Since the shutdown began, Pennsylvanians have filed nearly 1.1 million claims for unemployment benefits. That’s an astounding 18 percent of the 6.1 million state residents working in February — a Depression-evoking figure. The Keystone State is a harbinger, of the job losses in other states and potentially of President Trump’s reelection hopes.
The state’s system for processing jobless claims hasn’t frozen up under record inquiries. Which means the job losses reported by Pennsylvania will start showing up in other states soon, as more people access Web sites or get through to phone lines. New York, for example, recorded nearly 800,000 new claims over the last three weeks. Two months ago, it had 9.2 million workers — bigger by half than Pennsylvania’s workforce.
As national jobless figures continue to rise, it’s worth keeping an eye on the Keystone State. Pennsylvania is a state that closely tracks national averages: In racial demographics (82 percent white), household income (nearly $60,000), labor-force participation (63 percent), college-educated adults (31 percent), public-sector taxes and spending and pragmatic politics, it offers a snapshot of the United States as a whole.
The job market is also diverse, from its two big cities, Philadelphia and Pittsburgh, to affluent exurbs and struggling Rust Belt towns. Out of 6.2 million jobs in February, Pennsylvania boasted 820,000 professional and business jobs; 580,000 in manufacturing; another 580,000 in leisure, entertainment, hotel and restaurant jobs; 330,000 in finance; and 270,000 in construction. The state has 140,000 farmers.
Pennsylvania started 2020 with a healthy job market and low unemployment. Overall job growth was steady, with gains made nearly across the board, from finance and construction to leisure and hospitality. Pennsylvania’s economy did show some pre-pandemic weaknesses. Employment in the manufacturing sector shrunk slightly, even as it continued to grow modestly in the rest of the country.
The shutdown has obliterated what was left of this modest success, and the job losses are likely to dwarf those following the 2000 and 2008 recessions. The hospitality and retail industries are immediately at risk, with hotels, restaurants and retail stores essentially shuttered, except for some grocery and food-delivery work.
That’s bad for Philadelphia, whose 1.6 million residents, many lacking a college education, disproportionately depend on tourism for retail, leisure and hospitality jobs, which had risen by 43 percent since 2000, to nearly 100,000. In 2018, 45 million people visited Philadelphia, with China the second-biggest source of overseas tourists. Lancaster County’s Amish Country, Hershey, Gettysburg and the Poconos depend acutely on tourism.
Plus, reduced demand from global manufacturers could harm the state’s steel production; travel restrictions on migrant workers could hurt farming. Banking-industry losses, as unemployed workers can’t pay their bills, would mean finance layoffs. Even government workers aren’t immune. Though Gov. Tom Wolf proposed a sturdily balanced budget in February, the coronavirus likely means a multibillion-dollar shortfall.
Pennsylvania, then, will be a microcosm of how well Washington’s rescue-and-recovery measures are working. The state’s now-idle workers will benefit from supplemental unemployment insurance, passed by Congress last month with the CARES Act, which will largely replace their lost income. The state and local governments will likely receive $5 billion in direct federal aid, part of the same rescue package. Small businesses can apply for forgivable loans.
When the edict comes that people are free to go about their lives again, how quickly will small businesses be able to reopen? Will firms rehire people soon enough so they can regain confidence and start spending again?
Cities like Philadelphia could suffer for months or years, as people shy away from transit, avoid dense urban areas or shift to working from home. Conversely, cities could experience a new boom, as people quickly regain urban employment and splurge on trips and meals.
Nobody knows the answers to these questions. It could take years for a final verdict, though one interim judgment will take place this November. It’s hard to imagine Trump’s reelection unless he wins Pennsylvania again. The president’s political future, therefore, hinges on whether the rescue and recovery meet voters’ expectations.
This piece first appeared at the New York Post
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Nicole Gelinas is a senior fellow at the Manhattan Institute and contributing editor at City Journal. This piece was adapted from City Journal. Follow her on Twitter here.
This piece originally appeared in New York Post
