Sunday, August 01, 2010

How is Pittsburgh Faring in the Recovery?

Now that the U.S. economy is slowly beginning to add jobs again, how is the Pittsburgh Region faring?

Although it’s still early in the recovery process, the signs so far indicate that we are doing better than most regions. However, we still have a long way to go, particularly in one key sector of our economy, and we need to work hard to make sure that unemployed residents of the region aren’t left behind.

Between February 2010 (when jobs nationally bottomed out) and June, the Pittsburgh Region has added 46,700 jobs. Although tens of thousands of jobs are added every spring due to normal seasonal hiring, the growth rate this spring was the highest the region has seen in the past 20 years. Moreover, the rate of job growth here was 60% higher than the U.S. as a whole, and it was the fourth highest among the top 40 regions. Because the Pittsburgh Region lost fewer jobs during the recession than other regions, even average growth during the recovery will keep us ahead of them, and the above average growth we’ve been experiencing will further widen our lead.

What has contributed to our strong recovery? The Leisure and Hospitality sector contributed over one-third of the new jobs this spring (16,100) and the Construction sector added almost one-fourth of the jobs (11,500); both of those increases are typical seasonal increases experienced in previous years, but are welcome nonetheless. The third largest contributor was Administrative and Support Services (which includes a diversity of jobs ranging from telemarketing to janitorial services and landscaping to temporary employment), which added over 6,000 jobs. And fourth was the Retail sector, which added 5,500 jobs, the biggest spring growth in the past two decades. The Pittsburgh Region’s growth in all four of those sectors ranked between 3rd and 7th best among the 40 largest regions in the country. Another strong performer was the Natural Resources and Mining sector; although it only added 500 jobs, that was more than any region other than Houston, likely reflecting the impact of Marcellus Shale drilling.

The biggest area of concern is the manufacturing sector. Manufacturers in the Pittsburgh region added only 500 jobs in the spring; although that’s good news after almost two straight years of job losses, it’s only a small fraction of the 14,000 manufacturing jobs we lost during the recession. Moreover, the rate of job growth in manufacturing here this spring was the 15th worst among the top 40 regions. In contrast, Cleveland added over 5,000 manufacturing jobs this spring, and both Cincinnati and St. Louis added nearly 4,000 manufacturing jobs.

Despite the job gains this spring, we still have a long way to go to recover all of the jobs we lost during the recession. As of June, we’ve recovered about one-fourth of the 37,600 jobs we had lost between February 2008 and February 2010; we still have over 28,000 fewer jobs than we did two years ago, and perhaps even more sobering, we have 5,000 fewer jobs today than we did over a decade ago in 1999.

Moreover, despite the growth in jobs in the spring, there were still over 105,000 people unemployed in the Pittsburgh Region in June. That’s 12,000 fewer than in February, but 40,000 more than two years ago. There are more people unemployed today than the number of jobs we’ve lost because some of the new jobs have been filled by people moving here from other parts of the country, and that in turn is because job creation has occurred in different sectors and in different companies within a sector than where jobs were lost.

What should we do to accelerate the region’s economic recovery?

• Because manufacturing jobs are among the highest-paid in the region and because manufacturing firms are a major source of income for many service firms, the slow growth we’re experiencing in the manufacturing sector is a serious concern. It is critical that state and local government leaders create a more competitive business climate to help existing manufacturers recover, and that private investors and economic development agencies provide the capital and technical assistance that entrepreneurs need to start and grow new manufacturing firms.

• Just because new jobs are created here does not mean that unemployed residents of the region will have the skills to fill them. Consequently, it is essential that job training programs focus on helping unemployed individuals develop the skills that employers in growth sectors need. Fortunately, regional organizations such as Three Rivers Clean Energy ( have had major successes this year in attracting federal funding for training in energy-related occupations, and this type of aggressive action needs to continue.

(A version of this post appeared as the Regional Insights column in the Sunday, August 1, 2010 Pittsburgh Post-Gazette.)


Blogger Dean Jackson said...

Asking a question I think about often - having to do with Pittsburgh's Future - what happens to the health care segment when our elderly baby boomers die off, and we have the lost generation - the one that moved out of state - in the same bracket the baby boomers are in now?

We keep talking about "sustainability of healthcare jobs", but don't consider that the demographics will shift heavily in the next twenty years, with poignant reminders like West Penn Hospital closing it's ER...

12:45 PM  

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