The State of the Pennsylvania Economy

Mark Price |

Below is the first 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:

In the 12 months ending in July, Pennsylvania created 66,500 jobs.  At 1.1% increase, that’s the fastest year-over-year job growth reported in any July since 2005.  That was the 34th fastest pace out of the 50 states and the best Pennsylvania has ranked since July 2011 when it ranked 26th.

July 2011 is of note because former Gov. Corbett’s first budget was signed shortly before the stroke of midnight June 30, 2011. While on time, the budget was even more remarkable because it cut $1 billion from education spending and set off a wave of school district layoffs that, as of the end of the last school year, tallied to 33,000 jobs. Not surprisingly, layoffs on that scale delivered a body blow to a state economy still recovering from the worst recession since the Great Depression. This body blow reduced Pennsylvania’s job growth ranking within a year to 44th and by July 2013 to 48th.

Every week the current deadlock continues raises the risk that the budget standoff could set back the state’s economy yet again. All Pennsylvania public schools and many service providers receive a portion of their operating budget from the state. Without a state budget, these schools and service providers will have to dip into their cash reserves to meet payroll and pay vendors. When those funds run out, furloughs will follow.  Therein lies the risk to all Pennsylvanians – another round of layoffs and reduced consumer spending that injures an already bruised economy that has yet to produce meaningful wage or income gains for the bottom 99 percent of families (see below).

While Pennsylvania needs a budget soon it also needs a sustainable budget that eliminates the state’s structural deficit and strengthens the economy – by investing in education, communities, and job creation. To raise the revenue for a sustainable budget the state needs to enact a severance tax on gas drillers. Communities would also be strengthened if the budget included property tax relief – which many Republicans have championed in the past.

The need for a quick budget resolution – but also for a sound budget that will strengthen the recovery – stems from the still fragile nature of the Pennsylvania job market.


[1] See Senate Proposal Goes Backwards, Not Forwards, on Pensions, Pension Primer #12, Keystone Research Center, June 3, 2015, online at The 70 percent figure is based on estimates by the actuary for the Public School Employees’ Retirement System of benefit cuts under the original SB 1. Small increases in employer contributions to the SB 1 retirement plans proposed recently by Senate Republicans likely reduce these benefit cuts slightly.