Below is the third in a series of excerpts from The State of Working Pennsylvania 2015 report, released by Keystone Research Center on Sept. 2, which will appear on Third and State in the coming weeks:
Over this and the last economic expansion (taken together) monthly job growth in Pennsylvania has averaged 3,200 jobs.[1] This is roughly half the pace of job growth during the 1990s expansion (Figure 1). Although job growth has been stronger since 2010 it still substantially lags the best years of the late 1990s (1997 to 2000) when the Pennsylvania economy added 7,400 jobs a month.
To examine monthly job growth in the late 90s and since the turn of the century in your county and metropolitan area go to http://goo.gl/QdJkFS
Strong job growth in an economy nearer full employment directly translated into a 6.6% increase in real wages for the typical Pennsylvania worker from1997 to 2001 (50th percentile in Table 3).[2] Notably, the lowest-paid workers enjoyed the fastest wage growth from 1997 to 2001 (10th to 30th percentile in Table 1).[3]
Thanks to two recessions and two weak expansions (Figure 1) wages for the typical Pennsylvania worker are down 2% since the turn of the century (2001). The lowest-paid workers (the 10th to 30th percentile) have seen the largest real declines in hourly earnings of any group of workers since 2001. But for an increase in the Pennsylvania[4] minimum hourly wage in 2007 (to $7.15 from $5.15, followed by a very small federal minimum wage increase to $7.25 in 2009) low-wage workers would likely have fallen further behind. Even over the course of the current recovery 2009 to 2014, real hourly earnings have fallen for the bottom 70% of Pennsylvania workers.
The years since the turn of the century have also been accompanied by a breathtaking growth in the gap between the incomes of most families and the highest earners (CEOs, financial executives, and other high earners in the private sector). While market incomes (income before taxes and transfers like unemployment insurance payments) climbed 9.1% for the bottom 99% of Pennsylvania families from 1997 to 2000, they have fallen 5% since 2001 (Table 4). At the same time the highest earners in Pennsylvania have seen the growth in their market incomes accelerate from 19.2% in the late 90s to 27% since 2001.[5]
In order for the majority of Pennsylvania families to see income growth in the years ahead we will need a combination of faster job growth and economic policy that actively seeks to raise wages for more workers.
[1] Using seasonally adjusted data Pennsylvania has created an average of 3,600 jobs a month in a period that includes each month from 2003 to 2007 and each month from 2010 to June 2016.
[2] Change in inflation adjusted wages 1997 to 2001.
[3] There was also a modest minimum wage increase in 1997 from $4.75 to $5.15. This was the second step of increase from $4.25 that occurred in the previous year http://www.dol.gov/whd/minwage/chart.htm#fn5
[5] State and county level data on top incomes while the most accurate is only available through 2012. 2013 data will be released later this fall. Preliminary estimates of top incomes through 2014 for the U.S. have been published by Emmanuel Saez. 2015. “Striking It Richer: The Evolution of Top Incomes in the United States.” http://goo.gl/w8WVze. Saez’s data indicate the average income of the bottom 99% of U.S. families fell 5.1% between 2001 and 2014. The average income of the top 1% of families increased over this period by 15%.