Ten years after the Great Recession, the capital region has jobs than it does people to fill them.
Harrisburg’s metro area logged a 3.8 percent unemployment rate in August, signaling its ascent to full employment—that economic idyll where every willing, able job seeker can find work, at a living wage to boot.
But it’s not just the employment rate that’s booming. Other indicators suggest the regional economy is at its strongest point in a decade. Data show that the region’s workforce is slowly growing, as people who gave up on finding jobs once again begin to seek work. College graduates report high confidence in their employment prospects, and business owners feel increasingly optimistic about the economic climate.
Many of these same trends are true across the United States, where unemployment hit 3.7 percent in October—a 50-year low. But even as Harrisburg keeps pace with the national economy, it out-performs other parts of Pennsylvania. In a report published earlier this year, researchers at Penn State found that diverging economic fortunes are creating “two Pennsylvanias”—one with sluggish job growth that incentivizes out-migration; the other with a fast economy that draws in new residents with the promise of jobs. Harrisburg, aided by the fast-growing economies in Lancaster and Philadelphia, is part of the latter.
“Honestly, south-central Pennsylvania is a good place to be right now,” said Jesse McCree, executive director of South Central PA Works, a workforce development organization. “We’ve heard from more employers in last 12 to 24 months who cannot find people to fill jobs… and we’re seeing a lot of employers who want to improve job quality and invest in their workers as an asset.”
A “tight” labor market—one where jobs outnumber job seekers—tends to tip the scales of power towards workers, who can hop jobs or bargain with managers to secure better pay and benefits. Employers, on the other hand, say they can’t hire fast enough. Kathryn Sandoe, chief communications officer for the Lancaster County Solid Waste Management Authority (LCSWMA), said a months-long worker shortage has created a crisis in the waste industry.
“We’re operating at a high vacancy right now,” Sandoe said. “We have more waste to move than ever before, but quality truck drivers and equipment operators are at a premium.”
Other employers agree that the worker shortage is dampening productivity, especially in the building trades professions, where a growing construction market stresses a shrinking labor pipeline.
“We have work scheduled four, six months out almost all the time now,” said Seth Maurer, who owns a hardscaping and outdoor contracting company based in Susquehanna Township. “We have to turn a lot of jobs down.”
The competition bodes well for job seekers, who businesses want to woo with new incentives and job perks. Maurer’s company has increased its average starting wage to $16—$3 above the regional industry average, he said. They’ve also added healthcare benefits and one week of paid vacation. LCSWMA raised its entry-level wages this summer and is touting its comprehensive benefits package in ads and interviews.
Employers also find themselves investing more resources in branding and recruitment. Gone are the days when newspaper and job site ads yielded a robust field of applicants; recruiters say they’re now buying targeted online advertisements and billboard spots. But since job seekers can afford to be choosy, getting a candidate in for an interview is only half the battle.
“When previously did you have to worry about branding yourself as an employer?” Sandoe said. “Before, if you were hungry for a job, you would try to sell yourself hard as a candidate. Now, as an organization, we have to sell ourselves hard just as the candidate does.”
As demand for workers increases, those who previously left the workforce, or who were pushed to its margins, are dipping their toes back in. This particularly benefits job seekers who would be overlooked in a more crowded hiring field. This includes applicants with disabilities (federal data show the number of workers claiming disability insurance is plummeting) and those with criminal backgrounds.
“Employers are giving a second look to previously untapped labor markets,” McCree said. “When you look at specific populations, like people who were incarcerated, we are seeing workforce participation levels creeping up in a significant way.”
In all, economists agree that it’s better to be a worker now than at any point in the last decade. As employers scramble for staff, employees have their pick of jobs and can afford to leave lousy ones. Wage increases and newfound bargaining power are putting more money in some workers’ pockets. These combined forces should, theoretically, improve quality of life in and out of the workplace. As economist Stephen Herzenberg of the Keystone Research Center explained, “A tight labor market is a friend of high productivity, which is a friend of faster income growth and better living standards.”
But a tight market only reveals so much about an economy’s overall health. Even though the unemployment rate is one of the most frequently cited economic indicators, experts say it can mask more troubling, insidious trends. These trends—such as yawning income inequality and shrinking gains in social mobility—reveal themselves in conversations with job seekers, who describe a labor market much harsher than the one touted by politicians. They’re evident in local poverty rates, which have risen every year since the Great Recession. And they’re worrying the people who provide food, housing and other services to low-income residents, who say that full employment hasn’t translated into widespread self-sufficiency.
“I think we all kind of thought that once unemployment started to drop we would see a more significant reduction in need for services. But it didn’t quite happen—it spiked up,” said Joe Arthur, executive director of the Central Pennsylvania Food Bank. “Folks aren’t showing up on unemployment rolls, but we have a lot of families who are struggling towards the end of the month. That’s a big change over time. It wasn’t really like that when I started here 10 years ago.”
As Susan Wokulich of the United Way of the Capitol Region put it, people struggled during the recession because they couldn’t find jobs. Now, she says, “People are getting jobs but still need assistance. I would guess that problem existed [a decade ago,] but maybe not to as great a measure as it does now.”
On this surface, the coincidence of worker shortages and stubbornly low wages seems to defy basic supply and demand principles. But economists say it’s the result of years of policy failures that, even in a booming economy, could take years more to repair.
Even though the region is adding jobs, that growth isn’t uniform across all sectors of the economy. Data show that the industries that added the most jobs in the Harrisburg metro area in 2016 and 2017 were both low-wage ones. What’s more, wage growth remains sluggish. While some employers have increased pay in response to worker shortages, economists say one surge of raises won’t reverse long-term stagnation. The economy would need to stay at full employment for a long time to yield meaningful wages gains across all sectors.
“Tight labor markets can help a little bit, but by themselves are not likely to end four decades of wage stagnation and income stagnation for many families,” Herzenberg said. “We need policies that increase wages and give workers more bargaining power.”
Many researchers are quick to point to Pennsylvania’s minimum wage as one factor depressing pay across the state. There’s widespread support among Democrats in the state legislature to raise it to $12 an hour—the same rate that Gov. Tom Wolf instituted for all state workers in 2017. But lawmakers haven’t increased the $7.25 wage floor since 2009.
Service providers say that minimum wage jobs are becoming scarce, but many jobs in the region still don’t pay enough to live on, Wokulich said. And she doesn’t think that wages at the level Wolf proposed are any more viable.
“When you’re getting $11.50 or $12.50 an hour and you have a family, that’s not a living wage,” she said.
The Harrisburg region has low housing costs compared to large East Coast metropolises, or even to neighboring cities like Lancaster and Hershey. But a low wage still only goes so far. The costs of food, transportation healthcare and childcare burden many workers’ incomes, Wokulich said. And while welfare benefits can subsidize these expenses, experts say that current policies are wildly uncalibrated, trapping upwardly mobile workers in low-wage jobs.
Take the Child Care Network, which awards subsidies for daycare based on a sliding scale. The more you earn, the smaller your subsidy—and, at a certain income, the benefit disappears entirely. The graduated benefit plan was designed to lead families to self-sufficiency. But more often than not, the result is a net-loss of household resources.
“Everyone wants to see salary increases, but when subsidies start to drop off and you have less spending power for basic needs, one disaster—a flat tire or a sick child—can throw you off,” Wokulich said.
Policymakers call this phenomenon the “benefit cliff”: the point at which subsidies dissipate, leaving a worker who transcends the welfare system poorer than when she was on it. These cliffs also ensnare families receiving SNAP, a federal food assistance voucher, and those in public housing.
Arthur, the food bank director, thinks these cliffs could explain why some well-paying, mid-skilled jobs are going unfilled. Even with a salary raise, losing a benefit “can be the difference between staying afloat and not staying afloat,” he said. “It creates unintended obstacles for folks, because it basically does lower their household resources and possibly [disqualify] a job they otherwise would take.”
That’s certainly the case for Araija Robinson, a 21-year-old single mother who works part-time at the Harrisburg branch of CareerLink, an employment agency. Robinson’s current job pays her $8.75 an hour—barely enough to support her and her two children in a subsidized apartment in public housing.
Robinson was recently offered a job at UPS that would pay $20 an hour. She wants to take it, but she’s conflicted. Robinson fears she won’t be eligible to stay in her apartment if she makes that much money, but says she’s not ready to move out, especially once she starts paying for daycare.
“I think it will be worth it, but it’s just going to make things hard,” Robinson said. “The job is definitely ideal for me, but I know once I start it, I’ll have to move. And can I make $20 an hour and move into a nice apartment in the suburbs? No – not with two kids. I would have to find something dirt cheap that’s just like living in the projects.”
Experts say that good jobs, ones that offer living wages, benefits and a path to self-sufficiency, are out there—Pennsylvania just isn’t cultivating a workforce that can fill them. Data from South Central PA Works show a glut of workers in low-paying industries, such food preparation and retail sales. Meanwhile, mid-skilled occupations in the healthcare and IT fields see perennial worker shortages.
“There is still a mismatch in what Pennsylvania’s educational institutions produce and what our employers require,” said Sue Mukherjee, a former labor and industry analyst who now works for the state higher education system. Experts expect this “skills gap” will widen over the next decade, requiring governments, employers and schools to double down on workforce development and training.
“In this market, you would think anyone with any skills would look for a job,” Mukherjee said. “But there are many Pennsylvanians whose skills may have hemorrhaged a bit because of industry disruption, and there’s no infrastructure in place that is looking into educating and training the working poor and the working class.”
Some of that infrastructure is under development. In mid-October, Wolf announced a new building trades apprenticeship program in the Harrisburg area, which could add dozens more carpenters, electricians and plumbers to the local workforce in the coming years. As demand for workers increases across sectors, employers have started responding themselves, said John Shelton, a program manager at CareerLink’s office in Harrisburg. Shelton pointed to a local nursing home that’s tired of losing and replacing nurses. The company launched a mentorship and training program and now pays for some employees to get nursing certifications.
“I’ve never seen a nursing home facility do something like that, but they want keep people on board,” Shelton said. “There’s a feeling that companies are trying to make things better to keep people and help them advance.”
Shelton hopes that the current labor market will force companies to make work more meaningful and sustainable for their employees. If low unemployment rates persist, turning whispers of labor shortages into full on shouts, wage gains and job quality improvements could accelerate for workers across the board. But what remains to be seen is who will take the lead: the private sector, local and state government, schools or workers themselves.
Correction: A previous version of this article misidentified a United Way employee due to a transcription error. Her name is Susan Wokulich, not Susan Coolidge.