Analysis of post-recession job trends suggests existence of 'two Pennsylvanias'

June 11, 2018

UNIVERSITY PARK, Pa. — An analysis of employment change in the state since 2001 suggests the existence of "two Pennsylvanias" during the period from 2001 to 2017, according to economists in Penn State's College of Agricultural Sciences.

The newly released report — "Pennsylvania Employment on the Move: 2001-17" — graphically describes the rapidly changing geography of resident employment and unemployment during the 2001-08 and 2008-16 business cycles and in the post-recovery period of 2014-17. The data show a sharp divide between southeastern Pennsylvania, with mainly job growth, and the rest of the state, with primarily job decline.

The 2001-08 business cycle included a mild recession in 2001-02, and the 2008-16 business cycle was marked by the Great Recession of 2008-10, which was long and deep.

Using local area employment statistics from the Pennsylvania Department of Labor and Industry, the report identifies "winners and losers" among the state's 67 counties, 19 Metropolitan Statistical Areas (MSAs), 16 Micropolitan Statistical Areas and 15 Small Center Areas. These designations are defined by the U.S. Census Bureau.

"The aim of the report is to promote public awareness of the wide swings in employment growth and decline within Pennsylvania since 2001," said co-author Ted Alter, professor of agricultural, environmental and regional economics. "We do not offer policy prescriptions, but we hope the report can inform policymaking at the local and state levels."

Alter noted that economic trends often are discussed in aggregate terms.

"But statewide trends in employment miss the diversity of local change occurring across the state," he said. "What you see statewide is seldom the case locally."

Regionally, the economists said, the big employment winner during 2001-17 was southeastern Pennsylvania, including the Philadelphia MSA and eight other MSAs located mainly south and east of Interstate 78 and Interstate 81. This region enjoyed employment growth during both the 2001-08 and 2008-16 business cycles. In contrast, the rest of the state had a wide mix of slow job growth and decline during 2001-08, and widespread decline from 2008 to 2016.

PA regional employment gains and losses

Maps comparing employment gains and losses in four regions of Pennsylvania during the 2008-16 business cycle and during the 2014-17 post-recovery years. Individual county results varied, but overall, the southeastern quadrant posted significantly stronger job numbers than the rest of the state.

IMAGE: Penn State

While the researchers did not investigate the causes of this shift in resident employment to southeast Pennsylvania, they did suggest possible explanations. "The complexity and diversity of the economy in the Southeast provides a dynamic that businesses and individuals can take advantage of to grow the economy," said Alter, who also is co-director of Penn State's Center for Economic and Community Development.

Co-author Ted Fuller, development economist in the Department of Agricultural Economics, Sociology and Education, agreed. "Typically, you don't have the density and mix of 'growth' versus 'declining' industries in the rest of the state as you do in the Southeast," he said.

"Also, there has been a long-term shift in economic activity and employment from the interior to the coast along much of the Eastern Seaboard. The Philadelphia MSA and other MSAs in southeastern Pennsylvania are likely part of this trend."

One surprising employment trend in southeastern Pennsylvania, noted Gretchen Seigworth, co-author and undergraduate research associate, was the dramatic change in employment in Philadelphia County during 2001-16.

"County employment declined by 12,000 from 2001 to 2008 but increased by 73,000 during 2008-16 — an amazing turnaround," said Seigworth.

On the other side of the state, the Pittsburgh MSA had a mix of employment growth and decline during 2001-17. Allegheny — the core county in the MSA — lost 100 jobs from 2001 to 2008 but gained 3,300 from 2008 to 2016. On the other hand, the six suburban counties in the Pittsburgh MSA added 16,500 jobs during 2001-08 but lost 21,000 jobs between 2008 and 2016.

"Allegheny County — centered on the city of Pittsburgh — recently has capitalized on employment growth in research and development and health care, while a number of the suburban counties have been saddled with a continued decline in manufacturing employment," Fuller said. "A future hope for economic growth in the Pittsburgh MSA is the construction of a natural-gas 'cracker' plant in Beaver County, which would create jobs and likely would generate spin-off industries."

A nighttime photo of an ethane cracker plant

Shell Pennsylvania Chemicals is building a $6 billion ethane "cracker" plant, similar to this facility, in Beaver County. The plant is expected to open in 2020.

IMAGE: Can Stock Photo

Overall, 13 of the state's 19 MSAs had a net increase in employment during 2001-16. All six MSAs with employment declines during that time were outside the Southeast.

Conversely, only three of the state's 16 Micropolitan Statistical Areas and two of 15 Small Center Areas had net increases in employment during 2001-16. All of the Micropolitan and Small Center Areas were located outside of southeastern Pennsylvania, which may have impacted their employment performance.

"The fact that very few Micropolitan and Small Center Areas had employment gains during 2001-16 raises tough questions for policymakers," said Tessa Sontheimer, report co-author and undergraduate research associate. "What's going on that impacts Micropolitan Areas and Small Center Areas differently than MSAs?"

At the county level, 53 of Pennsylvania's 67 counties had employment growth and 14 had employment decline from 2001 to 2008. But during 2008-16, only 16 of the 67 counties experienced job growth. Eleven of the 16 were in southeastern Pennsylvania.

The report concludes that 2008-16 employment trends carried over into the first three "post-recovery" years. During 2014-17, employment growth continued for most of the Southeast, but the Pittsburgh MSA had minimal growth, and most counties in northeastern, northwestern and central Pennsylvania experienced employment declines.

"The geography of employment change during 2014-17 suggests a continuation of the story of 'two Pennsylvanias' into the near future," said Alter.

Added Fuller, "If so, it will present a challenge for future local and state economic development policy and action in both southeastern Pennsylvania and the rest of the state."

"Pennsylvania Employment on the Move: 2001-17" is available on the Center for Economic and Community Development's website.

(Media Contacts)

Last Updated June 11, 2018