How Long Will the Good News Last? (by Harold D. Miller)

For the past several months, PittsburghToday has been reporting that the Pittsburgh Region is outperforming the U.S. as a whole and most benchmark regions. The questions the pessimists keep asking are: “Can this really be true?” and “How long can it last?”

First of all, why is the Pittsburgh Region doing so much better than the rest of the country? Three reasons:


Slow But Steady Growth. It’s not that our job growth rate has somehow leaped ahead of where it had been before; it’s that we’ve maintained a steady pace of growth while the rest of the country has slowed dramatically.

Eds and Meds. A major reason for this is that one-fifth of the jobs in the Pittsburgh Region – the highest percentage among benchmark regions and the second highest among the top 40 regions in the country – are in the two most recession-resistant sectors: health care and higher education. They have continued to add jobs over the past year, offsetting losses in other sectors.


Stable Business Services, Construction, Financial, and Manufacturing Sectors. Over the past year, we’ve done better than the U.S. as a whole in these four key sectors. Our Professional and Business Services sector has had the second highest growth rate among our benchmark regions and the fifth highest growth rate among the top 40 regions. Even our manufacturing sector, which has lost 700 jobs in the past year, has lost fewer jobs than any of our benchmark regions and fewer than 35 of the top 40 regions. Moreover, it’s important to note that a job doesn’t officially count in these statistics as a “job” unless it’s filled. A number of our region’s manufacturers are complaining that they can’t find qualified workers, so many of those 700 jobs may simply be vacant, rather than permanently gone.


The only one of our benchmark regions that had a higher growth rate in October than Pittsburgh was Charlotte. But if you look at where the jobs in Charlotte have been growing and declining, you’d probably say that Pittsburgh is really doing better. Nearly half of Charlotte’s job growth has been in retail and leisure/hospitality, two relatively low-wage sectors. In contrast, Charlotte has lost 2,900 manufacturing jobs in the past year, over 3% of its manufacturing base, which is 5 times worse than Pittsburgh.

So we’re doing well, and for good reasons. But everyone, particularly the pessimists, worry that all of this could be temporary, particularly since the November U.S. job report released this past week showed that the U.S. had lost more jobs than in any previous month so far. We won’t know what the November job totals are for regions like Pittsburgh until mid-December, but the question is: how likely is it that the national recessionary undertow will finally drag us underwater when those numbers do appear?

It’s hard for any region, even one with a high concentration of jobs in health care and higher education, to keep fighting a global recession forever, but if you look at the sectors where the U.S. economy got worse in November, you’ll see that there is still reason for optimism here in Pittsburgh.


Nationally, almost every sector in the economy did worse in November. Only 3 did not: education, health care, and utilities. And two of those are the sectors where we have an unusually high concentration of jobs. Even though UPMC announced 500 layoffs and West Penn Allegheny Health System announced 300 layoffs since the October regional job totals were announced, our health care sector will still likely have more jobs in November than it did a year ago.

At the other end of the scale, two of the sectors with the biggest reductions in jobs nationally were construction and retail. That’s because those two sectors were growing rapidly in many areas due to the housing boom, and now the bubble has burst. We didn’t have the same kind of boom that other regions did, so we’re not likely to see the same kind of downturn. Our construction sector has been adding jobs because of all the major public and private construction projects going on, like 3 PNC, the casino, the North Shore Connector, and the Penguins Arena, not because of housing construction. Those big projects are not going to end anytime soon, and so the jobs associated with them won't end soon either.

Even if you assume that the job growth rates in each sector in Pittsburgh decreased in November by the same amounts they did nationally, the total number of jobs in the Pittsburgh Region would still be as high or higher than in November of 2007.

It’s important to emphasize that none of this means that people aren’t suffering here. Even though the total number of jobs has been growing here, we’ve lost thousands of jobs in sectors like transportation and retail. And some people who still have a job may be working fewer hours, taking pay cuts, or paying a greater share of health care costs, making it harder for them to make ends meet. That will likely get worse in the months ahead, even if we continue to do better than other regions and the nation as whole. Consequently, those who are lucky enough to still be employed should be generous when the United Way and other charities come calling for contributions to help those who are less fortunate.


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