Since the COVID-19 shutdown began, residents of Pennsylvania have filed nearly 1.1 million claims for unemployment benefits, trailing only California, which has three times Pennsylvania’s population of 13 million. The new jobless claims represent an astounding 18% of the 6.1 million Pennsylvanians working in February — a Depression-evoking figure. Pennsylvania is a harbinger, both of the job losses other states will likely suffer and, potentially, of the fate of President Donald Trump’s reelection hopes this November.
The state’s labor department is grimly efficient. Its system for processing unemployment claims hasn’t frozen up under a record number of inquiries. The quantity of job losses reported by Pennsylvania will start showing up in other states over the next few weeks, as more people access websites 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 unemployment 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% white), household income (nearly $60,000), labor-force participation (63%), college-educated adults (31%), public-sector taxes and spending, and pragmatic politics, it offers a snapshot of the United States as a whole.
The state’s job market, too, is impressively 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 manufacturing jobs; another 580,000 leisure, entertainment, hotel, and restaurant jobs; 330,000 financial jobs; and 270,000 construction jobs. The state is also home to 140,000 farmers.
Pennsylvania started 2020 with healthy job growth and low unemployment — even if, at 4.7%, the state rate was higher than the U.S. rate of 3.6%, largely the result of sharp cuts in the oil and gas industry that took place before COVID-19 spread domestically. 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 modest growth in the rest of the country. In fact, just a week before COVID-19 captured the nation’s attention, The Inquirer ran an article titled “Trump promised to bring back manufacturing in Pennsylvania. He didn’t. Will it cost him?” The report noted that Pennsylvania had lost 7,400 of its more than half-million manufacturing jobs over the last two years, in part because of new tariffs on steel and plastics.
The economic shutdown has obliterated what was left of this modest success. For some context, consider that, after the tech bubble burst in 2000, Pennsylvania lost about 150,000 jobs, or 3% of its private workforce. After the 2008 financial crisis, the state lost nearly 300,000 jobs, or about 5% of its private workforce. Today’s figures dwarf these numbers and will likely worsen. The hospitality and retail sectors are immediately at risk, with hotels, restaurants, and retail businesses essentially shuttered, except for some grocery and food-delivery work.
These hotel, restaurant, and retail closures are particularly bad for Philadelphia, which has built up a global tourism business over the last 15 years. The city of 1.6 million residents, many lacking a college education, disproportionately depends on tourism for its retail, leisure, and hospitality jobs, which rose by 43% since 2000, to nearly 100,000. Forty-five million people visited Philadelphia in 2018, with China the second-biggest source of overseas tourists. Lancaster County’s Amish country, Hershey, Gettysburg, and the Poconos depend acutely on tourism.
But protracted public-health edicts — and a long recession — will ripple across the economy, beyond the people who directly interact with the money-spending public in hotels and stores. 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 government, as well as cities and boroughs, 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 from Wolf and Trump that people are free to go about their lives again, how quickly will small-business owners be able to reopen? Will firms rehire people soon enough so that they can regain confidence and start spending money again?
Cities like Philadelphia could suffer for months or years, as people shy away from public-transportation systems, avoid dense urban environments, 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, after months in quarantine.
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 over the spring, summer, and fall meet voters’ expectations.