Sunday, May 07, 2006

We're All In It Together, Economically

Recent analyses have shown that job growth in most of the Pittsburgh Region’s economy has matched the U.S. average over the past six years. Job losses at U.S. Airways, and slow growth in the construction, government, and retail sectors, are the reasons why overall regional job growth looks slow.

But which parts of the region are creating jobs?

  • Higher education and health care were the biggest creators of high wage jobs region-wide between 1999 and 2005. Allegheny County is home to the vast majority of the jobs in education and health care, and so it is natural to expect that Allegheny County played the lead role in the significant regional job growth that occurred in these sectors. And in fact, it's true that the vast majority of the net new jobs in education (80%) were created in Allegheny County.
    But the majority of the net new jobs in health care were created outside of Allegheny County – in Armstrong, Beaver, Butler, Fayette, Greene, Indiana, Lawrence, Washington, and Westmoreland Counties. These are not hospital jobs, but doctors’ offices and clinics, which are locating throughout the region to be close to where people live.

  • Other high-wage sectors which grew region-wide over the past six years were finance, professional services, and wholesale trade. Although Allegheny County is home to the majority of the region's jobs in these sectors, the net new job creation in these sectors occurred in the nine counties outside of Allegheny County during this period. Allegheny County actually lost over 4,000 jobs in these sectors during this period. Fortunately for the region, the job growth in the outer counties was strong enough to offset the losses in Allegheny County and still result in net new jobs for the entire region.
    Why is Allegheny County losing jobs in these sectors while the other counties are growing them? It's not because businesses are fleeing Allegheny County – the number of businesses in these sectors increased in Allegheny County while the number of jobs went down. The job losses appear to be due primarily to the downsizing of big firms, and the biggest firms are located in Allegheny County.

  • All counties in the region lost manufacturing jobs, with the losses equally split between Allegheny County and the other 9 counties. (The majority of manufacturing jobs in the region are located outside of Allegheny County.) Although this sounds negative, there are two pieces of good news. The first is that the U.S. economy as a whole lost manufacturing jobs during this period, but the Pittsburgh Region lost a smaller percentage of manufacturing jobs than did other regions. The second piece of good news is that we lost a smaller percentage of manufacturing companies than of jobs. In other words, most of the manufacturing companies are still here, and they can create new manufacturing jobs as the U.S. economy continues its recovery.

  • Thanks to a strong tourism industry, the region experienced significant growth in the leisure and hospitality sectors, with 11,000 net new jobs created in the past six years. Half of those job gains occurred in Allegheny County, and the other half occurred in the other nine counties.

The different strengths of the different counties gives the Pittsburgh Region a more balanced economic portfolio than any one county would have on its own. The concentration of education and research jobs in Pittsburgh has fostered strong job growth in these high-wage sectors, helping mitigate the impacts of the recession on the entire region. The majority of manufacturing jobs are located outside of Allegheny County, and while many jobs have been lost in the past several years, the Pittsburgh Region created manufacturing jobs ahead of the national average during the 1990s. An increasing number of trade, finance, and professional services businesses are locating in every county in the region, so that job growth in many sectors is now occurring throughout the region, not in any one county. And the region’s unique combination of urban and rural amenities across all ten counties not only creates tourism jobs, but also helps attracts new residents.

Job growth in each county benefits the entire region. Over 200,000 people who live in the ten-county Pittsburgh Region cross county lines every day to go to work. Only half of them are people coming in to Allegheny County and Pittsburgh. Nearly 40,000 people leave Allegheny County every day to work in one of the other nine counties.

The bottom line? The counties in the region are closely linked economically. And so economic development strategies need to be regional, not county-specific.


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