Recovery

A Recovery for the 1%

By Jheanelle Chambers, Intern, Third and State

Even in a Down Year, Top 1% Have More Total Income Than Bottom 50 Percent CombinedWhile many middle-class Americans are still struggling in a down economy, the 1% is doing quite well.

The Center on Budget and Policy Priorities has an eye-popping chart (right) showing that in 2009, despite the weak economy, the top 1% of households captured $1.32 trillion in gross income while the bottom 50% earned $1.06 trillion.

Economist Chuck Marr explains further at Off the Charts:

The long-term trend in the United States has been towards much greater income concentration at the top. But the trend isn’t perfectly smooth: high-income people tend to benefit more from economic expansions than other income groups but tend to get hit harder by recessions. The swings are particularly pronounced in financial booms and busts...

At the height of the previous expansion, in 2007, the top 1 percent had 87 percent more total [adjusted gross income] than the bottom 50 percent. But even the 2009 gap of “only” 25 percent — the difference between the $1.32 trillion earned by the top 1 percent and the $1.06 trillion earned by the bottom 50 percent — is pretty staggering.

End of Mortgage Assistance Could Undermine Economic Recovery

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

Economic forecasters predicting strong economic growth in the next several years rest those hopes on a robust recovery in residential construction. In light of that, The Philadelphia Inquirer has some troubling news this morning in a story about a surge in foreclosure filings over the last 12 months.

The rise in foreclosure filings may be the result of lenders moving forward with long planned foreclosures rather than a worsening of economic conditions. More troubling is the rise in 90-day delinquencies, which could be the result of the end of Pennsylvania's Homeowners Emergency Mortgage Assistance Program (HEMAP). The permanent end to HEMAP also means rising costs for future taxpayers.

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?

State Cuts to Education, Health Care Will Slow Recovery

A blog post from Christopher Lilienthal, originally published on Third and State.

We have written about the negative impact that deep cuts to state funding will have for Pennsylvania children, seniors and our economy. Now a new report from the Center on Budget and Policy Priorities shows that we aren't alone.

At least 38 of the 47 states with new 2011-12 budgets are cutting K-12 education, higher education, health care, or other key public services, according to the report. As Policy Analyst Erica Williams writes at the Center's Off the Charts Blog:

While states continue to face rising numbers of children enrolled in public schools, students enrolled in universities, and seniors eligible for health and long-term care services, most states (37 of 44 states for which data are available) plan to spend less on services in 2012 than they spent in 2008, adjusted for inflation — in some cases, much less.

State lawmakers no doubt faced tough decisions this year, with revenues still far below pre-recession levels and emergency federal aid all but expired. Still, our review shows that the cuts are unnecessarily harmful, unbalanced, and counterproductive.

Pennsylvania is among that group spending less in 2012 than in 2008 (adjusted for inflation):

More Analysis of Pa.'s June Jobs Report

A blog post from Mark Price, originally published on Third and State.

As I said last week, Pennsylvania's June jobs report raises several concerns about the fragile economic recovery. It was the second month in a row of job losses, with total nonfarm employment dropping by 2,600 jobs.

Taking into account June’s poor performance, the Commonwealth has added an average of just over 2,600 jobs a month in the second quarter. That’s down from the 9,700 jobs per month the Commonwealth added in the first quarter of this year. The Keystone Research Center has a full analysis here.

State level payroll and unemployment numbers should always be viewed with some caution as monthly volatility can obscure trends. But it is clear that weakness in the national economy in the second quarter slowed job growth in Pennsylvania.

While the economy is still growing and adding jobs, the slower pace of job growth is quite troubling given that the labor market in Pennsylvania remains more than 240,000 jobs short of full employment.

Employment in Pennsylvania remains more than 240,000 jobs below full employment

The Middle Class ‘Under Attack’

A blog post from Mark Price, originally published on Third and State.

At the Keystone Research Center, we have been chronicling for years the forces that are putting a tighter and tighter squeeze on middle-class Pennsylvanians.

Last week, we released a new report in partnership with the national policy center Demos that takes the temperature of the state's middle class in the wake of the Great Recession. I'm sorry to say, once again, the patient is not well.

The state's annual unemployment rate is the highest it has been in nearly three decades and the cost of going to college is on the rise.

According to the report, times are particularly tough for Pennsylvania's young people, with state budget cuts to 18% of public university funding and a 7.5% tuition hike in Pennsylvania's State System of Higher Education. Pennsylvania's young people already bear the seventh highest rate of student debt in the nation — at approximately $28,000 on average.

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