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March/April 2007

Inside This Issue:

 

Employment Is Up But Wages Are Down
It’s A Mixed Bag for Pennsylvania’s Rural Economy
On the upside: employment and business establishments. On the downside: wages. That’s the economic picture for rural Pennsylvania from the second quarter of 2005 to the second quarter of 2006, according to an analysis by the Center for Rural Pennsylvania. For the analysis, the Center used labor force and ES-202 data from the Pennsylvania Department of Labor and Industry’s Center for Workforce Information and Analysis. The data was from the second quarters (April to June) of 2005 and 2006

The data revealed that employment and the number of business establishments have increased in rural Pennsylvania but wages have failed to keep pace with inflation.

Employment
In 2006, rural employment was 1.26 million, an increase of 1 percent or 15,662 jobs from 2005. In urban areas, employment in 2006 was 4.29 million, an increase of 0.8 percent or 37,700 jobs from 2005. The change in employment between rural and urban areas was not statistically significant.

Within Pennsylvania, employment growth was not even. Twenty-four of the commonwealth’s 67 counties had a decline in employment; all but four of these counties are rural. The counties with the largest decline in employment were Juniata, Bradford and Clarion, each with a decline of more than 3 percent. The counties with the largest increases in employment were Adams, Montour, Wayne and Forest, each having an increase of 5 percent or more.

Within rural Pennsylvania, the largest growth in employment between 2005 and 2006 was in the health care and social services sector and the transportation and warehousing sector. Each of these sectors had a 4 percent increase in employment. The retail sector and the real estate, rental and leasing sector each saw a decline in employment during this period.

Business establishments
In 2006, there were 83,328 rural business establishments, an increase of 1 percent or 717 new establishments from 2005. In urban areas, there were 233,869 business establishments in 2006, for an increase of 0.3 percent or 707 new establishments from 2005. The change in business establishments between rural and urban areas was not statistically significant.

Regionally, the largest increase in business establishments was in the 26-county region of central Pennsylvania. This region had a 1 percent increase or 926 new establishments from 2005 to 2006. Western Pennsylvania had a 0.5 percent growth rate, and eastern Pennsylvania remained essentially unchanged.

Within rural Pennsylvania, the largest increase in business establishments was in the health care and social service sector. Between 2005 and 2006, the number of establishments in this sector increased nearly 20 percent. 

Wages
From 2005 to 2006, the inflation rate increased 4 percent. After adjusting for inflation, the average rural weekly wage did not keep pace with inflation and declined 0.4 percent or $3. The average weekly wage in rural Pennsylvania was $601.

From 2005 to 2006, after adjusting for inflation, the average urban wage increased only slightly more than the inflation rate, rising 0.1 percent or $1. In urban areas, the average weekly wage was $806, or $205 above the rural average.

Unemployment
In 2006, the rural unemployment rate was 4.9 percent. From 2005 to 2006, rural unemployment declined 0.3 percentage points. In urban areas, the unemployment rate was 4.6 percent, a decline of 0.2 percentage points from 2005.

Regionally, the lowest unemployment rate was 4.1 percent in central Pennsylvania, followed by 4.8 percent in eastern Pennsylvania and 5.0 percent in western Pennsylvania. Each of these regions had only marginal declines in the unemployment rates.

Conclusion
From the second quarter of 2005 to the second quarter of 2006, Pennsylvania’s rural economy improved somewhat. Employment increased 1 percent, as did the number of business establishments. Wages, however, did not keep pace with inflation and the unemployment rate showed only an incremental decline. The limited growth, however, affected both rural and urban areas.  

Nationally, the same economic indicators showed more robust growth. However, most of this growth occurred in the southern and western states. Pennsylvania’s economy, like most other northeastern states, preformed at or below the national rates.

Fact sheet available
For the complete fact sheet, Rural Economic Snapshot: Second Quarter 2005 to Second Quarter 2006, call the Center for Rural Pennsylvania at (717) 787-9555, email info@ruralpa.org or visit www.ruralpa.org

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Chairman’s Message
There’s truth in the old saying “Charity begins at home.” In my hometown, the sale of the former, nonprofit Berwick Hospital to a for-profit corporation resulted in a $28 million endowment that created the Berwick Health and Wellness Foundation, which serves 23 communities in Columbia and lower-Luzerne Counties. The foundation’s monies were earmarked to help residents of the hospital’s service area by promoting individual and community health and well being. This effort has grown into the current Central Susquehanna Community Foundation, which has expanded the service area to include Montour, Northumberland, Snyder and Union Counties. While dedicated to its original health care goals, the foundation is also encouraging increased philanthropy to charities and communities to improve the region’s overall quality of life. The charity that began at home, now serves a six-county region.

Like my rural area, rural communities throughout the nation may have access to considerable financial resources in their own hometowns. Some, however, may be unaware of those resources or may not have the systems or programs needed to identify, retrieve and retain those resources. According to a 1991 study by Boston College, in the U.S., about $41 trillion will be transferred from one generation to the next over the next 50 years. Recognizing this potential for rural development, some states, including Indiana, Montana, Nebraska, South Dakota, Wisconsin, and Wyoming have already assessed the opportunity to determine how their rural, cash-strapped communities can access this wealth for local development efforts. 

Nebraska is recognized as the forerunner of this effort, with its Nebraska Community Foundation that handles combined endowments and confirmed future gifts totaling $31 million; triple the amount of what it was five years ago. An example of one rural town that is benefiting from its partnership with the foundation is Shickley, NE, a town of 358 people. One local family promised $105,000 if other donors would match the amount within three years. A fund drive started with a mailing to every household in the Shickley school district. In two years, the community raised $160,000 in matching funds. One couple made their gift to the foundation through retirement accounts and life insurance. Shickley now has an endowed fund of $335,000, and another $1.4 million is promised.

The Center for Rural Pennsylvania sees the potential for similar programs in rural Pennsylvania. That’s why the board is supporting a similar assessment to be conducted of the commonwealth. Through a joint effort with the Center for Rural Entrepreneurship, the Center will estimate the wealth that may be transferred in the state’s 67 counties over the next 50 years, and, from that study, consider ways to retain some of that for community betterment. A critical component of the work plan is the establishment of a technical advisory committee to help prepare and validate the wealth transfer estimates. We will be developing that group over the next several months and if contacted to serve, I hope you will join us in this very worthwhile effort.

From Berwick to Shickley, it is evident that charity does begin at home. The work of the Center for Rural Pennsylvania over the next year in this major wealth transfer analysis will take us a long way in witnessing other such acts of charity across the commonwealth.  Stay tuned.

Senator John Gordner

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Center Undertakes Wealth Transfer Analysis
The Center for Rural Pennsylvania Board of Directors has approved a study to measure inter-generational wealth transfer. The work will result in county level estimates on the amount of personal wealth likely to be transferred from one generation to the next. It will cover a transfer period of 50 years, and the study will be conducted on all 67 counties in the commonwealth. The methodology for the study is based on Boston College research, which found that more than $41 trillion of wealth in the United States will pass from the current generation to the next during the first half of the 21st Century.

Center staff will work with Don Macke of the Rural Policy Research Institute’s (RUPRI) Center for Rural Entrepreneurship to conduct the study. Macke and his RUPRI colleagues have assisted in similar studies in 10 other states.

For Pennsylvania, this work will result in useful information on the amount of wealth Baby Boomers and their parents will likely leave behind. For community foundations and other locally based organizations, tapping into this wealth through estate planning and bequeaths could provide the needed capital for a variety of programs and services that support a better quality of life. In Nebraska, for example, where the Nebraska Community Foundation handles the administration of 179 small foundations, funds have been used for schools, 4-H groups, parks, playgrounds, hospitals, libraries, and economic development.

The Pennsylvania analysis project is scheduled to begin in the summer of 2007 and conclude within a year.

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Research Compares Children’s Mental Health Outpatient Services in Rural and Urban Areas
To learn if differences exist between the mental health outpatient services used by rural and urban children enrolled in Medical Assistance, the Center for Rural Pennsylvania sponsored research in 2004.

Drs. Donald U. Robertson and Kimberly Husenits of Indiana University of Pennsylvania analyzed the authorization and utilization rates for children who live in rural and urban counties within the state’s HealthChoices program areas as well as those who live in counties outside the HealthChoices program areas.

The HealthChoices program is a managed care program that began in the late 1990s. Pennsylvania Medical Assistance (MA) recipients were required to enroll in the program as it was rolled out to various counties. While the program was to be implemented statewide by 2005, budget constraints prevented the program from being fully implemented in every county.
The major findings from the research are as follows:

For a copy of the research results, The Impact of Mandatory Managed Care for Medicaid Clients on the Delivery of Mental Health Services to Children and Adolescents in Rural Pennsylvania, call the Center for Rural Pennsylvania at (717) 787-9555, email info@ruralpa.org, or visit www.ruralpa.org.

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CHIP Proposal to Cover All Kids Approved
The proposal to expand Pennsylvania’s Children’s Health Insurance Program (CHIP) was approved by the federal Centers for Medicare and Medicaid Services in late February, and now all uninsured children and teens up to age 19 have access to health insurance, regardless of family income.

According to the Pennsylvania Insurance Department, the expanded CHIP program, called Cover All Kids, offers all families the option of enrolling their children in the CHIP program.

Premiums will be affordable for all families because the premium payment is on a sliding scale based on the families’ income. There is no cost for families who qualify for free CHIP and average monthly premiums for low-cost CHIP could range between $38 and $60 per month, per child.

Families with higher incomes who qualify for at-cost CHIP will pay approximately $150 per month, per child. Families who are unable to purchase insurance because their children have pre-existing conditions or for whom insurance is not affordable will be able to purchase coverage at cost.
 
For more information about premiums, visit www.CHIPcoversPAkids.com. For more information about CHIP or to apply, parents may call a CHIP counselor at (800) 986-5437 or visit www.compass.state.pa.us.

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Did You Know. . .
In rural Pennsylvania:

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Market and Workforce Needs of Pennsylvania’s Wood Products Industry
While employment in Pennsylvania’s wood products industry has remained relatively strong from the early 1990s to the early part of this decade, employment growth has not been as consistent; particularly among the higher value-added furniture and fixtures sectors, which has been seeing a great deal of pressure from offshore manufacturers.

While government policy cannot reverse global and technological forces, it can help the industry adapt to challenges and opportunities.

In the summer and fall of 2004, Dr. John E. Bodenman of Bloomsburg University and Drs. Stephen M. Smith and Georg Grassmueck of Pennsylvania State University conducted research, sponsored by the Center for Rural Pennsylvania, to develop a better understanding of what Pennsylvania’s hardwood markets are, how they are changing, and where the greatest competition lies.

The research, Market and Labor Force Factors in the Growth of the Wood Products Industry in Rural Pennsylvania, was published in February.

A look at Pennsylvania’s hardwood processors
The main objective of the research was to determine what markets Pennsylvania hardwood processors currently access, how these processors see their markets changing, and how they view their future. The second objective was to determine the workforce needs of the industry to respond to an increasingly competitive environment and to become more productive and efficient.

The research included analyses of secondary data as well as information from a mail survey of hardwood processors in Pennsylvania and surrounding states.

Adapting to their markets
In terms of markets, the research revealed that: 88 percent of respondents had made changes in the last five years in what they produced, due mainly to changes in demand, outputs, inputs, or imports; 79 percent had seen no change in their final buyers in the last five years; 58 percent of Pennsylvania firms reported increased sales in the last five years; 75 percent of survey respondents identified local competitors and/or those within their own industry as their main competition while 19 percent of Pennsylvania firms considered imports to be main sources of competition; and for the businesses that mentioned foreign competition as a concern, two products are the most affected – low value-added saw and planing products and high value-added furniture products.

In terms of workforce needs, the research revealed that: while less than half of Pennsylvania respondents reported problems finding workers with the proper skills, 39 percent of the smallest firms and 67 percent of the largest firms had problems; the top three skills perceived to be lacking among workers were basic schooling, work ethic and technical skills; the majority of respondents preferred to train workers themselves; 76 percent of respondents had invested in new technology in the last five years; and investment in new technology required retraining for about 60 percent of all businesses.

Addressing the needs of the industry
To address the marketing and workforce needs of the industry, the researchers suggest that policy efforts focused on the different types and sizes of hardwood businesses will achieve better results than a one-size-fits-all policy. Three considerations for state government from this research are to: analyze and provide information on changing markets and how to access those markets; examine Pennsylvania’s investment assistance programs to determine if they meet the needs of the state’s hardwoods industry, including both small and large businesses; and devise a range of on-site workforce training and education programs, particularly for smaller firms.

Report available
For a copy of the report, Market and Labor Force Factors in the Growth of the Wood Products Industry in Rural Pennsylvania, call the Center for Rural Pennsylvania at (717) 787-9555 or visit www.ruralpa.org/reports.html.

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A Closer Look: Rural Children and Seniors
Children (Under 18 Years Old)
In 2006, about 23 percent of rural Pennsylvanians were under 18 years old. The average rural child was nine years old and had one sibling. This average child lived in a household with two adults who were married. Typically, both adults were employed and the family’s total median income was about $50,000.

Seventy-seven percent of rural households with children were comprised of married couples, 17 percent were single parent households, and 6 percent were unmarried couple households. 

Twelve percent of rural households with children were in poverty and single parents headed 55 percent of these households. About 1 percent of these households received assistance from the Temporary Assistance for Needy Families (TANF) program and 10 percent received Food Stamps. Thirty-two percent of the school-age children in these households were eligible for the Free or Reduced School Lunch Program. Nine percent of these households received heating assistance. 

Eighteen percent of rural youth under age 18 were employed. In 2005, 22 percent of rural youth under age 18 were employed. In both years, the majority of working youth were employed part-time.

In 2005 and 2006, about 90 percent of rural households with children had a computer.  

In both rural and urban areas, children comprise about 23 percent of the total population. In general, there were no significant differences between rural and urban children in terms of average age or gender. There was, however, a slight difference in the type of household in which rural and urban children lived: 79 percent of urban households were comprised of married couples with children while 77 percent of rural households were comprised of married couples with children.

Senior Citizens (65+ Years Old)
In 2006, the average rural senior citizen was 73 years old and lived with a spouse in his/her own home. The typical rural senior had a median income of about $29,000, of which about 61 percent came from Social Security, investments and pensions. Less than 11 percent of seniors were employed. Sixty-four percent of rural seniors had a high school diploma or less. 

Between 2005 and 2006, conditions for rural seniors changed very little. In both years, about 26 percent lived alone. Eight percent were in a household in poverty. Three percent were in households receiving Food Stamps and 5 percent were in households receiving heating assistance.

While rural and urban senior citizens have many similar demographic characteristics, they also have some differences:  12 percent of urban seniors were in households in poverty compared to 8 percent of rural seniors; the majority of urban senior citizens lived in households with higher incomes than rural seniors; and the median household income for urban seniors was $36,000 and for rural seniors was $29,000. 

Also, 84 percent of urban seniors owned their own home, compared to 89 percent of rural seniors. For the 16 percent of urban seniors who lived in rental units, the median monthly rent was $560. For the 9 percent of rural seniors who rented, the median monthly bill was $374.

Another slight difference between rural and urban seniors was computer ownership. Approximately 54 percent of urban senior households owned a computer while 52 percent of rural senior households owned a computer. 

Note: All data are from the 2006 RuralPA-CPS unless noted otherwise. The RuralPA-CPS, modeled after the March Supplement of the federal Current Population Survey, was first conducted in 2005 by the Center for Rural Pennsylvania. The RuralPA-CPS provides baseline data on the state’s rural households and individuals. In 2006, the Center expanded the survey of more than 2,000 rural households to include 1,000 urban households and their members.

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Fast Fact: Sexually Transmitted Diseases* Per 100,000 Residents in Rural and Urban Pennsylvania Counties, 1994-2004

*Includes Primary and Secondary Syphilis, Chlamydia, and Gonorrhea.
Data source: Pennsylvania Department of Health

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Just the Facts: Rural Poverty
An increasing number of rural Pennsylvanians are facing difficult economic times, according to data estimates from the U.S. Census Bureau. In 2004, the rural poverty rate was 11.5 percent, while a year earlier the rate was 10.9 percent. That means between 2003 and 2004 approximately 20,500 more persons were living in poverty.

Urban areas also experienced an increase in poverty. In 2004, approximately 11.1 percent of urban residents were in poverty, an increase of almost 1 percentage point from 2003, or nearly 62,000 more residents.

Regionally, in 2004, the northwest had the highest poverty rate of 13.1 percent, and the south central region had the lowest at 8.5 percent. At the county level, Philadelphia, Fayette, and Greene had the highest poverty rates (each more than 15 percent), while Bucks, Montgomery, and Chester had the lowest (each less than 6 percent.)

Nationally, there was a 3 percent increase in the number of persons in poverty. The states with the greatest increases were: Connecticut, Iowa, and Wisconsin, each with more than a 15 percent increase. Only 12 states had a decline in poverty. Among the states with the largest declines were Hawaii, Florida, and New Jersey, each with a decline of more than 5 percent.

The increasing number of children living in poverty is another indicator of hard economic times for families.

In 2004, the poverty rate for rural children in Pennsylvania 16.4 percent. From 2003 to 2004, the number of rural children in poverty increased 4 percent.

Regionally, south central Pennsylvania registered the largest increase of children living in poverty with 11 percent, while the central region reported the lowest at 2 percent.

Children accounted for 31 percent of the population living in poverty in rural areas of Pennsylvania versus 33 percent in urban areas.

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