Pennsylvania employers added more than 111,000 jobs in 2023, pushing the number of nonfarm jobs to a new state record, nearly 6.2 million, according to the Department of Labor & Industry.
- The jobless rate, meanwhile, was at 3.5%, down from 4.3% a year earlier.
- But things may not be as healthy as they look.
- Pennsylvania could be in for a “major downward revision” in the rate of job growth over the last year, according to the Independent Fiscal Office, or IFO, an independent state agency that monitors economic and budgetary trends.
- In other words, fewer jobs may have been created over the last year than previously thought.
Why: It comes down to the way job growth is measured.
- The federal government uses two yardsticks.
- One is the current employment survey, a monthly survey of employers designed to produce a timely glimpse of jobs and wages.
- The second is called the quarterly census of employment and wages.
- It is based on unemployment insurance tax reports filed by all employers.
- It is less timely but it is considered a “near census” of employment, making it more accurate, according to a spokesperson for the U.S. Bureau of Labor Statistics.
- Every quarter, the government adjusts the survey results based on the annual quarterly census results in what’s described as a benchmarking exercise.
- The numbers show annualized average growth for each quarter.
What’s the result: The benchmarking usually yields some small gap between the two sets of data, said Matt Knittel, director of the IFO.
- But since the end of 2022, the gap in Pennsylvania has been growing, according to an IFO research brief published yesterday.
- By the third quarter of 2023, Pennsylvania’s gap reached 75,000 jobs,
- “I haven’t seen it this large before,” Knittel said.
- A similar gap is expected to appear in the fourth quarter numbers, as well.
- The IFO estimates the quarterly census will show annualized average growth of about 55,000 jobs during the fourth quarter.
- That compares to annualized growth of roughly 125,000 jobs measured in the survey.
- L&I uses the two sources for its job numbers, an agency spokesperson said.
- And the difference between them will be reflected in updated numbers published March 8, the spokesperson said.
- However, L&I incorporates additional data not reflected in the IFO brief, the spokesperson added.
Why is this happening: Knittel said there is not yet enough data to provide a firm answer.
- He is waiting to see data on specific industries, for example.
- In the meantime, he expects the state jobless rate to rise above 4% over the next several months.
- “The unemployment rate is still very low, but we think it’s going to start ticking up here heading into the summer,” Knittel said.
- Some jobs remain hard to fill — such as positions in manual labor and specialized professions like engineering and architecture, he said. But the market is softening for general white-collar jobs.
- Recent news reports, for instance, highlight tough job searches for recent MBA grads.
Why does it matter: Perceptions of Pennsylvania’s economic strength are likely to show up this spring in battles over spending and taxes in the state budget.
Editor’s note: This story has been updated to include comments from the Pennsylvania Department of Labor & Industry.
