Pennsylvania’s Unremarkable Private-Sector Job Performance

Philadelphia Daily News Columnist John Baer is right to suggest that Governor Corbett’s jobs performance since January 2011 is less than “remarkable.”

Baer's critique comes in response to the Governor’s first re-election campaign ad touting "a remarkable 116,000 new private-sector jobs" since he came into office in January 2011. Not so fast, Baer writes:

When one looks at net jobs here since January 2011, the picture is less than "remarkable." The current net jobs gain is not 116,000. It's 75,100.  Among the 10 largest states, of which we're sixth, we gained the fewest jobs. … data on the four states with less population (Ohio, Georgia, Michigan and North Carolina) show each gained double the number of jobs we did, or more.

Governor Corbett gets to 116,000 by limiting his count to private-sector jobs only, not the tens of thousands of teachers, police officers and other public servants who lost their jobs following years of state and local budget cuts.

Even if you restrict your analysis to the private sector, Pennsylvania’s private-sector job growth has almost stalled since about a year into the Governor’s term. To see that, take a look at the chart below.

The chart shows cumulative private-sector job growth in Pennsylvania since January 2011, the month Baer uses as his point of reference. We rely on data from a survey of employers by the Bureau of Labor Statistics known as the "establishment" survey. There is another employment survey of households done monthly by the U.S. Census Bureau, and over short periods of time, the two can differ — but as Mark Price has explained, both surveys typically tell the same story about the health of the labor market over the long haul.

Looking at data from the establishment survey, Pennsylvania’s private-sector job growth was relatively robust in 2011, yielding a total of 100,000 net new private jobs by March 2012. In the 14 months since then, however, the state has seen private jobs growth of less than 5,000; private job growth is less than 20,000 even if you use a three-month moving average for the same period.

Another way to gauge how “unremarkable” the state’s private job performance has been is to compare it to the national level. We do this by first computing percent job growth for the U.S. since January 2011 and then computing what private job growth in Pennsylvania would have been if the state’s percent job growth had kept pace with the national average. The gap between what Pennsylvania’s job growth would have been if it matched the national rate and actual Pennsylvania job growth is labeled “Pennsylvania’s growing private job gap” in the next chart.

What explains Pennsylvania’s private-sector job growth trends since early 2011 relative to the nation?

One hypothesis for Pennsylvania’s strong showing in 2011 is that the robust job growth that year partly reflected the policies of outgoing Governor Ed Rendell. A related hypothesis is that the policies of Governor Corbett, most prominently the impact of budget cuts and public-sector layoffs, took a year or so to have an impact on the private-sector economy.

Yet another factor could be the natural gas industry. Although the impact of drilling on Pennsylvania jobs has been exaggerated, it did have some impact. Since 2011, however, drilling and natural gas employment have ebbed. The flat-lining of private-sector job growth in Pennsylvania since the first quarter of 2012 makes abundantly clear that the natural gas industry alone never amounted to an adequate jobs strategy for the state.

A final factor is slow population growth in Pennsylvania. From April 1, 2010 to July 1, 2011, population growth in Pennsylvania was 0.5% compared to 1.7% nationally. When the economy is at full employment, the growth of the working-age population has more impact than any other factor on job growth — as a result, job growth in states with slowly-growing populations should not be expected to keep pace with that of the nation. However, when unemployment rates are well above full employment, as at present, then state job growth rates are more likely to cluster close to the national average and less likely to be impacted primarily by relative rates of long-term population growth.

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