Some Parts of the Pittsburgh Region Are Suffering More Than Others
Last year, things looked pretty rosy in the Pittsburgh region; jobs were growing significantly faster here than in the U.S. as a whole in 2011. However, since May 2012, our region’s job growth has fallen below the national rate. In both June and September, the 12-month rate of job growth in Pittsburgh was less than 1%, the lowest rates in the past two years, whereas the national job growth rate has been 1.3% or higher for over twelve straight months.
What’s worse, if you adjust for the normal seasonal variations in jobs during the summer, there were actually fewer jobs in the Pittsburgh region in September than in August, and fewer jobs in August than in July. In other words, we’re moving backward, not forward.
The slowing rate of job growth here has meant that instead of seeing unemployment improve, it has actually been getting worse. In September 2012, there were 84,876 people unemployed in the Pittsburgh region, 1,700 more than a year earlier, and 37,600 more than in September 2007, the year before the recession began.
As explained in a previous post, even though our region has more jobs today in total than before the recession began, that’s not the same as saying that all the jobs we lost during the recession have come back. Most of the layoffs during the recession were in manufacturing, but most of the jobs that have been created since the recession have been in professional/business services and the hospitality industry. As a result, many of the people who lost work during the recession still can’t find the kinds of jobs they have the skills and experience to fill.
This mismatch between job creation and unemployment is exacerbated when you look at individual counties in our region. For example, over 60% of the manufacturing jobs in the region are located outside of Allegheny County, and 65% of the manufacturing job losses during the recession occurred outside of Allegheny County. Before the recession began, manufacturing jobs represented only 6% of the jobs in Allegheny County, but over 12% of the jobs in most of our other counties. That means the job losses in manufacturing had twice as big an impact on the economies of Armstrong, Beaver, Butler, Fayette, Lawrence, Washington, and Westmoreland Counties as they did in Allegheny County.
In contrast, over 70% of the region’s jobs in business and professional services and nearly 60% of the region’s jobs in the leisure and hospitality industry are in Allegheny County, and the majority of the job gains in those two sectors have occurred in Allegheny County, meaning Allegheny County has disproportionately benefited from much of the job growth that has occurred in our region since the recession.
Some counties have been luckier than others in getting back the manufacturing jobs they’ve lost. For example, Beaver County has regained three-fourths of the manufacturing jobs it lost during the recession, but in most of the other counties, fewer than 20% of the manufacturing jobs lost in the recession have come back.
The hardest hit in terms of manufacturing job loss has been Butler County, where over 17% of the jobs in the county were in manufacturing prior to the recession. Butler County lost 1700 manufacturing jobs during the recession (12% of its total), but only 5% of them have come back. Yet Butler County has the lowest unemployment rate in the region – 5.8% in September. What’s its secret? Butler County has had a huge influx of jobs from business headquarters moving to the office parks in the southern part of the county. In fact, essentially all of the job growth the county has experienced in the past four years has come from new business headquarters and expanded public schools due to population growth. Butler County’s unemployment is also low because more of its residents commute to Pittsburgh for jobs than any other county in the region.
There are two lessons in all of this.
First, just because the region as a whole is doing well doesn’t mean that every part of the region or every type of worker is also doing well. We need to constantly ensure that the entire region is benefiting from our economic development initiatives.
Second, we can’t predict where economic growth will occur, so we can’t put all of our economic eggs in any one basket. The counties in our region each contribute unique strengths, ranging from manufacturing to tourism, energy to life sciences, etc. We need economic development programs that will support both new and existing firms in a wide range of industries across the entire region in order to have a diversified and stable regional economy that provides job opportunities for all of our residents.
(A version of this post appeared as the Regional Insights column in the Sunday, November 4, 2012 edition of the Pittsburgh Post-Gazette.)