Penn State report: Pennsylvania's economic performance still mixed

Penn State report: Pennsylvania's economic performance still mixed

University Park, Pa. -- Pennsylvania's economic performance continues to mirror the nation's in its unemployment rate and per-capita income, but the commonwealth has lagged considerably on employment and population growth since 2000, according to the latest edition of "Road to 2005 -- Update on Pennsylvania" by Penn State researchers.

"Not all urban and rural areas of the state navigated the 2001-2003 recession and recovery with equal success," the Penn State team said in the report. "Indeed, the report suggests substantial differences in performance across the state, with the various regions in the state following different paths and facing unique development problems."

"Road to 2005," which is the 17th annual edition, provides the latest data available on broad economic trends in Pennsylvania from 1990-2004 and detailed data on job change by sector among counties and detailed industry changes statewide during 2001-2003.

This year's report has been developed with sector and industry data collected under the revised North American Industry Classification System (NAICS), which identifies new industries in fast-growing services sectors. Most notably, during the 2001-2003 period, health care and social services replaced manufacturing as the largest employing sector in Pennsylvania, due to job changes among the sectors. Sectors that reported expanded employment include: health care and social assistance; accommodation and food service; management of companies and enterprises; educational services (private sector); and arts, entertainment and recreation.

Pennsylvania's overall performance since 2000 has continued the 1990s phenomenon of tracking, yet lagging the nation on key economic indicators. Total employment, a key measure of economic health, expanded only 10.3 percent in the state versus 20.2 percent nationwide in the 1990s. More recently, Pennsylvania employment declined at the national pace during the recession and slow recovery from June 2001-2003 but again fell behind the U.S. in rate of gain from June 2003-2004, said Ted Fuller, co-author and Penn State economist.

By contrast, Pennsylvania's unemployment rate marched in step with the nation throughout the booming 1990s as well as the recent recession. During this time the state's jobless rate seldom varied from the national rate by more than a couple of tenths of a percentage point. This suggests that the state's slower rate of job growth since 1990 did not seriously impact unemployment, possibly in part due to Pennsylvania's slow rate of population growth and related "brain-drain" migration of residents leaving the state, suggested Martin Shields, co-author and director of Penn State's Center for Economic and Community Development, which publishes the annual report.

Like job growth, the state's population growth rate continues its decades-long trend of trailing the national average. During the years 2000-2003, Pennsylvania's population is estimated to have expanded only 0.7 percent, compared to 3.3 percent growth at the national level.

"Overall since 1990, Pennsylvania's population growth rate has been only about one-fourth of the U.S. rate,' said Stephen Smith, co-author and head of Penn State's Department of Agricultural Economics and Rural Sociology. "The slow population growth is coupled with the state having the second-oldest population among the 50 states. In 2000, 15.6 percent of the state's population was age 65 or over, versus 12.4 percent for the U.S."

The report added that since 1990, Pennsylvania has held its own on a fourth key economic indicator -- per-capita personal income: in both 1990 and 2002, per-capita personal income averaged 101 percent of the national average.

However, the researchers noted that there are substantial differences across Pennsylvania's 67 counties. For example, most counties had a relatively slow employment growth rate (below the U.S.) in the 1990s. In addition, the recent national recession and recovery has seen a number of counties lose jobs between June 2001 and 2003, especially in the western and northern tier areas.

"Yet the Pocono counties and a few in the southeast and central Pennsylvania have added jobs," Shields said. "The widespread job decline among counties since 2000 has often been related to greater historical dependence on manufacturing -- especially in small-city and rural counties."

Similarly, unemployment rates typically were lower in the urbanized counties of the southeast and in the west around Pittsburgh than in the small-city or rural counties in the state's interior. In June 2004, despite some job growth, nearly all counties outside of the southeast had unemployment rates near or in excess of 6.0 percent. Notable exceptions were Centre and Union counties in central Pennsylvania, and the urban counties of Allegheny and Butler in the west. Philadelphia County was the only southeast county with an unemployment rate greater than 6.0 percent.

Estimated population change from 2000-2003 also showed a marked pattern of slow decline in most counties in western and northeastern Pennsylvania, and growth in counties of the southeast and the Poconos. Counties in the west and northeast also had the highest proportions of population age 65 and older.

In 2002, per-capita personal incomes averaged below the nation and the state in most counties across the state. The main exceptions were a few suburban counties of Philadelphia in the southeast and Allegheny County in the west.

The variations in key economic measures among counties across the state suggest a number of "Pennsylvanias" exist -- each with its own unique economy and development challenges, the researchers said.

"Road to 2005" also describes employment changes from June 2001-2003 in eight major economic sectors by county and more than 175 industries statewide.

Copies of "Road to 2005 -- Update on Pennsylvania" may be obtained on the Web at http://cecd.aers.psu.edu or by contacting Shields at (814) 865-0659 or at mshields@psu.edu; or Smith at (814) 863-8245 or smsmith@psu.edu.