MESSAGE FROM THE DIRECTOR
This week marks the release of our annual “State of Working Pennsylvania” report, often cited by policy professionals and the media as the barometer for Pennsylvania’s economic outlook from the perspective of working people. It is of particular importance this year as we will have a new governor and state legislature by January 2023. Many thanks to Claire Kovach, PhD, senior research analyst, and Maisum Murtaza, research associate, for their collaboration in compiling and bringing this document to fruition.
Keystone Research Center releases annual State of Working PA Report
Highlights Importance of Policy Choices a New Governor, Legislature Will Make
Press Release | 8/31/22
Harrisburg, PA—The Keystone Research Center released its annual “State of Working Pennsylvania” check-in on the Pennsylvania economy, a report with a simple message: a tight labor market and new union organizing offer new possibilities for Pennsylvania workers. With smart and worker-friendly policies over the next several years, Pennsylvania could enjoy a return to shared prosperity for the first time in decades. (View press conference here.)
“Two unique circumstances that increase workers’ power in the labor market create the possibility of a better future for Pennsylvania workers,” said KRC economist and executive director Stephen Herzenberg. “The withdrawal of individual workers from the job market and a wave of innovative union organizing—if policy capitalizes on these realities, and has workers’ backs, Pennsylvania can lock in a more equitable future.”
KRC’s new report finds that, on many measures, the economy has now fully recovered from the 2020 downturn brought on by the need to close businesses to stem the spread of COVID-19. For example:
- Despite a small decline in early 2022, GDP remains above the level at the end of 2019.
- Pennsylvania’s unemployment rate is now 4.3 percent, well below February 2020’s 5.0 percent.
Despite faster inflation, Pennsylvania workers continued to enjoy wage increases across the first two years of the pandemic.
- From 2014 to 2021, inflation-adjusted, hourly pay rose 9 percent to 19 percent for workers near the bottom, the top, and in the middle of the wage distribution, the first period of broad-based wage increases since the long 1990s economic expansion.
Our tight labor market explains both the low unemployment rate and still-rising wages; worker supply is down and employer demand is high.
- As of July 2022, the Pennsylvania labor force was 131,000 people below its pre-COVID peak.
- The shrinkage of our labor force—some 2 percent compared to pre-pandemic, a modest, more than “great” resignation—contributed to a fall in the number of Pennsylvania jobless looking for work (i.e., unemployed people) below the number of job openings in August 2021. Today, there are only six unemployed for every 10 Pennsylvania job openings.
- The number of people quitting each month in Pennsylvania is now more than double the number laid off or fired by employers.
“Our report finds that workers collectively, as well as individually, do not want to build back the same—to accept jobs as they were before the pandemic,” said report co-author Claire Kovach. Evidence of workers’ desire to collectively improve their jobs pre-dates the pandemic: in 2018, roughly half of non-union workers surveyed said they would join a union if they could, up from a third in 1995 and 1977 surveys. The pandemic further elevated workers’ desire to improve U.S. jobs—the share of Americans who approve of unions in September 2021 reached its highest level since the mid-1960s.
In 2021-2022, workers’ interest in transforming their jobs and industries burst into the headlines with union organizing at name-brand companies such as Amazon, Apple, Google, and Starbucks—including eight Philadelphia Starbucks. In the past year, unions also organized one of the pillars of the Pittsburgh “eds and meds” economy, the University of Pittsburgh.
KRC’s analysis of recent union developments explains how recent organizing could foreshadow an upsurge in unionism anchored in giant service companies (e.g., Amazon and Starbucks) and in inherently local services that must locate near their customers—so runaway shops and capital flight are not an option for employers.
The end of KRC’s report comes back to the theme that “policy matters.”
If Pennsylvania policymakers, guided by voters, go through “door number one” in November and enact policies that strengthen unions, raise wages, and enhance workers’ skills, our state could consolidate shared prosperity.
If policymakers choose “door number two”—slowing the economy, weakening unions, and eroding policies that boost wages—Pennsylvania will see a return to wage stagnation and rising economic inequality.
Over the next weeks, KRC will re-release stand-alone blogs and/or briefs focused on each of the seven sections of this year’s “State of Working Pennsylvania.” “By breaking down our analysis into smaller bites,” said Herzenberg, “we aim to make it more digestible. We also want to persuade elected officials, candidates, the media, and other audiences that we need a holistic commitment in the next gubernatorial administration to rules and public investments which ensure our powerful market economy delivers for all Pennsylvanians.
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