HARRISBURG, PA – Ahead of Labor Day weekend, the Keystone Research Center today released the 24th edition of its report “The State of Working Pennsylvania.” The report finds that, despite low unemployment and a glimmer of good news on the wage front, economic gains are still disproportionately going to Pennsylvanians at the top of the income distribution at historic rates. Changing that requires bold policies and a political assist from business leaders who recognize that the benefits of growth are dangerously skewed.
“For the first time since 2001, Pennsylvania wages increased across the board,” said economist and report author Stephen Herzenberg, “But they used to increase 3% every year. It took 10 years of the longest economic expansion in U.S. history for those gains to emerge, and Black workers are still being left behind. It’s not good enough.”
The report notes an important shift in thinking in the business community that provides an opportunity to reshape the economy. Some business leaders have taken notice that the long-term picture of meager gains for workers risks undermining ordinary people’s faith in our economic system.
In recent days, the Business Roundtable, which represents the largest U.S. corporations, issued a statement signed by 181 CEOs that embraced stakeholder capitalism—the idea that corporations have obligations to employees, the community, and customers, as well as shareholders. On the next day, Tom Wilson, the chair of the executive committee of the U.S. Chamber published an op ed entitled “Save Capitalism by Paying People More.” Wilson acknowledged in blunt terms that “most Americans are struggling” and that 40 percent of Americans don’t have $400 for an emergency. The KRC report backs that assessment, finding that:
- Over the last full business cycle, from the 2007 peak to 2018, the annual average increase in the Pennsylvania median wage has been less than half a percent;
- Underemployment remains above the 2007 pre-Great Recession level and the employment rate (share of adults 20 and over who are employed) remains below the 2007 level;
- If the employment rate today were at the 2007 level, Pennsylvania would have another roughly 150,000 jobs;
- Since 1973, the top 1% in Pennsylvania received 46% of the increase in income in the state.
The report lays out grimmer economic realities for African Americans in Pennsylvania:
- The Black unemployment rate remains more than twice the white.
- In the first quarter of 2019, Black unemployment in Pennsylvania, at 8.4%, was the fourth highest among the 22 states for which reliable estimates exist.
- The African American median wage in Pennsylvania in 2018 was also fourth lowest among the 24 states for which reliable estimates exist.
- The African-American median wage in Pennsylvania is roughly 10% lower today in inflation-adjusted terms than it was in 1979. Black Pennsylvania workers now earn less than 75% the wage of white, compared to 90% in the early 1980s.
The report concludes with concrete policy prescription that could begin to reverse these troubling long-term trends:
- Raise Pennsylvania’s minimum wage for the first time in over a decade.
- Restore overtime pay and the 40-hour work week for nearly half a million Pennsylvania salaried workers.
- Increase Pennsylvania’s minimum teacher salary.
- And enlist newly enlightened business leaders and Pennsylvania’s existing Middle-Class Task Force to develop a plan to expand economic prosperity beyond the top 1%—and then to execute that plan.
“For four decades or more, business leaders have focused on profits and put their weight behind federal and state policies that created an economy for the 1%,” said Herzenberg. “Their recognition that such starkly unequal growth is unsustainable is a first step towards a team effort to restore an economy that works for everyone.”