Sunday, May 06, 2007

We Need More Jobs If We Want More People

The Pittsburgh Region has once again been recognized as the Most Livable City in America. So why are we losing population?

The answer is pretty simple – we’re not creating the jobs needed to attract new residents to the region. In fact, there are over 16,000 fewer jobs in the Pittsburgh Region today than there were six years ago.

The biggest job losses occurred during the recession years of 2002 and 2003. But the national recession bottomed out in 1ate 2003, and jobs nationally grew by 4.75% between 2003 and 2006. In the Pittsburgh Region, however, jobs have grown by a mere 0.3% since 2003 – less than 1/15 the national rate. Among the top 40 regions in the country, only Cleveland, Detroit, and New Orleans have done worse.

But we’ve lagged way behind the national job growth rate for years, right?

Actually, no: in the three-year period just before the recession (1998-2001), when jobs nationally grew by 4.7% (almost exactly the same rate as in the past three years), jobs in the Pittsburgh Region grew by just over 4%, 86% of the U.S. rate. Back then, our job growth ranked 27th among the top 40 regions, ahead of places like Seattle, Portland (Ore.), Chicago, and St. Louis.

In fact, nearly 45,000 net new jobs were created here between 1998 and 2001, an average of 15,000 jobs per year, compared to an average of only 1,100 jobs per year over the past three years. If we had matched our own 1998-2001 performance over the past three years, we would have over 42,000 more jobs today.

Our poor recovery from the recession cuts across most sectors. Among the top 40 regions, Pittsburgh’s job growth between 2003 and 2006 ranked 35th in the manufacturing sector, 37th in retail, 36th in transportation and utilities, 29th in the information sector, 36th in the financial sector, and 38th in leisure and hospitality. The best performing sectors were health care and social assistance, where we ranked 19th among the top 40 regions, and wholesale trade, where we ranked 13th.

This is a dramatic contrast to the pre-recession period, when almost every sector of the Pittsburgh Region’s economy, except for manufacturing, was adding jobs.

2006 was the first year since 2001 that the region saw any net growth in jobs, with 4,600 net new jobs created. The biggest contributor to job growth between 2005 and 2006 was the health care sector, which added 3,600 jobs, followed by construction (2,100 jobs), wholesale trade (1,400 jobs), professional and business services (1,300 jobs), and social assistance (1,000 jobs). These gains, however, were offset by losses of 2,200 jobs in retail, 1,400 jobs in “other services,” and 1,100 jobs in non-durable goods manufacturing.

While 2006 was better than previous years, it wasn’t much better relative to other large regions. One notable exception was durable goods manufacturing, where we had the 13th best rate of job creation among the top 40 regions in 2006.

Although the consistent job growth in the health care sector over the past several years has been welcome, it’s important to recognize how dependent the region’s economy has become on health care. Over 15% of the region’s jobs are in the health care and social assistance sector – that’s the highest percentage of any of the top 40 regions in the country. Federal, state, and private efforts to control health care costs could limit the chances of seeing continued high rates of job growth in health care in the future.

Why is our economy doing so poorly? The fact that job growth is slow across so many different sectors suggests a common cause – an uncompetitive business climate.

More on that in a future post.


Anonymous Anonymous said...


You always say things that are entirely logical and reasonable, but as with some of the other more enlightened blogs out there, you have zero ability to actually drive any type of change.

Of course this area is uncompetitive from a tax, labor and regulatory perspective and has been for decades. Apparently though, this means nothing to the folks who actually vote in elections and continue to put into office these incompetent state and regional officials who refuse to make sensible changes to how things are done here. The impact is a perpetual downfall that continues to feed off itself.

Talking about improving the business climate and lowering taxes is all good and well but the vast majority of people who live in this region obviously don't care about this stuff. If they did they would demand change and they simply aren't doing this.

I used the blame the politicians but now I blame the public. You get what you vote for and after years of seeing the same results while voting for the same types of people, we have to look in the mirror to see the root cause of our failure as a region.

9:47 AM  

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