Pa. Unemployment Would Be in Double Digits Absent Federal Economic Policies

Federal action saved thousands of jobs in every region; regional unemployment would be 15% or higher in many parts of the state, new report finds

Oct 27, 2010, 15:56 ET from Keystone Research Center

HARRISBURG, Pa., Oct. 27 /PRNewswire/ -- Hundreds of thousands more Pennsylvanians would be out of work today had policymakers chosen to do nothing in the face of the worst economic recession in decades, according to a new report from the Keystone Research Center.

Unemployment rates would be at 15% or higher in most parts of the state, with a staggering 20% rate in Philadelphia. Even places with traditionally lower jobless rates, like the Harrisburg-Carlisle and Lancaster regions, would be saddled with double-digit unemployment today.

"Federal policies stopped the economic free fall, and policy choices at the national and state level will powerfully shape the future health of the economy for middle-class Pennsylvania families," said Dr. Mark Price, Labor Economist for the Keystone Research Center.

The new report, Getting Pennsylvania's Economy Back on Track, amplifies a key finding of Keystone's State of Working Pennsylvania 2010 report released last month: that Pennsylvania's economy would have been much worse off without the policy actions taken by the Federal Reserve, the Bush and Obama administrations, and Congress. The Keystone estimates are derived from a national-level analysis of the impact of federal economic intervention that was co-authored by John McCain economic adviser Mark Zandi.

Absent federal economic policies to restore the economy, Pennsylvania's unemployment rate today would be at 15% - nearly 700,000 jobs short of full employment - Keystone estimates. By comparison, Pennsylvania's September unemployment rate stood at 9%, with a jobs gap of 312,000. Thus, federal actions saved nearly 400,000 jobs.

Pennsylvania's economy is also adding jobs faster during the current economic recovery than it did after the last two recessions - in 2001 and 1991.  Fourteen months after the end of the 1991 recession, private-sector employment had declined by 19,300 jobs. At the same point after the 2001 recession, private-sector employment was down 29,800 jobs. In August of this year - 14 months after the Great Recession ended - private-sector employment in Pennsylvania had increased by 2,900 jobs.

Keystone researchers found that federal economic policy measures, while successful, were too small to entirely avert the significant job losses that occurred when the housing bubble burst, bringing down the economy.

"We have more work to do," said Dr. Stephen Herzenberg, Executive Director of the Keystone Research Center. "To get Pennsylvania's economy going full steam, we need more investment in people and communities - our kids' education, roads and bridges, and local economies. If the federal government trims spending too soon, our economy will get derailed again."

Across Pennsylvania, a hands-off approach to the Great Recession in 2008 and 2009 would have been devastating. It would have sent unemployment rates spiraling to:

  • 20% in the City of Philadelphia and nearly 15% in the Philadelphia metro area, including Bucks, Chester, Delaware, Montgomery and Philadelphia counties and parts of New Jersey and Delaware (110,000 jobs saved);
  • 17% in the Scranton-Wilkes-Barre metro area (15,000 jobs saved);
  • Nearly 17% in Erie County (5,500 jobs saved);
  • Nearly 16% in Altoona (over 5,000 jobs saved);
  • 15% in the Allentown-Bethlehem-Easton metro area (27,000  jobs were saved by federal intervention);
  • 15% in the Pittsburgh metro area (76,000 jobs saved);
  • 15% in the Reading metro area (9,000 jobs saved);
  • 13% in the York-Hanover metro area (nearly 14,000 jobs saved);
  • Above 12% in the Harrisburg-Carlisle metro area (21,000 jobs saved);
  • Above 11% in Lancaster County (14,000 jobs saved).

View the full report at:

View specific figures for all 14 metro areas and 67 counties of Pennsylvania:

"With only a few days to go before the election, fixing the economy is on the minds of many voters," said Dr. Price. "Our estimates let Pennsylvanians know what would have happened if we'd listened two years ago to those who advocated taking no federal action. We also give voters a basis for thinking about the wisdom of similar policies today."

The Keystone Research Center is a nonprofit, nonpartisan research organization that promotes a more prosperous and equitable Pennsylvania economy. Learn more:

SOURCE Keystone Research Center