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Commonwealth Foundation


Reviving Pennsylvania

by Jake Haulk,
President, Allegheny Institute for Public Policy
 

By Jake Haulk Matthew J. Brouillette

Editor's note: This is the first in a series of occasional commentaries on how Pennsylvania can turn around its economic fortunes. Today, troubling numbers.

Pennsylvania was one of the most dynamic and most rapidly growing states for nearly 130 years following the nation's founding. But by 1930 its growth had drastically weakened. By 1970, population growth had virtually stopped. It was the status quo for the next 38 years.

In 2008, the commonwealth's population reached 12.4 million, 5.3 percent above the 1970 level. That made Pennsylvania the third-slowest growing state, slightly ahead of West Virginia and North Dakota.

Meanwhile, the U.S. population climbed 49.7 percent during the period (10 times faster than Pennsylvania) with 19 states posting gains well above the national average pace.

Fortunately for Pennsylvania's economy (at least in the short run) the very anemic overall population growth was accompanied by a major shift in the state's age distribution.

In 1970, there were 5.8 million residents under the age of 30. By 2000 that number had dropped to 4.7 million. The number of people in the prime working age group of 20 to 64 rose sharply from 5.5 million in 1970 to 7.1 million in 2000, a gain of 30 percent.

Thus, even though overall population essentially was flat–reflecting ongoing losses to net out-migration–the aging of the baby boomers provided a substantial boost to the state's work force. Unless in-migration rises sharply, the age distribution will dampen labor force growth in the coming decades.

Bureau of Economic Analysis data show the state's private-sector jobs (full- and part-time) climbing 45 percent between 1970 and 2007. And while appearing to be a respectable pace, it is weak compared with the national increase of 116 percent. Many states enjoyed job gains far faster than the national average with Texas employment tripling from 1970 to 2007.

Pennsylvania's job picture was very mixed. Worst hit was manufacturing, with a loss of more than half-a-million jobs between 1970 and 2007–a 56 percent drop. Offsetting the factory declines were large increases in services employment (doubled) and construction (72 percent).

State and local government jobs kept pace with private-sector gains, rising by 39 percent over the period–about 185,000 jobs. In other words, government job growth was about eight times faster than the commonwealth's population increase, something legislators need to bear in mind.

Finally, it is important to note that the nation's total personal income grew much faster than Pennsylvania's, outstripping it by 40 percent during the 1970 to 2007 period. Several states with very robust job gains have seen total personal income climb at twice the pace in Pennsylvania.

This is significant because total income is perhaps the single best gauge of a state's overall tax base and its ability to fund necessary government functions with low tax rates.

In sum, the last 40 years have been at best so-so for Pennsylvania. Moreover, numerous state rankings of economic competitiveness consistently place Pennsylvania in the bottom 10 states. If we want a brighter future, Pennsylvania must replace its growth-inhibiting fiscal, labor and regulatory policies.

# # #

Jake Haulk is president of the Allegheny Institute for Public Policy (www.AlleghenyInstitute.org). Matthew J. Brouillette is president of the Commonwealth Foundation for Public Policy Alternatives (www.CommonwealthFoundation.org).

Permission to reprint is hereby granted provided the author and affiliation are cited.


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