Slow Regional Job Growth Continues in October
The newest regional job statistics show that as of October, the Pittsburgh Region has only created 3,000 new jobs over the past year, the smallest level of job creation since the spring of 2006. The region's job growth rate was a mere 0.26% (a quarter-percent), compared to a U.S. job growth rate more than four times as large at 1.18%.
As you can see in this chart comparing job growth rates in Pittsburgh to the U.S. over the past decade, average job growth in the Pittsburgh Region over the past two years has averaged under 0.50%, well below the job growth rates experienced prior to the recession, and well below the U.S. job growth rates during the same period.
Although the chart suggests that the gap between the U.S. and Pittsburgh job growth rates was narrowing this year, this was due to a temporary spurt in job growth that occurred here late last year into early 2007.
The following chart, which shows monthly job growth, makes it clear that over the past six months, things have been getting progressively worse, not better. Job growth rates are much lower now than at the beginning of the year, and the gap between job growth here and the U.S. as a whole has widened.
Of particular concern is that manufacturing jobs in the Pittsburgh Region began to decline again in October after holding fairly steady during 2006 and into early 2007. The preliminary job totals indicate that there were almost 2,000 fewer manufacturing jobs here in October than in the same month last year. If that continues, it will have serious negative ripple effects throughout the regional economy.
As you can see in this chart comparing job growth rates in Pittsburgh to the U.S. over the past decade, average job growth in the Pittsburgh Region over the past two years has averaged under 0.50%, well below the job growth rates experienced prior to the recession, and well below the U.S. job growth rates during the same period.
Although the chart suggests that the gap between the U.S. and Pittsburgh job growth rates was narrowing this year, this was due to a temporary spurt in job growth that occurred here late last year into early 2007.
The following chart, which shows monthly job growth, makes it clear that over the past six months, things have been getting progressively worse, not better. Job growth rates are much lower now than at the beginning of the year, and the gap between job growth here and the U.S. as a whole has widened.
Of particular concern is that manufacturing jobs in the Pittsburgh Region began to decline again in October after holding fairly steady during 2006 and into early 2007. The preliminary job totals indicate that there were almost 2,000 fewer manufacturing jobs here in October than in the same month last year. If that continues, it will have serious negative ripple effects throughout the regional economy.
posted by Harold D. Miller at 7:27 AM
4 Comments:
Supporting our local businesses would be a good step at spurring job growth. We are too easy to do businesses with those outside the area, and the state. For example, the state government has spent hundreds of thousands of dollars on conducting surveys; while the surveys may be in question for whether or not we need them, a lot of the money for these surveys went to companies outside of the state (http://keystonepolitics.com/story/aroundcapitol/you-paid-it-state-spends-500k-secret-political-polls). We are not doing the best with offering the jobs first to those who live here.
Key concept – support those who live here and do business here as best we can.
www.citizendriven.blogspot.com
www.drinkironcity.com
good stuff harold. Question -- if one wanted to draft a regional economic development plan that placed heavy emphasis on growing, developing and supporting entrepreneurship, what are some of the things you would include in that plan?
1. Increase the number of angel investors in the community. Lack of access to early-stage capital is probably the biggest single impediment in the region. In Pittsburgh, this will probably be easier to do by getting wealthy individuals to invest in an angel investment fund.
2. Have existing companies commit to buy products and services from entrepreneurial startup companies. Getting the first few customers is critical to a startup's success, and many local entrepreneurs report that they have to go out of town to find customers.
3. Make entrepreneurs the economic heroes of the community. Feature stories about them continuously in the newspapers and on TV. When an entrepreneur fails, view them as having the experience to be more more successful in the future and encourage them to try again, rather than treating them as a failure.
4. Get new technologies out of the universities more rapidly and easily, and get local corporate R&D labs to license breakthroughs that are not likely to fit the company's business plan.
5. Attract and provide backup employment options for the experienced C-level staff (marketing managers, engineering managers, etc.) that startup companies need.
The following was presented to the Municipality of Monroeville Council. I am told that the Council is considering my proposal.
Presentation for Monroeville Council
11/8/07
• Observation in Monroeville – The number of For Sale or For Lease signs in the commercial district in Monroeville is quite high. I am told that the vacancy rate is about 20%.
• Translation – This observation translates to fewer jobs and is possibly an indication of the future economic state of this community.
• Fact- Westinghouse will be vacating the Energy Center in 3 years with a loss of over 2,500 jobs.
• Translation – This fact will mean a lower number of employees and residents paying the occupation privilege tax and the earned income tax in Monroeville.
• Concern – This observation and fact will result in higher taxes for the remaining employees and residents.
• Challenge – The Municipality of Monroeville Council, Monroeville Chamber of Commerce and Pennsylvania State Legislators must devise a plan to offset this potential economic and monetary disaster.
• Solutions – Develop a plan to encourage job growth with small and medium businesses. Large businesses have their own incentives for job growth.
1. The State Legislators should endorse legislation with an immediate 5 years abatement of the corporate net income tax. This tax is especially onorous for small and medium businesses including start up firms. After the abatement legislation is passed with a starting date of 1/1/2008, the legislators should begin a study of the complete elimination of the corporate net income tax or at worst case, reduce this tax significantly. This abatement will not result in any loss of current revenue for the State.
2. The State Legislators should provide incentives for all of the local political subdivisions in the State to encourage a City, Municipality, Township or Borough to enact a 5 year abatement of the Business Privilege and Mercantile Taxes for all small and medium businesses including start up businesses. This abatement will not result in any loss of current revenue for the political subdivisions.
• Results – If the above solutions were enacted, the number of new jobs in the State of Pennsylvania would increase significantly. For example, the Engineers at Westinghouse are paid a starting salary of about $70,000 and their purchasing power is quite good. I believe that those 2,500 jobs at Westinghouse can be replaced with 50 small to medium firms employing on the average of 50 employees each.
I have been in the software industry for 44 years and I started and grew 3 successful software companies in Monroeville over a span of 27 years. I like this industry and I am currently working as Director of Sales and Marketing for a firm in Plum Borough called B Three Solutions, Inc. We have 10 employees and we are about to double and possibly triple our employee base in 2008. At the present time, we do not have any plans to move out of Plum. The reason is simple. We do not have to pay the onorous business privilege tax in Plum.
The software industry in the United States is a growing industry despite the outsourcing of software development to India, Pakistan, etc. I have recently surveyed the number of new software engineering positions for the Western Pa region. That number is about 15 – 20 per day.
Have I mentioned to you that the starting salary for a software engineer is between $70,000 and $90,000?
• Actions –
1. I suggest an immediate study be conducted to evaluate the job growth in the State of Pennsylvania for small and medium businesses. This study should not take more that 30 days and could be conducted by the PA Economy League or a similar group.
2. If this legislation is proposed, the Governor of Pennsylvania should immediate endorse it.
3. I further suggest that the Municipality of Monroeville Council review the current business and mercantile legislation as to the economic and financial challenges facing the Municipal budget. If other communities can attract businesses without these two taxes, then our community will remain uncompetitive for job growth.
• I thank you for the opportunity to present this information to you at this time. If you would be interested in discussing this information further, I would be pleased to do so.
Chuck Summerville, 1143 Colgate Drive, Monroeville, 412-372-4332
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