Monday, March 27, 2006

The Pittsburgh Region's Economy Is Doing Better Than It Might Seem

Careful analysis of the Pittsburgh Region's economy shows that the reason that total job growth here appears so much lower than the U.S. growth rate is because of slow growth or job losses in four sectors – construction, government, retail, and transportation.

The loss of over 8,000 jobs at USAirways over the past six years offset much of the job growth in the rest of the region’s economy. In addition, because of the stagnant population growth in the region, sectors of the economy that are driven by population growth, such as retail, construction, and government, have grown much more slowly here than the rest of the country. The remaining sectors of the Pittsburgh Region's economy are growing at a rate matching the U.S. and ahead of many other regions.

You might be surprised to learn that one-third of the job growth in the U.S. over the past six years has been in the public sector, not the private sector. In contrast, public sector jobs declined in the Pittsburgh Region during this period.

The universities and health care systems have been the quality-job drivers in the Pittsburgh Region over the past six years. Had it not been for the strong job growth in higher education and health care, there would be fewer total jobs in the region today than in 1999.

Although the Pittsburgh Region lost a significant number of manufacturing jobs during the recession, so did every region in the country. The Pittsburgh Region actually lost fewer production jobs than most comparable regions, indicating that southwestern Pennsylvania remains attractive for high value-added manufacturing work.

Moreover, jobs in science, engineering, and health care are growing faster in the Pittsburgh Region than in the U.S. as a whole and faster than many high-tech regions of the country.

With appropriate funding support from the state and federal governments, the universities and health care systems could continue to create more jobs, as well as the ideas that lead to new businesses. In addition, more jobs in corporate R&D could be created through an aggressive marketing effort. The continued presence of long-standing corporate R&D Centers for companies like Alcoa, Bayer, PPG, and U.S. Steel, and the recent successes in attracting research centers for Google, Intel, RAND, Seagate, and others, prove that southwestern Pennsylvania is an ideal spot for growing R&D jobs of all kinds.

In evaluating the region's economy, it's important to look beyond changes in total employment and focus on whether job growth is occurring in the sectors that bring new revenues into the economy, such as manufacturing, higher education, and research and development. These are the sectors that attract and retain talented young people and build regional wealth. Growth in these kinds of jobs will, over time, lead to population growth in the region, which in turn will lead to higher rates of job creation in the population-dependent sectors of the economy. That will move total job growth in the Pittsburgh Region closer to the national rate.

A complete analysis of the changes in jobs in the region over the past six years can be downloaded from the Pittsburgh's Future website.


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