Sunday, December 07, 2008

Why Is Pittsburgh's Economy Doing Better Than the Rest of the Country?

The Pittsburgh Region now has the 6th lowest unemployment rate among the 40 largest regions in the country, and we’ve had the 9th best job growth rate over the past year (October 2007 - October 2008).

What’s the secret to Pittsburgh’s success? A big part of it is “eds and meds” -– our large health care and higher education sectors, which created 5,300 jobs here over the past year.

Caution is in order, though: we’ve become very dependent on these two sectors -- 1 out of every 5 jobs in our region is in health care or higher education, the second highest percentage among the top 40 regions. Although these are the two most recession-resistant industries nationally, they can also suffer when the U.S. economy sags. UPMC and West Penn Allegheny Health System have each announced hundreds of layoffs since the October job figures were tallied.

Fortunately, our region’s strengths are broader than health care and higher education. We have 3,400 more jobs in professional and business services than a year ago, the fifth highest growth rate in that sector among the top 40 regions. We’ve also added 1,500 construction jobs over the past year, thanks to the many building projects around the region.

The news is not all positive, however. Over the past year, we’ve lost 1,300 jobs in transportation and utilities – the seventh largest loss of such jobs among the top 40 regions. We’ve also lost 1,300 jobs in the retail sector, 500 jobs in the information sector, and 500 jobs in other services.

Consequently, it’s not surprising that regional unemployment has been increasing at the same time that jobs have been growing. Moreover, some people who still have a job may be working fewer hours, taking pay cuts, or paying a greater share of health care costs, making it harder for them to make ends meet.

We also have 700 fewer people working in manufacturing than a year ago, but that’s actually good news when you realize that 36 of the 40 largest regions lost more manufacturing jobs than we have. Moreover, our region’s manufacturers are complaining that they can’t find qualified workers, so many of those 700 jobs may simply be vacant, rather than permanently gone.

Even regions that appear to be doing better than Pittsburgh may not be. For example, although Charlotte has had a slightly higher job growth rate than Pittsburgh over the past year, much of that growth has been in lower-wage sectors such as retail and tourism. In contrast to Pittsburgh, Charlotte has lost 2,900 manufacturing jobs in the past year, over 3% of its manufacturing base.

How long can we keep bucking the national trend? It’s hard for any region to fight the riptide of a global recession, but that doesn’t mean we can’t try. You can help keep the regional economy afloat by:

* Spreading the word that we have jobs here as well as affordable housing – this is a unique opportunity to reverse the net outmigration that’s plagued us for over two decades;

* Buying local – use Pittsburgh-region products and services whenever possible; and

* Supporting entrepreneurs – startup businesses will be a key to rapid job growth once the economy turns around, but they need banks and investors to help them through today’s tight credit markets.

(A slightly different version of this post appeared in the Sunday, December 7 Pittsburgh Post-Gazette.)


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