Sunday, June 21, 2009

More Bad News for the Region's Workers

Although everyone has been looking for some good economic news, there is, unfortunately, no sign that the recession is abating locally. Indeed, May was the worst month so far in terms of job losses in the Pittsburgh Region. Between May 2008 and May 2009, the Pittsburgh metro area lost 33,600 jobs, a 2.9% drop. For the second month in a row, the region has fewer jobs than it did in 1999, i.e., an entire decade’s economic growth has been lost.

Don’t be confused if you hear reports saying that the region added jobs in May. It’s true that there were 5,700 more jobs here in May than there were in April. But there are always more jobs in May than there are in April due to seasonal hiring patterns. The key fact that is that the increase in jobs between April and May this year was smaller than in any year since 1995, and as a result of that and the losses in previous months, there are 33,600 fewer jobs in May this year than there were in May of 2008.

We’ve still lost fewer jobs than most major regions in the country, but we’ve been slowly slipping behind some regions that were previously doing worse than we were. As of May, Boston, Columbus, Kansas City, and New York had all lost fewer jobs on a percentage basis in the past year than the Pittsburgh Region did.

The most troubling news continues to be the significant and accelerating loss of manufacturing jobs in the region. In just twelve months, the Pittsburgh Region has lost over 9,000 manufacturing jobs – 1 out of every 11 manufacturing jobs that were here last year. Manufacturing jobs are among the highest paid jobs in the region and typically have some of the best health and retirement benefits, so losing a manufacturing job has a particularly large negative impact on the regional economy.

Up through the beginning of the year, Pittsburgh’s manufacturing sector was one of its strengths – even though we were losing manufacturing jobs, we were losing them at the 5th smallest rate among the top 40 regions. But in May, Pittsburgh had the 15th largest rate of manufacturing job loss among the top 40 regions. The manufacturing sector is now the biggest contributor to job losses in the region.

The second biggest contributor to job losses continues to be the leisure and hospitality industry. Over 7,000 jobs have been lost in that sector over the past year. This is not only a large jobs loss relative to other sectors here, it's the 3rd biggest percentage loss in that sector among the largest 40 regions.

Construction is the fourth largest contributor to local job losses – we have 4,900 fewer construction jobs in May than a year ago – but unlike in the manufacturing sector and the leisure and hospitality sector, construction workers have fared better here than in most regions. Although our 8.2% loss of construction jobs is high, it pales in comparison to construction job losses of 14% in Chicago, 20% in Atlanta, and 29% in Phoenix.

Health care and higher education still have more jobs than last year, but even there, the rate of growth has slowed significantly from where it was last year, particularly in higher education, which likely reflects the impacts of smaller endowment earnings at colleges and universities.

If you saw the recent news stories about a Brookings Institution report saying that Pittsburgh's economy ranked 18th best out of 100 regions, it’s important to recognize that the data used in that report were old news – they only measured employment and unemployment changes through March, whereas Pittsburgh’s job losses have accelerated rapidly in April and May. Also, little noticed was the fact that the Brookings report ranked the region only 59th (i.e, 42nd worst) over the past year in the change in gross metropolitan product, i.e., the value of goods and services produced in the region. That is probably a reflection of the accelerating job losses in high-wage sectors such as manufacturing that began here early in 2009.

It’s not likely that Pittsburgh’s economy will experience any significant turnaround before the U.S. economy recovers, and national job losses continued to worsen in May. Moreover, even when the U.S. economy turns around, Pittsburgh may lag behind as it has in past recessions.


Anonymous Anonymous said...

I am curious as to why Pittsburgh's leisure and hospitality sector is getting so hammered... it's down there with regions that are much more dependent on long-distant tourists (Las Vegas, Orlando, San Diego, Miami, etc.). Why is Pittsburgh getting hammered in this sector... while say... Cleveland is barely losing any? Pittsburgh has consistently been a strong performer in hotel occupancy rates the past few years... even with the hotel mini-boom in the region. Have all the kayak operators at Ohiopyle shut down? There's got to be some explanation for this rather peculiar downturn.

Also... I'm hoping we're not beginning to see a repeat of the 2002 recession... which PGH didn't emerge from until 2005ish.

7:17 PM  
Blogger Harold D. Miller said...

It's not job losses in the hotels or the restaurants that is making us look so bad compared to other regions -- although they're down in employment, too -- it's the arts and entertainment sector. But it's not clear what's happening there, either, or why it's so much worse than other regions.

7:23 PM  

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