Sunday, November 04, 2012

Some Parts of the Pittsburgh Region Are Suffering More Than Others

In the Presidential campaign, both candidates agree that the national economy is growing too slowly, but disagree on what to do about it. For those of us in Pittsburgh, however, the U.S. job growth rate actually looks good compared to what we’ve been experiencing in recent months.

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.

Although it’s true that our region’s unemployment rate is below the national average (6.7% here vs. 7.6% nationally in September), that gives little comfort to the nearly 85,000 people who are still looking for work. And things are even less positive for some parts of our region. In September, both Armstrong and Fayette Counties had unemployment rates higher than the U.S. (7.7% in Armstrong and 8.3% in Fayette), and the unemployment rate in Lawrence County (7.5%) was only barely lower than the U.S. rate.

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.

The highest rate of job growth over the past two years has occurred in Greene County. Twenty years ago, the unemployment rate in Greene County was double the regional average, but in September, the unemployment rate in Greene County was 6.5%, lower than the region as a whole and the second lowest rate of any county in the region. The reason is simple – coal mining as well as gas well drilling has been a growth industry recently, and mining/extraction represents almost one-fourth of the jobs in Greene County, a dramatically larger share of the economy than in 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.) 


Blogger Jared McLaughlin said...

I have to question the data sources on a certain level. I work in manufacturing, and the amount of positions available is high. Sometimes I joke with my college educated friends and tell them to search craigslist for machinist positions. Then I kid that they should have been machinists instead of going to school. The only way I can see my observations matching the data is if we are really looking at positions filled, not available jobs. That hints to me that growth is there in the industry, but perhaps wages or other factors are keeping those positions from being filled.

9:18 AM  
Blogger Harold D. Miller said...

One of the limitations of data on jobs at the state and regional level is that the data only measure jobs that are filled. There are many job opportunities, particularly in manufacturing, that aren't filled. National data show that, but we don't have any surveys of that at the local level. On the other hand, if the jobs exist but aren't filled, the impact on workers in the community is the same as a job that doesn't exist at all.

9:27 AM  

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