Pennsylvania in July started to see post-COVID growth in private-sector jobs, however in comparison the commonwealth remains behind both national job growth numbers and increases in the Sun Belt states, according to a newly released brief from the Allegheny Institute for Public Policy.
“The gain was accounted for by … service-sector jobs, especially education and health, professional and business services and transportation, trade and utilities,” Jake Haulk, president-emeritus and senior advisor of the Pittsburgh-based think tank, wrote in the policy brief, noting that goods-producing jobs remain below the 2019 readings.
Part of the reason, Haulk concluded, is the state’s loyalty to organized labor.
“Pennsylvania as a non-RTW state — with a very high percentage of public-sector union membership — remains a long-term, slow-growth state, especially in comparisons to Sun Belt states with much lower levels of union membership (both public and private) and Right-to-Work,” wrote Haulk.
In the Sept. 7 policy brief, Haulk says that Pennsylvania’s private-sector employment in July stood 125,500 above the level recorded in July 2019, with July’s 5.5 million jobs representing a 2.3 percent gain from July 2019.
In comparison, Haulk wrote that during the same four-year period, private-sector employment in the U.S. grew by 4.04 percent, almost twice as fast, and he noted that during 2020, 2021, and 2022, Pennsylvania’s private sector fell by a cumulative 766,300 jobs, or 14.3 percent below the 2019 yearly average of 5.36 million jobs.
“If jobs had continued to grow at the rate recorded in the four years 2015 to 2019, the cumulative employment loss would have been 1.12 million jobs or 20.5 percent,” he wrote in the brief.
While there are sources of income other than hours worked by employees — such as pensions, Social Security, investment income, royalties, COVID payments, etc. — Haulk pointed out that private-sector employment is closely related to the state’s real output.
“Thus, the cumulative employment loss created by the COVID-19 pandemic and state policies in reaction to COVID-19 during the two years following the start of the pandemic in March 2020 also took a substantial toll on real output,” according to the brief.
Specifically, private-services employment led the way over the last 48 months (July 2019 to July 2023) with a gain of 138,300 jobs, while goods-production employment remained 12,800 below the July 2019 level. Manufacturing accounted for 8,300 of the goods-producing jobs shortfall, the brief says.
Haulk selected six states to compare jobs performance to Pennsylvania: three in the northeastern part of the country (New Jersey, Massachusetts and Michigan) and three from the Sun Belt region (Texas, Florida, and North Carolina).
The Ph.D. economist compared each state’s job performance to Pennsylvania using specific measures: the percentage growth in private-sector employment from July 2019 to July 2023; job growth from July 2013 to July 2023; the presence of RTW and the percentage of public workers and private workers as members of labor unions in 2022; and the latest available data.
“Note that all the Sun Belt states are RTW states and have been for many years. All the northern states are non-RTW states,” wrote Haulk. “In addition to the presence of RTW in a state or its absence, it is also important to consider the percentage of unionization (the percent of workers that are members of a union) in both the public and private sectors in each state.”
With that in mind, regarding the first comparison indicator for private-sector employment growth from July 2019 to July 2023, for example, Haulk found that the average job gains for the four non-RTW states was 2.4 percent with Pennsylvania at 2.3 percent. The average growth over the four-year period for the three RTW states was 9.8 percent with Florida leading at 10.7 percent.
Meanwhile, for the last 10 years, the non-RTW states averaged a gain of 11.4 percent in private-jobs growth with Pennsylvania the slowest in the group at 9.1 percent, he said, while the RTW states posted an average gain of 28.4 percent with Florida having the highest gain of roughly 33 percent, according to the brief.
“Clearly, these Sun Belt RTW states have far outperformed the non-RTW states,” wrote Haulk.
He added that it’s important to note the strong correlation between the percentage of public-sector employees’ union membership and employment growth, pointing out that the four non-RTW states averaged 52.3 percent membership in 2022 while the RTW Sun Belt states averaged 15.4 percent. Private-sector union membership averaged 8.3 percent while the RTW states averaged just 2.1 percent.
At the same time, the uptick in Pennsylvania employment is unevenly distributed across the state with some areas posting meaningful gains while other areas lag behind and have not yet recovered to pre-pandemic levels, the policy brief says.
For instance, the overwhelming share of the private employment gain over the July 2019 to July 2023 period came in the southeast corner of the state, according to Haulk, with the three-county metropolitan division that includes Montgomery, Bucks, and Chester counties posted an increase of 50,000 jobs.
“Unfortunately, several metro areas in the state had not recovered to 2019 levels by July 2023,” he wrote. “The Pittsburgh MSA led the way in jobs shortfall with a July 2023 posting of private-sector jobs still 8,500 below the 2019 level.”