Summary: Nearly three years after the start of the pandemic, the Pittsburgh region is still struggling to recover jobs. But this struggle is nothing new as the region has not performed well since at least 2000 when compared to other regions or even nationally.
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Introduction
The Bureau of Labor Statistics (BLS) released the February 2023 preliminary total nonfarm job count for the Pittsburgh Metropolitan Statistical Area (MSA). The preliminary reading of 1,145,500 is the lowest February count since 2016 (1,142,600). While it represents an improvement of 1.9 percent over February 2022, it is still 2.7 percent lower than February 2020, the month before the pandemic took root and mandated lockdowns began.
Unfortunately, the seven-county Pittsburgh MSA (Allegheny, Armstrong, Beaver, Butler, Fayette, Washington and Westmoreland counties) has been scuffling along for quite a while and looks even worse when compared to national jobs growth or to similarly sized metro areas. To provide perspective, this Brief looks at the growth in nonfarm jobs nationally as well as the performance of Philadelphia (Pennsylvania component only), Cleveland, Indianapolis, Milwaukee as well as the MSAs of the four cities that comprise the Allegheny Institute’s benchmark study: Charlotte, Columbus, Omaha and Salt Lake City.
The data, from the BLS, includes nonfarm annual averages for each year from 2000 through 2022.
Total nonfarm job growth
From 2000 through 2019 (pre-pandemic), nonfarm jobs nationwide grew 14.3 percent. Only four MSAs in this group grew faster than the nation: Salt Lake City (36.9 percent); Charlotte (33.7 percent); Indianapolis (21.7 percent) and Columbus (19.3 percent). Omaha (14 percent) finished just under the national mark, followed distantly by Philadelphia (7.4 percent), Pittsburgh (4 percent) and Milwaukee (0.04 percent). Cleveland (-4.8 percent) was the only metro in this group of MSAs to lose jobs over the two decades.
At this point a more pertinent question is how many of the MSAs in the sample have recovered from the losses incurred during the pandemic? To answer that question the 2019-2022 period is examined. Nationally, in 2022, nonfarm job totals averaged 1.1 percent above the 2019 level, pointing to a slow nationwide jobs recovery from the pandemic. The four metros that enjoyed stronger than national job gains during the first two decades of the century also posted gains from 2019 to 2022 as they recovered from the pandemic-induced 2020 downturn: Salt Lake City (6.4 percent); Charlotte (5.3 percent); Indianapolis (3.7 percent) and Columbus (2.3 percent). Five metros in the group have yet to restore all the jobs lost in the pandemic: Philadelphia (-0.19 percent); Omaha (-1.3 percent); Milwaukee (-2.6 percent); Cleveland (-3.14 percent) and Pittsburgh (-3.8 percent).
Several previous Policy Briefs outlined the principal reasons for the lackluster economic performance of the Pittsburgh MSA. These reasons no doubt apply to the other poorest performing MSAs as well. These include, in no particular order of importance: a stifling regulatory environment, excessive fealty to unions—both public and private sector—and a willingness to subsidize businesses viewed as possible winners and very often coming up with losers instead. These policies result in very expensive public services, high taxes and fees as we have seen all too clearly in the City of Pittsburgh government, its schools and the local transit system.
Labor force
Another reason for the lagging economy may be the sluggish growth in the labor force. a 2022 Policy Brief (Vol.22, No. 17) documented the Pittsburgh area’s labor force struggles and how that tracks closely with a paucity of regional population growth. Do employment gains in the other MSAs in the group being studied track with labor force gains or lack of gains?
Labor force data are also from the BLS.
Over the nearly two-decade period 2000 to 2019, the labor force in the MSAs tracks closely, although not identically, with nonfarm employment. Note, for example, that nationally the labor force rose 14.7 percent while employment was up 14.3 percent, almost lock-step gains. Generally speaking, the MSAs’ increases in labor force—or loss in the case of Cleveland—over the period are the same order of magnitude as job changes.
Pittsburgh jobs were up nearly 4 percent on a labor force gain of 2.4 percent. On the other hand, Milwaukee jobs were essentially unchanged on a labor force gain of 2 percent. At the same time Cleveland saw a drop in jobs of 4.8 percent as labor force fell 2.2 percent—the only MSA to suffer losses of both labor force and employment.
For reasons not immediately obvious, Philadelphia, Omaha and Charlotte showed labor force gains significantly higher than employment increases. At the same time, Salt Lake City enjoyed stronger employment growth than labor force expansion. In the case of Charlotte, the disparity could be the result of a massive influx of population during the period that was not absorbed even though job growth was spectacular.
Additional commentary
There is a clear correlation of both job gains and labor force growth in the MSAs and the presence of Right-to-Work in the states where the MSAs are located. Except for Columbus, which has outperformed the nation with labor force growth and job gains over the 2000 to 2019 period, all other better than national labor force gains in this sample are in states with Right-to-Work in effect. The same is true for job gains with only Omaha (in a Right-to-Work state) just under the national gain.
Generally speaking, major MSAs in Right-to-Work Mountain states such as Boise, Idaho and Salt Lake City, Utah and in most southern states have performed better than MSAs in Midwest Right-to-Work states. Nonetheless, Indianapolis has fared quite well compared to Cincinnati and Cleveland.
Other southern MSAs such as Raleigh, Nashville and several in Texas and Florida are leading the rebound in the national economy in terms of employment growth and other measures of economic performance.
As an earlier Policy Brief (Vol. 22, No.24) has demonstrated, the percentage of public employees in unions is strongly correlated with economic performance and high levels of public sector unionization associated with slower economies and low levels with much better economies.
