Which Region is Winning the Economic Competition?
Back when Pittsburgh won its first four Super Bowls, Phoenix didn’t even have an NFL team. And up until 1992, the Pittsburgh Region was bigger – in both population and jobs – than Phoenix.
Over the past 16 years, however, the Phoenix metro area has almost doubled in population, and is now the 13th largest region in the country, while the Pittsburgh metro area has fallen from 18th to 22nd. A lot of the population growth in Phoenix was fueled by the kind of immigration that Pittsburgh has failed to attract. In 2007, 58% of Phoenix residents were born in another state, compared to only 13% in Pittsburgh, and 17% of Phoenicians were foreign-born, compared to only 3% of Pittsburghers.
Between December 1992 and December 2007, Phoenix had the second highest rate of job growth among the top 40 regions – an 84% increase in jobs – while Pittsburgh had the 4th lowest rate of job growth – only 10%. Phoenix skated through the 2001-2002 U.S. recession with almost no loss of jobs, while Pittsburgh lost 20,000 jobs and didn’t fully recover until last year. The job growth in Phoenix over the past two decades was diversified across a wide range of sectors – professional services, retail, construction, health care, tourism, and manufacturing.
But while Pittsburghers may have been envious of Phoenix’s boom economy in previous years, our slow and steady job growth looks pretty good right now. Over the past year, Phoenix has had the second largest rate of job loss among the top 40 regions. Whereas Pittsburgh lost 7,100 jobs between December 2007 and December 2008, Phoenix lost 87,000 jobs, almost 1 out of every 20 jobs in that region. While Phoenix still has far more jobs than we do, that’s little comfort to the tens of thousands of people there who have lost work in the past year.
Although Detroit’s job losses have received most of the attention nationally, the magnitude and rate of job loss in Phoenix is almost identical to Detroit. The reasons for the decline are different, though. While Detroit has lost nearly 29,000 manufacturing jobs, the leading job loser in Phoenix was the construction industry, which lost 35,000 jobs. A major reason for that is the collapse in the housing market: Arizona had the third-highest number of foreclosure filings in the country in 2008, and housing prices in Phoenix dropped by almost 17% in the past year, whereas they grew by 2% here. Phoenix has also lost over 23,000 jobs in Professional and Business Services in the past year, while Pittsburgh still has more jobs in that sector than a year ago. Clearly, a lot of the growth in Phoenix was built on a very shallow foundation.
As Pittsburghers well know, if you don’t have jobs, you can’t keep your residents. Last month, while Pittsburghers were reading that Toledo is now bigger than the City of Pittsburgh, The Arizona Republic reported that for the first time in modern history, the City of Phoenix’s population may be shrinking.
Whether Pittsburgh gets its sixth Super Bowl ring or Arizona gets its first, our focus needs to quickly shift to winning in the economic arena. We need to help our manufacturing firms stay competitive and find qualified workers, and we need to help our entrepreneurs get the financing and customers they need to ride out the recession.
Everyone can help by looking to see whether there are local products and local vendors that can meet their needs at a competitive price. In an era of internet shopping, it's all too easy to buy something from a vendor someplace else when a local vendor may have a superior product at a competitive price, but with a lower page ranking on Google (or no e-commerce site at all). Moreover, many of our local entrepreneurs complain that they have to find their first customers outside of the region, even though there are businesses here that could benefit from their product or service and would ultimately use them once they have a reputation built on sales elsewhere. If local companies are given the opportunity and successfully win the business, it will support jobs here, and the workers filling those jobs will also spend their money in the region, creating an economic multiplier effect. (Giving local companies a chance to compete is different from establishing rigid anti-competitive "buy American" types of rules that raise prices and engender retaliatory regulation. The goal should be to consider the full range of options and when all else is equal, to support the local economy.)
(A shorter version of this post was also published in the Sunday, February 1 Pittsburgh Post Gazette.)