Thursday, December 06, 2007

What Pittsburgh Needs to Do to Grow Again

Previous posts have pointed out how poor the economic growth in the Pittsburgh Region has been recently. Job creation here has been less than one-third the national rate for the past four years, with little signs of improving.

What do we need to do to turn things around? In November, over 50 experts and leaders in economic development from across the country met in Hershey, PA as part of the 106th American Assembly in order to create a blueprint for growth in older industrial regions like Pittsburgh. (The American Assembly was founded in 1950 by Dwight Eisenhower to serve as a national, non-partisan forum on important public affairs issues.)

The Assembly's report, Retooling for Growth: Building a 21st Century Economy in America’s Older Industrial Areas, has just been released. You can download it here.

The members of the Assembly agreed that if older industrial regions such as Pittsburgh want to be successful, they need to dramatically reinvent the way they approach economic development, both in terms of what their priorities should be, and how they should go about achieving those priorities.

First on the Assembly’s list of recommendations is placing a higher priority on promoting entrepreneurship. This is a particularly critical issue for the Pittsburgh Region, since data recently published by the Pittsburgh Regional Indicators Project ( show that, in virtually every industry, we rank dead last among similar regions in the rate at which new startup companies are created.

Key steps to helping startup companies are increasing access to early-stage capital, also known as angel investment, and providing training to prospective entrepreneurs. But it’s more than just creating programs for entrepreneurs, it’s creating a culture of entrepreneurship in the region. The Assembly report urges that “the leadership of these metropolitan areas – public and private – needs to celebrate, reward, and incentivize entrepreneurial behavior as a key pathway to economic growth.” This is something that that is not done in the Pittsburgh Region, and that needs to change.

In contrast, the Assembly recommended making business attraction efforts much more selective and reducing the use of firm-specific subsidies. They noted that most job growth occurs through the retention and expansion of existing businesses and the creation of new ones, not by luring existing companies across jurisdictional lines. Yet business attraction is the primary focus for most of the region's economic development agencies.

The Assembly also called for regions to recognize that increasing the rate of job growth depends on the ability of their businesses to succeed. The Assembly’s report says “…metropolitan areas need to treat businesses as customers, continuously seek out and listen to those customers (both current and prospective), and use that feedback to set priorities for infrastructure investment, workforce development, and public services.”

In particular, they urged that local governments revamp outmoded rules, regulations, and processes to create an environment that is hospitable to the formation, attraction, and growth of businesses. They called for a reduction in the fragmentation of local government in order to improve regions’ ability to make coordinated investments in infrastructure (which is critical both for business growth and for the quality of life for residents), and for reforms in local tax systems in order to enable more effective support of regional services and to reduce intra-regional competition for growth. These recommendations should be a particularly high priority for the Pittsburgh Region, since we lead the nation in local government fragmentation.

Of course, businesses need capable workers to succeed, so the Assembly said that developing human capital must also be a high priority for regions such as ours. This includes radically improving the level of performance in public schools (in the Pittsburgh Region, one-third or more of the students who graduate high school aren’t proficient in reading or math), eliminating the fragmentation of workforce development programs, and better aligning training programs with business needs.

There are many other recommendations by the Assembly, which will be explored in future posts. On some, the Pittsburgh Region is already ahead of other regions. On others, particularly those above, it's way behind. Overall, the Assembly's recommendations can and should serve as a blueprint to help the Pittsburgh region get its economy growing again.


Blogger Frank said...

Improving Public Schools is certainly needed, but in terms of workforce development, retaining more college graduates in the region is a much more pressing need that can benefit the city a lot quicker.

While I agree that the regional and local governments need to work on the issues you outlined, I think there is a critical element missing. Culture change is necessary, but it is not something that can happen from above. People living in the city need to start taking initiative and creating momentum. The city and county can only help make the environment conducive to culture change, but when it comes down to it, only the people can make it happen.

Everyone knows that the city, county, and state have work to do. Let's start talking about what we as individuals can do. I don't know about everyone else out there, but I'm sick of waiting for the powers that be to make this city what we all know it can be. They should be following our lead, not the other way around.

The Blurgh

10:53 AM  
Anonymous Mike said...

All good points Frank, but if you want the people to bring about change, the bottom line is that it is a full time job. In the end, people are going to need financial capital to get what they want done. Building social capital through organizing efforts, will have more likelihood for accessing financial capital, but money will be needed to improve the human capital mentioned. The Pittsburgh Promise to giv emoney to graduating students in the city schools is great, but we have to also attack the problem at its root (which is when students are younger).
It will be the people that bring change, but their first obstacle after organizing will be money.

”Drink Iron City”

4:34 PM  

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