Sunday, March 14, 2010

Thirty Years Later, the Steel Industry Still Has a Major Impact on Our Economy

Revised data issued last week on the number of jobs in the region reveal that the recession hit the Pittsburgh Region somewhat harder than originally thought. Instead of a peak job loss from December 2007 to December 2009 of 33,600, the number was actually almost 10% higher – 36,700. The health care sector added fewer jobs than earlier estimates indicated, while higher education added more, but it remained the case that those two sectors were the only major job generators during the year. Professional and business services lost significantly more jobs than originally believed as did both construction and manufacturing. Leisure and hospitality lost significantly fewer jobs than earlier data indicated, as did the financial sector.

One thing that didn’t change was the fact that the biggest loss of jobs by far occurred in the manufacturing sector. Nearly half (46%) of the jobs lost here between 2007 and 2009 were in the manufacturing sector. In fact, manufacturing represented a bigger share of private sector job losses in the Pittsburgh Region than any major region in the country other than Austin, Texas.

Why have we lost so many manufacturing jobs? A key reason is the kind of manufacturing jobs we have in the region. Although many people believe that the steel industry is “gone,” the fact is that the steel industry is still a major part of the region’s economy. In 2007, over 14,000 jobs in the Pittsburgh Region were in primary metals manufacturing, which includes steel mills and steel manufacturing. That’s one of out every seven manufacturing jobs (14%), the highest percentage of any major region in the country.

An even larger number of manufacturing jobs in Pittsburgh have been in fabricated metal manufacturing – 16,000 jobs in 2007, or nearly 16% of all manufacturing jobs in the region. Another 11,400 jobs in 2007 were in machinery manufacturing. And finally, another 7,000 jobs were in “nonmetallic mineral product manufacturing,” which includes glass, bricks, and cement. The Pittsburgh Region has a higher concentration of its manufacturing jobs in each of these sectors than most regions in the country.

These four sectors, totaling nearly 50,000 jobs, represented almost half of all of the manufacturing jobs in the region in 2007. In fact, Pittsburgh has the highest concentration of manufacturing jobs in these sectors of any large region in the country. But nationally, most of these sectors suffered more than others during the recession. The Pittsburgh Region lost one-seventh of its jobs in these four sectors between 2007 and 2009, a total of 7,000 jobs, representing more than half of the region’s manufacturing job losses and more than a quarter of all the jobs lost in the Pittsburgh Region during the recession. How these four sectors fare during 2010 will have a major impact on the speed of recovery for the region as a whole.

Is there any good news on the horizon? Preliminary data for January indicate that jobs are finally starting to increase again in most industries. Although there were nearly 28,000 fewer jobs in the region in January than in December, that’s a seasonal phenomenon. There are significantly fewer jobs in January than December every year, even when the economy is growing. The good news is that the decrease from December to January this year was smaller than in prior years, which means that jobs are beginning to be added. Every industry sector improved or was stable with four exceptions: construction, manufacturing, utilities, and transportation and warehousing. Pittsburgh’s improvement was about average among major regions, but any improvement is a good way to start 2010 after the continuous stream of bad economic news throughout 2009.


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