Making PA Competitive Again

Lower post-recession unemployment & labor force participation rates are hopeful signs for a historically-weak economy, but without permanent policy changes, other states will continue to surpass Pennsylvania’s economic performance.

At 4.7 percent, the state's unemployment rate is the lowest in 10 years. Unfortunately it is still above the national rate of 4.1 percent. And it fails to account for people who have dropped out of the labor force. Once this population is included in the unemployment figure, the rate jumps to as high as 9.6 percent.

According to the Independent Fiscal Office, the labor force participation for Pennsylvania’s working population is down 1.7 percentage points from 2001. In just the past year, the labor force has shrunk by 56,000 people—the largest drop in three years.

Still, room for optimism exists given labor force participation rates have increased since 2011. However, the broadest rate, which includes the working and retirement populations, is still 2 percentage points below the 2001 rate.

A look at other economic indicators could lead Pennsylvanians to be cautiously optimistic. For instance, the commonwealth’s job growth rate held steady at 1.1 percent. But it did remain lower than the U.S. job growth rate of 1.4 percent.

In all, the economy is showing signs of life. GoBankingRates put Pennsylvania number 4 in terms of most improved state economy of 2017 given our 5.34 percent GDP growth and 3.14 percent personal income growth.

But we have a long way to go before the Keystone State can compete with the most vibrant state economies. The 9th Rich States, Poor States economic competitiveness index ranks Florida and North Carolina—the top two destinations states for Pennsylvanians—eighth and second respectively in economic outlook. Pennsylvania ranks a dismal 39.

Capitalizing on the strong fundamentals of the economy will require structural changes such as state tax reform, a reduction in regulatory burdens, and fixing our broken budget process to create an economic environment where Pennsylvanians can thrive