Cumberland County’s new comprehensive plan revision identifies two key issues when it comes to space – the aggressive growth of warehousing and distribution sites, and the corresponding lack of affordable residential housing for the people who may work there.
Employment data suggest that these two issues may be closely linked.
The number of warehousing sector jobs has massively increased in recent years, and the county’s unemployment rate has correspondingly plummeted. But the average wage for the sector has also taken a dive.
In 2009, there were 5,462 jobs classified by the Bureau of Labor Statistics under the 493 series, which represents warehousing. As of 2016, there were 9,111. Over same time period, unemployment in the county dropped from 6.6 percent to 4.1 percent.
However, average annual wages for 493-series jobs also took a steep dive during the period, from $47,634 in 2009 to $39,659 in 2016, not adjusting for inflation. Adjusted to the consumer price index, this is a drop of almost 26 percent.
On its face, this is counter-intuitive. As unemployment shrinks, and businesses have to search harder and compete with each other for workers, they should be raising wages to attract labor.
But there could be – and apparently are, given the data – mitigating factors to this.
“The supply of workers in response to the demand is growing more quickly than the demand itself for those workers, at least in a simple market analysis,” said Dickinson College Business Professor Michael Fratantuono.
With Cumberland’s unemployment dropping, that workforce would have to be coming in from outside the county – indeed, surrounding counties’ unemployment rates are higher than Cumberland’s, although not by much more than a single point, with Franklin county at 5.2 percent unemployment.
An additional factor would be how unemployment is calculated.
The commonly-cited rate of unemployment is what the BLS refers to as the U-3 rate – the third of six possible unemployment rates, depending on what workers are included.
The U-3 rate only includes workers who are unemployed but still in the labor force, meaning they want to work and are actively seeking new jobs. On the other hand, the U-6 rate is the most expansive definition of unemployment, including discouraged workers who are not actively seeking jobs, and persons who are employed part-time for economic reasons.
While the U-3 rate across most of the nation has dropped to record lows, U-6 rates are still trending higher than they were before the 2008 recession. Pennsylvania’s U-6 rate has averaged a relatively high 9.6 percent over the past year, according to the BLS.
In other words, while local unemployment may be low, there is still a significant pool of under-employed people who are able to supply temporary labor in an equal or greater volume to the warehouses’ increased demand.
Not only are surrounding counties potentially supplying labor, but new jobs may also be drawing upon this often-unrecorded force of partially-employed people, either inside or outside the county, Fratantuono noted.
Further, economists also deal with the issue of scalability – meaning that new jobs don’t necessarily add wages at the same ratio as old jobs.
In a case where more jobs mean lower average earnings, the new jobs must be scaling down, diluting the average pay of the sector as a whole.
“In a scalability situation, perhaps you need an initial higher-skilled cadre to launch these warehouses, and then as the operation increases in scale, the newer employees tend to be of a more general variety that don’t demand as high a wage,” Fratantuono said.