With A Quarter of Pennsylvania Workers Experiencing Underemployment Each Year and Wages Stagnant, a Call for a 'Moral Economy'

Keystone Research Center releases annual State of Working PA report

Sep 02, 2011, 11:42 ET from Keystone Research Center

HARRISBURG, Pa., Sept. 2, 2011 /PRNewswire/ -- Austerity economics driving state and federal policies are increasing joblessness, sparking greater economic inequality and undercutting American values, according to a new report from the Keystone Research Center.

Yet it doesn't have to be this way, researchers wrote in the Center's 2011 State of Working Pennsylvania report, emphatically rejecting the claim that "nothing can be done" about the current economy.

"The problems in our economy are self-inflicted," said co-author Stephen Herzenberg, PhD, an economist and Executive Director of the Center. "A bold shift of economic policy could restore growth and competitiveness, while bolstering the middle class."

U.S. Economic System Is Broken

The State of Working Pennsylvania is Keystone's annual review of how working Pennsylvanians and their families are faring in today's economy. The new report had little good news for most working people.

"From the perspective of most Pennsylvanians and Americans, our economic system is broken," said Mark Price, PhD, a labor economist for the Center and co-author of the report. "We remain stuck in the most extended period of high unemployment since the Great Depression."

The report found:

  • During the past year, over a quarter of Pennsylvania workers experienced joblessness or worked part time despite wanting more hours.
  • For every job opening in the state currently, there are nearly eight Pennsylvania workers who need a job or want additional hours of paid work.
  • 43% of likely U.S. voters report that they or a family member have experienced unemployment since 2009.
  • For those who do have full-time work, the sluggish job market has resulted in stagnant wages. Only the highest-paid 5% of Pennsylvania earners experienced significant wage gains from 2002 to 2010. Even college-educated Pennsylvanians were not immune, experiencing a 3.1% decline in hourly earnings.
  • Meanwhile, CEO pay rose 23% in Pennsylvania in 2010.

More Danger Signs Ahead

Some are calling for even more cuts in state and federal spending at a time when businesses and consumers are not ready or able to drive economic growth. Such cuts, researchers wrote, could be particularly devastating to high-unemployment rural Pennsylvania, where federal extended unemployment benefits have prevented an even more serious downward economic spiral.

"When people have less work and wages aren't going up," Dr. Price said, "they can't buy as much. If extended unemployment benefits expire in December and cuts are made to health care for seniors or food for kids, local economies will sink further, and we will all suffer."

Time for a New Direction in Economic Policy

With working families still struggling in this weak economy, policymakers should step into the breach with a plan that focuses directly on job creation and building a stronger economy, researchers wrote in the report.

"It's time for a new direction in U.S. policy," Dr. Herzenberg said. "We need to create a 'moral economy' that works better economically and supports rather than undercuts American values."

The report outlines some immediate steps to strengthen the economy, including:

  • Continuing extended federal unemployment benefits through 2012 as families continue to struggle in this weak economy;
  • Investing in infrastructure and school construction at a time when costs are low and we can get more bang for the buck; and
  • Modernizing our unemployment system to help out-of-work people strengthen their skills and better contribute to the economy.

"Our policy has not kept pace with changes in our economy over the past several decades," Dr. Herzenberg said. "That's why our economy is broken.

"The great news is that good companies in every industry demonstrate that it is possible to compete using highly-skilled workers and modern technology. Updating policy means creating conditions in which such 'high road' companies grow and multiply."

View the full State of Working Pennsylvania 2011 report

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

SOURCE Keystone Research Center