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Back to list New Research Helps Explain Roots of Worker Shortage in PA

Back to list New Research Helps Explain Roots of Worker Shortage in PA

Two new research briefs from the state’s Independent Fiscal Office (IFO) show trends leading to a declining number of workers in the state, which helps explain the continuing problem many employers have filling open positions.

A December 2022 IFO report titled Young Workers Leave PA Workforce examines the decline in labor force participation rates for young workers. Since the start of pandemic through November 2022, the labor force participation rate declined by -2.4% for workers age 20 to 24. Although the participation rate also declined for older workers, the decline was more modest: -0.8% for ages 25 to 44 and -0.5% for age 45 to 54.  

U.S. Census Bureau Data, which includes state employment data by age group (not including self-employed), shows that payroll jobs in Pennsylvania declined by 151,000 or -3.0% between 2020 Q1 and 2022 Q1. When broken down by age group, only workers in the age 65-74 category showed significant gains in employment (+2.1%), while jobs for workers under the age of 35 declined by -4.6%.

The IFO report examines the ratio of payroll jobs to population and finds a contraction across all ages, but a much larger decline for younger age groups. It then calculates the number of additional workers that would be present in the state if the ratio had not changed since 2020. If workforce participation rates had not changed, there would be 113,000 additional workers, and more than half of these workers would be under the age of 35. This trend is a significant concern for the future as Pennsylvania’s workforce continues to age.

Part of this decline in the number of workers can be explained by population changes, which IFO’s report also examines. Between 2020 and 2022, Pennsylvania’s population declined by -0.3%.

A second IFO report, PA Population Contracts Since 2020, goes into more detail about the decline. Between April 1, 2020 and July 1, 2022, the state population contracted by 30,680. This contraction was mainly due to a natural decline, as the number of deaths (351,130) exceeded the number of births (294,980). Pennsylvania recorded the fifth largest natural contraction across all states.

International migration, which added 37,560 residents over the course of the two years, helped to mitigate PA’s population decline.

However, net domestic migration reduced state residents by 16,220 (more people moved out of PA to other states than moved into PA from other states).

National figures reveal that states gaining population were in the west and south, with the largest beneficiaries of domestic migration being Idaho (4.8%), Montana (3.6%), South Carolina (3.2%), Florida (2.9%), and Delaware (2.7%). Pennsylvania’s -0.1% domestic migration loss places the state in a similar category, but not as high, as neighbors Ohio (-0.3%), Virginia (-0.3%), Maryland (-1.1%), New Jersey (-1.2%), and New York (-3.3%).

A 2021 study by moving company United Van Lines helped to explain the out-migration trend in Pennsylvania, finding that about 35% of movers left the state for jobs, while 28% cited family, and 21% retirement as their reasons for leaving. This indicates that improving the economic and jobs climate in Pennsylvania is one of the keys to keeping workers in the state.

Please join us for PMTA’s Annual Membership Conference on April 18-20, where Independent Fiscal Office Director Matthew Knittel will join us as a speaker to discuss these and other topics.

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