A tight Pennsylvania job market is good news for workers, but employers are still struggling to find enough people to fill available positions.
This battle remains raging for business owners, the latest economic update from the Independent Fiscal Office shows.
On a positive note, the state’s unemployment rate has fallen to 4%, the lowest rate since 1976. New jobless claims also fell dramatically in October to 7,900 from a pre-pandemic average of 14,500. The change in payroll offices is also higher than before COVID-19, reaching 10,400 in October versus 5,000.
If a Pennsylvanian wants to change jobs, they have a lot of options compared to just a few years ago.
However, at the national level, vacancies are much higher than they used to be. The monthly average before the pandemic in the Commonwealth was 281,000 job vacancies. In September, 372,000 positions were available but not filled. Employers who are understaffed or trying to expand cannot find workers to grow.
Economic growth and the associated increase in state tax revenues do not exist in Pennsylvania.
One problem is the lower participation rate. The activity rate, which includes employed and jobseekers, was 62.8% before the pandemic but has fallen to 61.7% and has been stable since May.
“The job market in Pennsylvania remains extraordinarily tight. The tight labor market, low labor force participation rate and shrinking demographics will continue to put upward pressure on wage growth and aggregate inflation.” This was announced by the IFO.
Increasing the labor force participation rate is not an easy task. Pennsylvania’s population is aging while the state’s population is expected to shrink.
The shrinking workforce, as more people retire and fewer young people in the state to replace them, threatens to turn the government’s budget surplus into a deficit, The Center Square previously reported. The IFO’s five-year forecast expects tax revenues to continue growing at 3.1% but government spending to grow faster at 3.3%, narrowing the current $6.7 billion surplus and $5 billion -Fund for rainy days to be canceled by fiscal year 2027-28.