In this year’s State of Working Pennsylvania, we decided to look once again at the pace of job growth in Pennsylvania relative to the other 49 states. What’s different about our analysis this time is that we compare Pennsylvania’s job performance at comparable points in the economic recovery that followed each of the last three recessions.
From January 2011 to July 2013, Pennsylvania ranked 46th out of the 50 states in terms of the percent increase in employment (looking at just private-sector job growth, the state ranked 45th).
Job growth during the January 2011 to July 2013 period has been slower — and the state’s job growth ranking among the 50 states slightly lower — than in either of the two periods following the 1990 and 2001 recessions.
It is true that Pennsylvania’s job-growth ranking in the last 32 months is only slightly lower than its job-growth rankings in comparable periods of the recoveries following the last two recessions. Still, it is important to note that the current rankings represent a sharp decline from Pennsylvania’s 2010 ranking of 7th and 12th, respectively, for total nonfarm and total private-sector job growth.
Far too many people want to avoid talking about that first full year of the recovery in Pennsylvania. One very important reason that job growth in 2010 was stronger than any of the years since is the public policy that was in effect that year. State and federal spending was still supporting the economy through greater investments in education, infrastructure, and health care, and extended unemployment insurance.
In the years since 2010, public policy has reversed course as both federal and Pennsylvania policymakers have taken steps that have weakened job growth and slowed the pace of the decline in unemployment. In fact, as we note in the State of Working Pennsylvania, the unemployment rate in Pennsylvania fell six-tenths of one percentage point between January 2010 and January 2011 (from 8.6% to 8%), but it has taken another two-and-a-half years for the rate to fall another half a percentage point, to 7.5%.
Policymakers chose a path that kept unemployment higher than it would otherwise be, which in turn has depressed the growth in wages and fueled the shocking rise in inequality we have witnessed since 2009. See The Wall Street Journal today for a summary of the latest trends in top incomes.