Pennsylvania’s Labor Force Participation Rate Continues to Decline

Member Group : Center Square

The Center Square) – Pennsylvania’s number of open jobs remains high while its number of workers in the labor force continues to shrink.

The trend, which has been ongoing for years, became worse when the pandemic hit in March 2020. The commonwealth has struggled to recover to its 2019-era labor force participation rate.

The labor force participation rate measures how many working-aged people are employed or looking for a job out of the entire population. Since May, it has held steady at 61.7%, as The Center Square previously reported.

In November, however, it declined even further, to 61.6%, at a time when the commonwealth has 361,000 open jobs, according to new data released by the Independent Fiscal Office.

The report also referenced a Wall Street Journal poll where economic forecasters estimated a 63% chance that the American economy could slip into recession within the next year.

Pennsylvania’s labor market “remains historically tight,” the IFO report said.

“Similar to prior months, the tight state labor market, low labor force participation rate and contracting demographics will continue to apply upward pressure on wage growth and economy-wide inflation,” the IFO reported.

For individual workers, it means wages should grow, or plenty of open jobs gives them the chance of switching for a better-paying one.

Broadly speaking, however, a lower labor force participation rate can put pressure on government services. The demand for services can increase in an aging population like Pennsylvania’s as tax revenue growth slows due to a smaller part of the population working.

Already, experts warn of the state’s budget surplus becoming a budget deficit due to government spending outpacing tax revenues.

research brief from the IFO earlier in December estimated Pennsylvania was missing about 113,000 workers, compared to a scenario where the state’s population stayed steady from the first quarter of 2020.

Staff Reporter

Anthony Hennen is a reporter for The Center Square. Previously, he worked for Philadelphia Weekly and the James G. Martin Center for Academic Renewal. He is managing editor of Expatalachians, a journalism project focused on the Appalachian region.