Issue Summary (Updated May 2012)

Pittsburgh Employment Situation

The Issue:

The recession that had gripped the nation from 2008-2010 caused massive job losses across the country.  The Pittsburgh region was no exception and had lost a significant amount of jobs.  But since the Pittsburgh region did not boom, it did not bust and thus did not lose jobs at the same rate as many other areas across the nation.  Since the end of the recession the Pittsburgh region has seen substantial growth to employment levels in 2011.  

What We Know:

According to U.S. Department of Labor statistics in 2011, the seven county Pittsburgh metropolitan statistical area (MSA) had the highest level of private sector jobs since 2001.  The average monthly level of total private jobs in 2011 was 1.023 million, ahead of the pre-recession 2008 level of 1.022 million and a 26,000 increase over the 2010 average.  The re-benchmarking process in March 2012 only confirmed the strengthening job market, not just the employer survey data but the household survey data as well.

Job strength in the Pittsburgh MSA has been concentrated in the education and health category and the professional and business services sector. Since 2001 these two sectors combined to add 66,000 jobs.  Perhaps the biggest catalyst in the area's employment growth is the Marcellus Shale gas industry.  Employer payrolls in the mining and logging sector grew 70 percent from 5,000 to 8,500 over the last seven years.  This industry has had an indirect impact on other industries, such as the manufacturing sector which had an increase to the average annual employment level in 2011-the first time that has happened since 2000. Other industries such as leisure and hospitality and construction have had healthy increases and can be tied to the Shale gas growth in the Pittsburgh MSA. 

As mentioned above the re-benchmarking process only strengthened the employment figures from 2011.  It also revised the labor force data upward.  The average monthly upward revision to the labor force was 9,900 people with a high of 17,000 in May and a low of 6,400 in August. 

However, the re-benchmarking process for 2011 had a negative effect on early 2012 data.  Consider the latest numbers for January 2012.  Instead an average of 27,000 year-over-year gains recorded to total private jobs in the first quarter of 2011, the first quarter of 2012 is showing slower growth with an average of 22,000 increase to private payrolls. 

Economically, the Pittsburgh region has the misfortune of being located in a state that is a relatively poor performer and whose business and labor climate, especially its public sector unions, is not as friendly as it ought to be toward private enterprise. Pittsburgh does have several strong economic attributes with top quality medical facilities and enviable institutions of higher education. In addition the development of the Marcellus Shale gas industry has provided an unexpected boost to jobs in the Pittsburgh MSA.  Unfortunately, while they help sustain the region's economy these sources of strength are not sufficient to spur the private sector dynamism necessary to produce healthy, long term job gains-the key to real economic well being and vitality.

Recommendations:

Sadly, there is little the Pittsburgh region can do by itself directly to fix the state's business and labor climate.  However, political, civic and business leaders need to demand actions in Harrisburg that will begin the process of loosening the stranglehold unions, particularly public sector unions, have over government spending, taxes, and regulations of the workplace. Then too, there needs to be strong support for lowering taxes, especially onerous property taxes and business taxes that are detrimental to state and regional growth. And there is much local leaders can do to rein in costly government and onerous taxes. There needs to be leadership that will stand up to unreasonable union demands and work for the benefit of citizens and taxpayers.