Rural Pennsylvania at an Economic Crossroads Says New Keystone Research Center Report on Trends Over Last Four Decades

Rural Population and Jobs Are Up and Unemployment Down But Income and Wage

Growth Lag and Benefits Erode

Global Economic Change Means Rural Areas Need New Development Strategies

and Better Support from State

Jun 19, 2007, 01:00 ET from Keystone Research Center

    HARRISBURG, Pa., June 19 /PRNewswire-USNewswire/ -- Rural Pennsylvania
 needs fresh economic approaches and a comprehensive rural development
 vision to take advantage of a pause in the region's decline, according to a
 new study of Pennsylvania's rural economy by the Keystone Research Center
 titled The State of Rural Pennsylvania.
     "Pennsylvania's rural economy is now at a crossroads," says Dr. Stephen
 Herzenberg, an economist and co-author of the report. "Rural and state
 leaders face critical choices about how to best capitalize on recently
 improved economic trends while ensuring that some festering problems don't
 overwhelm progress."
     Among the positive recent developments, according to The State of Rural
     -- jobs in rural parts of the state have grown by 25% since 1987, nearly
        twice the 13% job growth of urban areas.
     -- Unemployment rates in rural and urban Pennsylvania are now nearly the
        same, a significant change from early 1983 when rural unemployment
        peaked at 17% but urban at only 12%.
     -- Per capita income is 38% higher in rural Pennsylvania than it was in
     "Rural Pennsylvania has clearly stabilized since the free fall of the
 1980s," says report co-author and labor economist Dr. Mark Price. "Yet the
 long-term trends are still not good enough." Price explained that the
 report finds some causes for concern
     -- Between 1979 and 2004, the bottom 70 percent of rural Pennsylvanians
        experienced a decline in their taxable income.
     -- 16% of rural residents now lack health insurance, compared to 12% for
        residents in urban Pennsylvania.
     -- At the end of the 1970s, on average, rural Pennsylvanians earned 82% of
        what urban workers did. Now they earn 73% of what urban workers do.
     One significant obstacle to rural economic progress is rural
 Pennsylvania's educational attainment gap
     -- Only one in five rural Pennsylvanians aged 25-64 have a college degree
        compared with one in three in urban Pennsylvania.
     -- Well over half of rural Pennsylvania adults 25-64 (56%) have any
        education beyond high school.
     "In today's economy, lower education and skills hurt workers' chances
 for a good job and hurts businesses ability to compete in global markets,"
 says Herzenberg.
     A second obstacle is the erosion of rural Pennsylvania's middle-class
 manufacturing base combined with a lack of growth in high-wage service
     -- One in six rural jobs remains in manufacturing, down from roughly one
        in three in the late 1960s (but more than the one in eight jobs urban
        Pennsylvania now has in manufacturing).
     -- In Rural Pennsylvania, higher-paying private service industries, such
        as information technology, professional services, and finance and
        insurance, account for just 12% of jobs.  This compares with 20% in
        urban Pennsylvania.
     "Pennsylvania needs to do a better job of bolstering high-wage rural
 manufacturing," says Herzenberg, "while at the same time focusing new
 energy on creation of good jobs in the services."
     During recent decades of economic restructuring, the report notes,
 public programs have been an important source of economic stability in
 rural Pennsylvania. So-called "transfer payments" make up 22% percent of
 personal income in rural areas compared with 16% in urban Pennsylvania.
 Social Security, Medicare, and Medicaid payments account for the bulk of
 transfer payment income.
     To go beyond treading water to a new era of more robust prosperity, the
 report concludes, Pennsylvania needs a comprehensive new rural economic
 development strategy.
     "Even though 28% of the state's population lives in rural areas, rural
 Pennsylvania is too often an afterthought when it comes to state policy,"
 says Herzenberg. "More than three decades since the shift to a global
 economy began, a real business plan for rural Pennsylvania is long
     A statewide vision and plan for rural Pennsylvania, Herzenberg adds,
 must be accompanied by the leadership and resources to customize and
 implement the plan in each of the state's rural economic regions.
     The State of Rural Pennsylvania also outlines policy specifics in four
 broad areas.
     First, to close rural Pennsylvania's education gap, the state needs to
 invest in education and skills. A centerpiece of this investment should be
 the creation of a rural community and four-year college system that will
 make postsecondary education and training accessible and affordable for all
 rural businesses and residents.
     Second, the state must move beyond antiquated smokestack chasing
 economic development policies and invest, on a regional basis, in key rural
 industries with potential for growth. In much of rural Pennsylvania, these
 assets include natural beauty and tourist destinations, town centers, a
 powerful sense of community, and, in some places, colleges and
     Third, rural Pennsylvania has a powerful stake in state policies to
 promote more affordable access to health care and pensions.
     Fourth, rural Pennsylvania has a strong need for more progressive state
 taxation. As the state's poorest region, rural Pennsylvania funds an unfair
 share of state programs because state taxes take their largest bite out of
 the incomes of the less affluent.
     "Should the state fail to act," says Herzenberg, "it will force local
 governments to cope with global economic change without the resources and
 support they need to compete successfully. It is unrealistic to think that
 rural counties or municipalities, on their own, will be able to develop the
 capacities to compete with national states like China or India. In the
 global economy, that's almost exactly the problem they'll face without a
 real state rural development strategy."

SOURCE Keystone Research Center