Resisting the Recession in Pittsburgh (by Harold D. Miller)

Although the economic recession has caused a dramatic drop in the rate of job growth nationally over the past six months, job growth in the Pittsburgh Region has remained remarkably stable. The number of jobs here increased by 0.74% between the first quarter of 2007 and the first quarter of 2008, which was exactly the same as our job growth rate from 2006 to 2007. In contrast, the national job growth rate so far this year was less than half the rate last year (0.55% during the first quarter of 2008, versus 1.13% for 2007). In fact, you may be surprised to learn that jobs are now growing faster in the Pittsburgh Region than the U.S. as a whole and faster than many of our benchmark regions.

A major reason is that more than one out of every five of our jobs is in higher education or health care, and those are sectors that typically don’t decline in a recession. Between March 2007 and March 2008, the education and health care sectors created 5,000 net new jobs in the Pittsburgh Region, which was more than any year since 2002. We have the highest proportion of jobs in education and health care of any of our benchmark regions (and second highest among the top 40 regions, after Providence), making us more resistant to recessionary downturns than other communities.

Our biggest recent job losses have come in retail (1,500 fewer jobs in March 2008 than March 2007), government (1,500 fewer jobs), and manufacturing (1,100 jobs). The reductions in retail and government jobs have a simple explanation – our lack of population growth means we don’t get job growth in sectors that depend primarily on the local population. Our population has been declining, so we need fewer stores, fewer public schools, fewer police, etc., which means we need fewer retail and government jobs, too.

If you look at job growth in the sectors that aren’t so population-dependent, you see a very different picture. Our private sector job growth in March 2008 was 0.94%, the third highest among our benchmark regions. And our private, non-retail job growth (i.e., jobs other than in government or retail) was 1.25%, more than 4 times the 0.29% average growth experienced by benchmark regions.

Where is our private sector job creation coming from? In addition to Education and Health Care, the primary contributors to job growth in March were Professional and Business Services (3,700 net new jobs), Construction (2,400 net new jobs), and Leisure and Hospitality (2,500 net new jobs).

The loss of 1,100 manufacturing jobs over the past year – 1.1% of the total –is troubling, since manufacturing is still our largest economic sector in terms of income generation, and since it supports many of our professional and business service jobs. But fortunately, the decline in manufacturing jobs here was smaller than what most of our benchmark regions experienced. For example, Detroit lost nearly 10% of its manufacturing jobs in the past 12 months, and St. Louis lost over 5% of its manufacturing jobs during the same period.

This stable performance doesn’t mean that all is well in Pittsburgh’s economy, though. Despite our improved job creation in 2007 and our steady growth into the first quarter of 2008, we still have 10,000 fewer jobs than we did in March, 2001. We need to address our serious competitiveness problems – starting with the worst state business taxes in the nation – in order to keep our existing jobs in manufacturing and other sectors and to capture new growth when the U.S. economy turns around.