Pennsylvania’s Economy Still Needs a Turnaround: Falling Unemployment Results from People Leaving the Job Market

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While a lower unemployment is sometimes good news, the decline in Pennsylvania’s unemployment rate over the last two years has been driven by the fact that fewer Pennsylvanians are looking for work. Between December 2012 and December 2014, more than 127,000 Pennsylvanians dropped out of the labor force. With fewer unemployed workers “counting” in the official statistics, the unemployment rate went down:

If the labor force had not fallen since December 2012, the state’s unemployment rate would still be 6.9%. (This figure is based on adding the 127,000 to the 293,000 currently unemployed – a total of 420,000 people – and then taking this 420,000 as a share of the total labor force.)

The bottom line: Pennsylvania needs faster job growth. The move away from austerity represented by a state budget that invests in education, jobs, innovation and skills, and in infrastructure should help give Pennsylvania the economic turnaround it needs.

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