Saturday, August 21, 2010

Slipping into Mediocrity

After hopeful signs earlier in the spring that Pittsburgh’s economy was recovering better than other regions, the most recent data suggest that we may be slipping into the type of mediocre growth we experienced in the years prior to the recession. Over the past 3 months, jobs in the Pittsburgh Region have been growing more slowly than many of our competitor regions in key sectors of the economy.

In July, there were 15,300 fewer jobs in the Pittsburgh region than a month earlier. Losing jobs in July is not itself a cause for concern; we experience a similar seasonal change every year due to summer layoffs in public and private schools and colleges. In fact, even losing 15,000 jobs in July is not unusual; we’ve seen reductions of 14,000 to 17,000 jobs every July for the past decade. But therein lies the problem – if we had been experiencing a significant recovery from the recession this year, we would have seen smaller job losses this July than what we typically see, because growth in other sectors would have offset the losses in the education sector.

To see this more clearly, take a look at Cleveland. In each of the years from 2006 and 2008, Cleveland lost 12,000 to 15,000 jobs between June and July, similar to the seasonal reductions in the Pittsburgh Region. But this year, Cleveland lost only 5,000 jobs in July, one-third as many as Pittsburgh lost, because of the growth it has been experiencing in sectors such as construction and manufacturing.

You can see what’s going on in terms of economic recovery more clearly if you just look at private sector jobs, since most of the seasonal losses occur in the public sector (local school districts). Looking at our neighbors on Lake Erie again, the number of private sector jobs in Cleveland increased by 500 in July, whereas the Pittsburgh Region had over 4,000 fewer private sector jobs in July.

In fact, Pittsburgh had the eleventh worst rate of private sector job growth between June and July among the largest 40 regions in the country. Cleveland and twelve other regions had a net increase in private sector jobs between June and July, whereas Pittsburgh lost private sector jobs during July.

The region has been experiencing more and more mediocre economic performance over the past several months. After having best-in-the-nation job growth in April, the region slipped backward in May, regained a bit of ground in June, but then slipped again in July. Cumulatively, between April and July, we’ve added 14,200 private sector jobs. That’s a higher rate of growth than the majority of large regions in the country have experienced, but it’s behind what a number of our competitor regions have achieved. Cleveland, which has a smaller economy than Pittsburgh, added 24,000 private sector jobs over the past 3 months, and Denver, with the same total number of jobs as Pittsburgh, added 28,000 private sector jobs during that time period.

Looking at individual sectors, job growth here has been above average among our benchmark regions in Leisure and Hospitality, Professional and Business Services, Retail Trade, and Other Services. However, we’ve lost jobs in Manufacturing and Transportation while most regions have added jobs.

The fact that we lost fewer jobs during the recession means that even if we continue to have only modest growth for several months, we’ll still be better off than most regions in terms of total jobs lost since the recession began. However, with over 100,000 people still unemployed in the region, we need better than average job growth if we’re going to significantly reduce unemployment. And if other regions continue to add significantly more jobs than we do over a longer period of time, ultimately workers may conclude there are more and better opportunities elsewhere than here.


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