Pennsylvania families were squeezed last year as many residents lost jobs and those working saw their inflation-adjusted buying power eroded by stagnation in income and wages, according to an annual report on the state of the state's economy.

The Keystone Research Center's 15th annual check-up on the status of working Pennsylvanians examined the economic challenges residents faced over the past 12 months.

"The central message of our report is we need to be focused on the jobs deficit and the middle class wage deficit, and not the federal deficit," said Stephen Herzenberg, executive director of the non-profit economic research group in Harrisburg.

Before the federal government intervened to stabilize the economy through the American Recovery and Reinvestment Act, Pennsylvania was losing nearly 30,000 jobs per month and the number was growing rapidly.

This year, the center reported, Pennsylvania has gained jobs each month on average. Still, the state's economy remains in deep trouble.

Pennsylvania would need to add roughly 300,000 jobs to boost employment enough to replace the jobs lost since the recession began and to provide enough jobs to match the growing working age population, the report said.

The report pointed out that since 1995 productivity has grown by 43 percent while the inflation-adjusted hourly wages of both college-educated and high school-educated Pennsylvania workers has barely budged.

"The jobs deficit and wage deficit have created fertile ground for frustration with government as well as anti-tax sentiment," the report states. "Yet the wage deficit is greater than the amount most Pennsylvania families pay in state and local taxes."

Anything less than stellar employment growth over the next several years will be "an unmitigated disaster for hundreds of thousands of Pennsylvania families," the report said. "A further expansion of the jobs deficit could further dampen wage growth, possibly exacerbating inequality.

"Thousands of unemployed men and women with a decade, if not more, of gainful employment risk becoming permanently detached from the labor market as their skills atrophy over long spells of unemployment."

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