family prosperity.