Rural PA Hit Hardest by Unemployment Increase in Unemployment Rates for African-Americans as Large as in Early 80s

The following analysis is provided to Pennsylvania reporters as part of the Keystone Research Center's ongoing tracking of the health of the Pennsylvania economy. The Keystone Research Center is a nonprofit, nonpartisan research organization that promotes a more prosperous and equitable Pennsylvania economy.

HARRISBURG, Pa., Aug. 7 /PRNewswire/ -- The federal government reported this morning that the national economy shed 247,000 jobs in July and that the unemployment rate was 9.4%.

In Pennsylvania, months of layoffs have resulted in the loss of 182,000 jobs since the start of the recession. The labor market in the Commonwealth is weaker today than it has been at any point since the early 1980s. The Pennsylvania unemployment rate in the second quarter of 2009 was 8.1%, up from 4.5% in the fourth quarter of 2007.

"The hardship of rising unemployment has not been equally shared," said Mark Price, Ph.D., Labor Economist for the Keystone Research Center. "Our estimates show that the unemployment rate among African-Americans in Pennsylvania was 12.9% in the second quarter compared to 7.2% for whites. As a result, the gap between African-American and white unemployment rates has doubled over the course of the recession."

This recession also has disproportionately impacted rural Pennsylvania, which has seen the largest increases in unemployment rates during this downturn. In the fourth quarter of 2007, the unemployment rate in rural portions of the Commonwealth was 4.9%, compared to 4.4% in urban areas. By the second quarter of 2009, the overall unemployment rate in rural portions of Pennsylvania, at 8.9 percent, was a full percentage point higher than the urban rate. In the second quarter of this year, the following rural counties were home to the highest unemployment rates in the state: Cameron (17.8%), Elk (14.4%), Fulton (13.7%), Mercer (11.6%), Potter (11.4%), Bedford (11.2%), Huntingdon (11.2%), McKean (10.6%), Clearfield (10.5%) and Carbon (10.3%).

Following the 1981 recession, unemployment in rural Pennsylvania reached a staggering 17% compared to 12% in urban Pennsylvania, explained Stephen Herzenberg, Ph.D., Economist and Executive Director of the Keystone Research Center.

"It is quite troubling to see rural unemployment rates begin to pull away from urban unemployment rates," Dr. Herzenberg said. "Like the rising unemployment rate for African-Americans, the disparate impact of this recession on people in rural areas points toward the need for more investment in education and workforce development."

For African-Americans in Pennsylvania, the rise in unemployment during this recession is now as great as the increase in unemployment experienced during the severe 1981 recession.

"This recession has hit African-Americans just as hard as the brutal recession of 1981, which illustrates that the Commonwealth has tremendous work left to do in ensuring equal opportunity for African-Americans," Dr. Price said. "Perhaps the greatest challenge we face in this regard is achieving more equity in school funding."

Federal Stimulus Spurs Economic Improvement

The U.S. Department of Commerce recently reported that gross domestic product (GDP) contracted at a 1% annual rate in the second quarter of 2009, a substantial improvement over the 6.4% decline in the previous quarter. This improvement was likely due to the American Recovery and Reinvestment Act which added more than 2% to GDP in the second quarter through increases in direct government spending, the extension of unemployment benefits, increases in food stamp benefits, and one-time payments to Social Security beneficiaries.

"This is precisely what the public sector should be doing in a severe downturn, temporarily boosting spending to stabilize the economy," said Dr. Price. "We are concerned, however, that the remaining stimulus spending will not be large enough to offset the negative impact of budget cuts being made by state and local governments across the country. Anything that further prolongs this 20-month-old recession is bound to hit hardest those who can least afford it. This is the worst possible time for state and local governments to be cutting spending."

The briefing paper Unequal Unemployment: Unemployment Disparities in Pennsylvania is available online at http://tinyurl.com/l9x74k.

County-level unemployment rates are available now for June and can be seen in an online map at http://www.keystoneresearch.org/unemploymap.html.

For ongoing analysis of the PA economy: www.papolicyblog.com

SOURCE Keystone Research Center



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