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How Much Does Child Poverty Cost the Economy?

A blog post by Chris Lilienthal, originally published at Third and State.

At a conference this week, a presenter posed an important question that doesn't get asked very often: How much does child poverty cost our economy?

Based on an analysis of the U.S. Census Bureau's 2006 American Community Survey data, researchers estimated that child poverty costs the nation $500 billion annually in foregone earnings, involvement in crime, and the costs associated with poor health outcomes. In Pennsylvania, the cost is $17.5 billion annually, based on the 2006 data showing 465,000 (or 17%) of children living in poverty.

In effect, this is money that would accrue to the U.S. and Pennsylvania economies if we took steps now to end child poverty once and for all, such as investing in education, health care and other vital family needs. And with poverty rates higher today in the wake of the recession, the benefits of doing so would be that much greater.

We have long grappled with the social costs of poverty and what it means for families across Pennsylvania and the nation. It's also critical to look at poverty as a huge economic and jobs issue.

Lori Pfingst of the Washington State Budget and Policy Center, who took the national data and broke it down by state, explains:

Using Temporary Workers to Forecast the PA Economy

A blog post by Sean Brandon, originally published at Third and State.

The employment services industry provides a variety of human resources services, including most notably supplying temporary workers to other businesses. Because of the unique characteristics of this industry, economists often use its job market trends as an economic forecasting tool. The reason is simple: When the economy starts to slide, the first workers to go are usually the temporary employees, but when the economy begins to pick up, businesses will hire temporary workers first.

Historically, the employment services industry has proved a reliable indicator of broader job market trends. Let’s consider the Great Recession as an example. In the past five years, the height of employment (a 12-month moving average of not-seasonally-adjusted employment data) in the employment services industry in Pennsylvania was in January 2008, just after the recession began. The employment services industry then shed 23,517 jobs before it reached its low point in December 2009.

On the other hand, total nonfarm employment in Pennsylvania did not reach its peak until September 2008, eight months after employment services peaked. Furthermore, total nonfarm employment did not begin to recover until April 2010, after employment services had seen steady growth for four months.

In the case of both the recession and the recovery, the employment pattern in the employment services industry foreshadowed what was going to happen to Pennsylvania’s job market as a whole.

So what are the statistics in Pennsylvania’s employment services industry suggesting now?

A $56 million 'Oops': PA Revenue Department Updates Marcellus Shale Tax Estimates

A blog post by Michael Wood, originally published at Third and State.

Tim Puko at the Pittsburgh Tribune-Review uncovered a $56 million mistake in the Pennsylvania Department of Revenue's reporting of personal income tax (PIT) collections attributed to Marcellus Shale drilling for last year.

Back in May, the Department estimated that taxable Marcellus Shale royalties generated $102.7 million in PIT collections in 2010. Now the Department says that figure is a tad lower — $46.2 million, a decrease of $56.5 million or over 55% from what was reported six months ago. To quote Britney Spears, "Oops!"

How does this happen? By rushing too fast and using incomplete data to make a policy point, as I noted in the Tribune-Review story. This type of cheerleading report for a single industry is highly unusual for the Department of Revenue. There isn't a report of taxes paid by snack food manufacturers, steel producers, or even dairy farms.

The updated Marcellus tax data included another interesting tidbit — how little is paid in PIT from income flowing through to oil and gas company owners. In 2009, the Department reports $9.9 million in PIT from these taxpayers.

Job Growth Returns to PA but Challenges Still Loom

A shortened version of a blog post by Mark Price, originally published at Third and State.

The Pennsylvania Department of Labor and Industry reported Thursday that the number of jobs in the commonwealth grew by 13,800 in October, as the unemployment rate fell slightly to 8.1%. A key factor in October's relatively good performance was a pause in public-sector job losses.

So the good news is we had one positive month; the bad news is unless we have more months like October, the labor market is more or less stuck in neutral. Back in January, we estimated that the jobs deficit in Pennsylvania was 257,000 jobs (this is the number of jobs Pennsylvania needs to get back to full employment). The October jobs deficit is just over 237,000 jobs. In other words, the pace of job growth is such that we are back to full employment in more than eight and half years.

Read more in the Pittsburgh Post-Gazette and check out my statement on the latest jobs report.

It Is an Undeniable Fact that I Am an Uber Responsible Private-Sector Labor Market Analysis Machine

A blog post by Mark Price, originally published at Third and State.

A while back the Pennsylvania Department of Labor and Industry released a new version of its Marcellus Shale Fast Facts, which prompted a statement from Kathryn Klaber of the Marcellus Shale Coalition (MSC):

This new data further reinforces the undeniable fact that responsible American natural gas production is an unmatched private sector job creation machine.

So let's take a look at what the numbers say. Figure 1 presents on the left axis total employment in the Marcellus core industries by quarter from the fourth quarter of 2007 to first quarter of 2011 (the most recent data available).

On the right axis, the percent change from the previous quarter in total employment in that sector (the red line).

On a quarterly basis, employment growth in this sector is volatile, ranging from negative 5% in the first quarter of 2009 to an increase of more than 20% in the second quarter of 2010.

Between the first quarter of 2010 and the first quarter of 2011, the Marcellus core created 7,328 jobs. Total nonfarm employment over the same period increased by just over 87,000 jobs.

What is Pat Toomey Doing? Inequality and America's Future

A blog post by Stephen Herzenberg, originally published at Third and State.

Let me connect three dots for you. Draw your own conclusions about the impact of Pennsylvania Senator Pat Toomey’s proposal in the super committee to reduce the federal deficit.

Dot Number 1 — The American middle class is shrinking: The New York Times reports this morning that the middle class is shrinking in America — based on where people live.  In 2007, the latest year studied, 44% of families lived in middle-income neighborhoods, down from 65 percent of families in 1970. A third of families lived in very high-income or poor neighborhoods now, up from just 15 percent of families in 1970. The case example used to illustrate this national trend — the Philadelphia metropolitan area.

Putting the Brakes on Pennsylvania’s Recovery

A blog post by Stephen Herzenberg, originally published at Third and State.

Public-sector job losses are putting the brakes on Pennsylvania’s economic recovery, endangering private-sector job gains

Those are the findings in a new Keystone Research Center policy brief that I co-authored with Mark Price. (You can read the press release here.)

Over the last year, Pennsylvania has lost 21,000 public-sector jobs, including some 13,000 education jobs. The impact is being felt well beyond the public sector, slowing the pace of private-sector job growth as the ripple effects of out-of-work teachers and laid-off government workers take a toll on the broader economy.

As a result of these public-sector job losses, Pennsylvania is squandering a job growth advantage that it enjoyed over other states coming out of the recession.

Between September 2009 and September 2010, the commonwealth ranked fourth among the states in the number of jobs created and seventh by job growth percentage. During the five months between April and September 2011, however, Pennsylvania’s job growth ranked among the bottom 10 states.

Have You No Shame, Sir (Plus Mary)?

A blog post by Stephen Herzenberg, originally published at Third and State.

The Central Pennsylvania Business Journal this week published the list of the highest-paid 10 executives in the region in 2010. Nine of these executives are men. The tenth was Mary F. Sammons, the former Chairman and CEO of Rite Aid.

Some of the salary information in The Business Journal is not new. (See, for example, the CEO pay list in Table A1, starting on page 21 of The State of Working Pennsylvania 2011.) What is new is that The Business Journal also published these executives’ pay in 2009, allowing us to look at the change in pay from 2009 to 2010 for a group of Pennsylvania executives. (Earlier, we only had information on change in executive pay from 2009 to 2010 for U.S. CEOs.)

Here’s what we found. The dollar increase in pay for these executives ranged from $2.55 million for Michael Lockhart of Armstrong World Industries to less than a million dollars (about $900,000) for Neil Shah, the President and COO of Hersha Hospitality Trust. The average increase was $1.64 million.

The percent increase in pay ranged from a mere 14% for Peter Carlino, Chairman and CEO of Penn National Gaming Incorporated, to nearly 100% for John Standley, the current President and CEO of Rite Aid.

33 Years? A Bleak Employment Outlook

A blog post by Mark Price, originally published at Third and State.

More or less in line with the consensus forecast, the U.S. Labor Department reported last Friday that U.S. nonfarm payrolls grew in October by 80,000 and the unemployment rate fell slightly to 9%. This news comes a week after the Commerce Department reported that Gross Domestic Product (GPD) grew 2.5% in the third quarter of this year.

Both reports represent a relative improvement over previous trends, but as Dean Baker of the Center for Economic Policy Research (CEPR) notes:

At this pace it would take more than 33 years to return to the pre-recession rates of unemployment.

The figure below by Josh Bivens of the Economic Policy Institute plots the contraction in GDP during the Great Recession compared to the 1990 and 2001 recessions and the pace of growth in the recoveries that followed.  As you can see in the figure, the pace of growth in this recovery does lag somewhat the two previous recoveries. But as Dean's startling estimate reveals, the larger problem is how deep the recession was.

Growing Economies, Stagnant Wages: Pennsylvania Edition

A blog post by Mark Price, originally published at Third and State.

Catherine Rampell of The New York Times has posted results from a UK think tank tracking trends in overall economic growth and median pay from 2000 to 2007 in 10 countries. As Rampell explains:

A higher ratio means that the pace of growth for median pay was close to the pace of growth for output per capita. A low ratio means that median pay grew much more slowly than did the economy as a whole.

Of the 10 countries analyzed, Finland showed the closest relationship between the living standards of the typical worker and improvements in the overall economy.

The United States was on the lower end. From 2000 to 2007, median pay increased at a quarter of the pace of output per capita. In other words, the typical American worker did not share much in the country’s growing wealth even when the economy was good.

Below I reproduce the figure Rampell posted but with Pennsylvania data added in. When the economy was strongest here in Pennsylvania, wages for the typical Pennsylvania worker grew at a quarter of the pace of output per capita in the state. When it comes to trends in inequality, Pennsylvania is America.

Bad PA Employment News Keeps On Coming

A blog post by Mark Price, originally published at Third and State.

The unemployment rate in Pennsylvania peaked at 8.8% in April 2010 before steadily declining to 7.4% in May of this year. Then mounting public-sector job losses pushed unemployment back up to 8.3% this September.

Tuesday’s release of September unemployment data contained some good news in that the unemployment rate fell in September in 60 counties and in every metropolitan area in the state.

The figure below presents unemployment rates from April to September of this year in 16 metropolitan areas. As you can see, the good news of a sizable one-month decline in unemployment is tempered by the fact that unemployment in September remained higher than its April lows in every metropolitan area.

As I noted Tuesday morning, September’s good news on unemployment will be temporary if layoffs continue to outpace new job openings.

And on that front, The Central Pennsylvania Business Journal reported on Tuesday that an index (PDF) published by the Philadelphia Federal Reserve, which predicts economic conditions over the next six months, is signaling that the Pennsylvania economy will be shrinking through the first quarter of 2012.

Are policymakers seeing this?

Jobs Down, College Tuition Up, School District Taxes Up and Policy Makers Are Focused On What?

A blog post by Mark Price, originally published at Third and State.

Other recent Morning Must Reads from Third and State:

Monday: No Revenue for Public Transportation & Corporations Need Another Tax Loophole for their Jets

Tuesday: Mo Gas, Mo Problems

On Tuesday, the Keystone Research Center published a summary of the employment situation in Pennsylvania. With the release of September's jobs data, which included a loss of just over 15,000 jobs, a picture is emerging of a job market in Pennsylvania that is shrinking. The continued loss of public-sector jobs and relatively slow growth in private-sector jobs is the main source of weakness in the labor market. The bottom line is that although Pennsylvania ranked in the top 10 of states in terms of job growth early in this recovery, the Commonwealth has moved to the bottom 10 in the last five months.

Much of the public-sector job loss is driven by the fact that tax revenue has yet to fully recover from the recession, the end of federal Recovery Act funding, and state lawmakers' unwillingness to raise state revenues which has deepened state budget cuts.

Don't Want to Give Gas Drillers a Free Pass in PA? Sign Our Letter to State Lawmakers

A blog post by Kate Atkins, originally published at Third and State.

Any doubt about the level of public concern over Marcellus Shale drilling in Pennsylvania should be put to rest by the turnout at a series of citizens hearings over the past six weeks. Hundreds came out to testify about the impacts of drilling in their communities at hearings held by the Citizens Marcellus Shale Commission in Williamsport, Towanda, Philadelphia, suburban Pittsburgh and Harrisburg.

Sign Our PetitionIn the state Legislature, momentum is building among lawmakers to get tougher on Exxon, Andarko, Shell, and the other big natural gas drillers that have been extracting this non-renewable resource tax-free for the past three years. Legislators remember coal: when this industry is gone, we want to have something to show for it.

Every other state with significant mineral wealth is taxing it, and most use that revenue to educate the next generation’s workforce, protect our environment, maintain transportation and information networks, and otherwise build a stronger economy. Because we know this boom won’t last forever, we need to lay the groundwork for a better future for our children and grandchildren.

Bridges Need Repair and Little Old Ladies Are Homeless but Have We Done Enough for the Top 1%?

A blog post by Mark Price, originally published at Third and State.

With unemployment in the construction industry at record highs, interest rates low and a deep backlog of thousands of structurally deficient bridges in need of repair, now is a great time to spend money to fix stuff do nothing!

Actually, it is not really that bad; it's worse. The Pennsylvania Legislature is spending time debating changes to the state's prevailing wage statute, even though a large body of empirical research demonstrates that changes to prevailing wage laws do not lower construction costs.  Anyway, if you find yourself in Pittsburgh, make sure your car seat also doubles as a floatation device.

A report to be issued today says the Pittsburgh metropolitan area has the highest percentage of structurally deficient bridges in the U.S. ...

[James Corless, the director of the Washington, D.C.-based Transportation for America, said:] 'These metropolitan-area bridges are most costly and difficult to fix, but they also are the most urgent, because they carry such a large share of the nation's people and goods.'

New York Times on Marcellus Shale: With Growth Comes Problems

A blog post by Sharon Ward, originally published at Third and State.

In a recent article examining the impact of Marcellus Shale drilling in Pennsylvania, The New York Times asked me to put the state's tax policy on gas drilling in perspective. I explained that drilling isn't producing the tax revenue needed to address the significant impacts of drilling or to support shared state priorities. Reporting from Montrose, Pa., reporter Kit Seelye writes:

The [Marcellus Shale] gas boom is transforming small towns like this one (population 4,400 and growing) and revitalizing the economy of this once-forgotten stretch of rural northeastern Pennsylvania. The few hotels here have expanded, restaurants are packed and housing rentals have more than doubled ...

But the boom — brought on by an advanced drilling technique called hydraulic fracturing, known as fracking — has brought problems too. While the gas companies have created numerous high-paying drilling jobs, many residents lack the skills for them. Some people’s drinking water has been contaminated. Narrow country roads are crumbling under the weight of heavy trucks. With housing scarce and expensive, more residents are becoming homeless. Local services and infrastructure are strained.

“Very little tax revenue goes to local governments to help them share in the benefits of the economic development,” said Sharon Ward, executive director of the Pennsylvania Budget and Policy Center, an independent policy research organization.

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