With the economy now experiencing the longest recovery on record, there is a temptation among some to overstate the strength of the labor market and even cast blame on workers if they are not currently employed. Measures like the labor force participation rate are often misused to support those claims. But a close look at this measure shows a more nuanced story about Kentucky’s economy and the makeup of who is in, and more importantly who is not in, our labor force.
In just the past few weeks, leading American business leaders appear to have experienced a sudden and surprising bout of conscience. On Monday, August 19, the Business Roundtable, which represents the largest U.S. corporations, issued a statement signed by 181 CEOs that embraced stakeholder capitalism—the idea that corporations have obligations to employees, the community, and customers, as well as shareholders. On the next day, Tom Wilson, the chair of the executive committee of the U.S. Chamber published an op-ed titled “Save Capitalism by Paying People More.” Wilson acknowledges in blunt terms that ordinary working Americans aren’t flourishing economically. (For excerpts from Wilson’s op-ed, see Box 1 near the end of this report.)
This year’s annual “The State of Working Pennsylvania” documents the accuracy of Wilson’s observation in Pennsylvania. To be sure, this report does have a bit of good news. In 2018, for the first time since 2001, Pennsylvania workers enjoyed wage increases across the board—3.1% on average across the entire wage distribution (i.e. from the 10th percentile to the 90th percentile). These gains reflect what is now the longest economic expansion in U.S. history and an unemployment rate in Pennsylvania below 4% for the first time since before 1976.
Acknowledging this progress, the longer-term picture remains one of meager gains for workers. Over the last economy cycle, from the 2007 peak to 2018, the annual average increase in the Pennsylvania median wage has been less than half a percent. Even now, some slack remains within the Pennsylvania job market, which helps explain why wages in this expansion took so long to kick up. Underemployment remains above the 2007 pre-Great Recession level and the employment rate (share of adults aged 20 and over employed) remains below the 2007 level. If the employment rate today were at the 2007 level, Pennsylvania would have another roughly 150,000 jobs. Looking over a longer period, since 1973, the top 1% in Pennsylvania received 46% of the total increase in income in the state.
On the 154th anniversary of the abolition of slavery, barriers to thriving for black Kentuckians are still deeply entrenched. Data on wages and unemployment in Kentucky show that discrimination and systemic racism still hold us back as a state.
At a cursory glance, Colorado has much to celebrate in terms of low unemployment and poverty levels, but scratching the surface of the data reveals troubling trends fraught with wage stagnation and disparities.
CCLP produces the State of Working Colorado every year to gauge how the economy is performing for workers across the income spectrum. The publication is intended to help stakeholders and policymakers determine where to focus their efforts in revitalizing opportunities and prosperity for hard-working Coloradans across the racial spectrum.