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New Report Identifies Many Causes of Pennsylvania’s Shrinking Labor Pool | Don’t miss it

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HARRISBURG — Pennsylvania’s Independent Fiscal Office has sought to answer a question of great concern — Where have the workers gone? — in a new report this indicates the state’s declining population, increasing homeschooling and home care, and greater savings and investment.

The resulting responses from the nonpartisan office have spread even further, exposing a problem that workforce development professionals say requires multi-faceted solutions.

Higher wages for employees. Flexible working hours and spaces. Tuition incentives and professional development. Cross-training in offices and on manufacturing floors. Consolidated changes. Investments in automation.




Jennifer Wakeman, executive director of DRIVE, an economic development entity based in Montour County, spoke about the dreaded “more with less” philosophy. She found herself asking another question indicating how long this mantra would last in corporate America: when did we ever have more of anything?

“I think it’s going to take some creative solutions and I don’t think this is a moment of panic,” Wakeman said.

According to the report, “Where Have the Workers Gone? from the Independent Fiscal Office, an estimated 120,000 potential workers left the Pennsylvania workforce between May 2019 and May 2022.

Around the same time, the state’s population dropped by 48,000, and it aged as more baby boomers advanced toward retirement age. Resident populations in nursing homes fell 15% as the 65-and-older age groups increased, indicating that some workers left the workforce to care for elderly relatives, says The report.

Susan Whisler, director of the Southern Alleghenies Workforce Development Board, said the population 65 and older in this six-county region is 22% of the population compared to 19% statewide. She estimated the region’s labor force participation at 50% to 53%, well below the statewide rate of nearly 62% in May 2022.

The region represents Bedford, Blair, Cambria, Fulton, Huntingdon and Somerset counties.

“We saw this happen long before the pandemic,” Whisler said of the labor shortage, citing the aging population. “I think what the pandemic has done is speed up time.”

where they went

Enrollment in public and private physical schools fell by about 56,000 students after the onset of COVID-19 and did not recover, according to the report. In turn, another 35,600 people in total were either enrolled in cyber charter schools or home-schooled, likely pushing more workers away from their jobs.

Fewer childcare options, early retirements, and shifts in lifestyles and priorities due to the pandemic are all factors in the state’s changing workforce. The same is true for increased personal savings, rising home values, and market investment returns.

According to the analysis, IFO referred to a growth of $4.6 trillion in U.S. household cash and cash equivalents holdings between the start of 2020 and 2022; 29% increase in median home value in Pennsylvania; 51% rise in holdings on the S&P 500 market index. An important footnote in the report: $7 of every $10 in cash and equivalents added belonged to the top 20% of households.

Although warehousing and storage saw employment increase by 33% and courier and courier services by 12%, employment fell in most other sectors, according to the analysis. For nursing homes and residential care, salaried employment fell by almost 30%. Restaurants followed with a decline of almost 27%. Manufacturing, hospitality, local and national education, and retail were among those that declined.

There are now more jobs available than there are people unemployed and actively seeking work, according to the report – around 80,000 more.

Given that the report’s data sources are fluid from month to month, IFO Director Matthew Knittel now estimates it likely at 100,000 or more. He expects that as savings are spent, particularly through stimulus funds, and inflation remains high, more workers could return to the market next fall.

“We need higher turnouts here, otherwise it’s definitely going to hurt economic growth in the future,” Knittel said. “We’re trying to bring this to the attention of policy makers because it’s a real concern not just in Pennsylvania but across the country.”

A contracted workforce influences the unemployment rate of the state. If more workers returned to the labor market in search of jobs, according to the IFO report, the unemployment rate would rise or job openings would disappear.

Pennsylvania the unemployment rate has fallen at 4.5% in June, the lowest since September 2019, according to the Ministry of Labor and Industry. The unemployment rate in the United States was 3.6%, unchanged from last month.

According to Labor & Industry, the state saw 7,000 additional workers enter the civilian workforce in June. Year on year, it has increased by about 20,000, according to the department’s monthly update.

Retain young workers

Eric Karmecy, operations and special projects division manager, West Central Job Partnership, said that for his region covering Mercer and Lawrence counties, the shortage varies by industry and community.

Foot traffic at local CareerLink offices is increasing, he said, and attendance at a recent job fair far exceeded expectations.

Karmecy said the focus should be on preventing young people in the region from leaving for college and moving to other areas. This means providing more internship opportunities and fostering the development of the local workforce. He spoke of a grant program through his organization that helps offset the cost of paid internship opportunities, which will hopefully lead to local job openings.

Companies need to restructure their collective approach — and some have done so successfully, he says — to a new generation of workers who want a better return on their own investment: their time. Employers are now competing not only with each other, but also with broader self-employment opportunities, especially in e-commerce and services.

Pennsylvania CareerLinks statewide, Karmecy pointed out, provide many opportunities for would-be and would-be job seekers to not only find work, but also find resources to transition into a job opportunity for which they have need help learning new skills.

“In 20 years, I have never seen what is happening like today,” Karmecy said.