Not Out of the Woods Yet

The preliminary jobs figures for December show that while the Pittsburgh Region is still doing better than most major regions in the country, the recession continues to have a downward pull on the local economy. The region had fewer jobs in December 2009 than it did in December 1998, the first time that the region has ever fallen below 1998 levels.


There were 5,200 fewer jobs here in December than November, but over half of that decrease is a typical seasonal change – over the past 20 years, jobs have almost always decreased between November and December. What is significant is that the job loss this year was the fourth highest during those 20 years, exceeded only by the drops during the recession years of 2008, 2002, and 1992.

Until recently, a simple way of controlling for these kinds of seasonal effects from one month to the next was to compare the change in jobs over a 12 month period, i.e., by comparing December 2009 to December 2008, rather than to November 2009. However, that is no longer a good way to measure how much the recession is impacting our region, because 12 months ago, we were already losing jobs due to the recession. A better measure now is the 24-month job change between 2007 and 2009, since 2007 was the last year when the U.S. and regional economies were stable or growing through the whole year. The 24-month measure confirms that job losses worsened slightly in Pittsburgh between November and December. Jobs were down 2.9% (33,600) from December 2007 to December 2009, whereas they were only down 2.7% (31,400) from November 2007 to November 2009.


The bottom line is that the persistence of the recession cost us 2,200 jobs in December. Although this is bad news for local workers and job-seekers, things were worse in most other parts of the country. Our 24-month job loss between December 2007 and December 2009 was the 9th smallest among the top 40 regions, and even though jobs declined here between November and December, the declines were even bigger in 29 of the top 40 regions. For example, Milwaukee lost a whopping 10,000 jobs between November and December, five times as many as we did; they’ve lost a total of 70,000 jobs over the past two years, wiping out of all of the job gains they’ve made since 1993.


Which industries caused things to get worse here between November and December? The good news is that it wasn’t manufacturing. Although our manufacturing sector has lost over 12,000 jobs in the past two years, manufacturing jobs held steady between November and December. The biggest contributor to job losses was government, with significant reductions in federal, state, and local government jobs, followed by job losses in the professional and business services sector and the leisure and hospitality sector. Construction job losses decreased by 1,400 between November and December, offsetting some of the losses in other sectors.

It’s important to realize that these numbers are preliminary; the U.S. Bureau of Labor Statistics will revise all of the 2009 figures this spring, which will give us a more accurate picture of where we stand. However, it’s likely that the basic conclusion won’t have changed – we’ve lost a lot of jobs, but we’ve lost fewer than most regions – nor will the prescription for action: we need to continue working to support our local businesses to help them preserve and create as many jobs as possible.