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September 19, 2008
Statement by Keystone Research Center on Newest Pennsylvania Job Numbers
What follows is a statement the Keystone Research Center released today.
In the wake of this week's serious economic events-the bankruptcy of Lehman Brothers and the government takeover of AIG-the Keystone Research Center in Harrisburg has issued the following statement on the critical need to prevent the financial market turmoil from causing further damage to the Pennsylvania economy and to the working families of the commonwealth:The Pennsylvania economy-whether measured in terms of job loss, housing price declines, or mounting mortgage foreclosures-has thus far weathered the storm in financial and housing markets better than many parts of the country. But the facts remain that Pennsylvania has still lost 7,000 jobs since December, the August unemployment rate of 5.8% is the highest since early 2003, housing prices are falling in all but one area of the state, and mortgage foreclosures are going up.
If the national economy continues to deteriorate, employment losses in the state will worsen over the coming months, and state tax revenues will fall further. These problems come at a time when we also face two large and long-term challenges: an energy/climate crisis and wage stagnation.
In the past eight years, during the expansion of the national economy, wages and income have remained stagnant for the vast majority of families, including those in Pennsylvania. This wage and income stagnation is one reason that many families depended on rising home equity to maintain their consumption. The Keystone Research Center detailed the poor performance of hourly wages in our recent report, The State of Working Pennsylvania 2008, online at www.keystoneresearch.org.
To respond to these challenges and to counter the weak labor markets that may be with us over the next 12 to 36 months, Keystone Research Center renews its call for a second federal economic stimulus package. We implore state lawmakers to do as much as they can to supplement national action. The national stimulus package should serve the dual purposes of kick-starting the national economy and positioning the country and the state to compete for the long term. The package should include:
- revenue-sharing with the states, to avoid cuts in critical services that would further fuel a downward economic spiral
- investment in the country's workforce, so that unemployed and underemployed workers can, despite the slowdown, feed their families and sharpen their skills. Such an investment would help workers emerge from the economic crisis primed to compete in the global economy;
- investment in infrastructure-starting with a clean and green transportation system-and in energy efficiency, renewable energy, and clean manufacturing.
With buyouts, bailouts, and bankruptcies dominating recent news headlines, one of the major roots of the current economic crisis-those stagnating wages and incomes-has been discussed comparatively little. Stagnant wages contributed to the expansion of the sub-prime mortgage market and to the financing of consumption through unsustainable consumer debt. A second national stimulus package is needed to stabilize the economy and to provide the time needed to implement policies that restore a long-term, shared prosperity.
The Keystone Research Center is a nonprofit, nonpartisan organization seeking to promote a more prosperous and equitable Pennsylvania economy.
--Mark Price
Posted by Price at September 19, 2008 11:56 AM