How Pittsburgh and the Benchmark City fared during the pandemic

Summary: In 2004, the Allegheny Institute published its first Benchmark City Report. Every three years since, the Institute has updated the comparison between Pittsburgh and four geographically dispersed hub cities (Salt Lake City, Columbus, Charlotte and Omaha) that, when averaged together, form the “Benchmark City.” This Brief examines population changes, together with labor force and household employment, in light of the COVID pandemic.

These cities were selected for their varied size and role as a center of regional economic activity. Collectively, they provide a benchmark for assessing the City of Pittsburgh’s relative performance. The 2022 update of the benchmark study is the first since the COVID pandemic and the 2020 U.S. Census. Unlike the previous Benchmark City analyses that comparatively examined on a per-resident basis the levels of city taxes, spending and debt along with numbers of city employees, this Brief focuses on how the cities’ labor market performed.

Data from the Bureau of Labor Statistics (BLS) Local Area Unemployment Statistics household survey for the cities for the years of 2019, 2020, 2021 and 2022 was collected to cover the period immediately preceding the pandemic through the recovery period. The household survey counts residents who are working, regardless of their place of employment, as well as those actively looking for work.

Between the 2010 Census and 2020 Census, Pittsburgh’s population declined while the Benchmark City’s climbed. Pittsburgh’s population in 2020 was 302,971 (down by 0.9 percent from 305,704 in the 2010 Census).  Meanwhile, the Benchmark City population rose by 16.7 percent from 528,464 in 2010 to 616,525 in 2020.

In 2019, before the pandemic, Pittsburgh’s annual average labor force (persons working or looking for work) was 159,070 with 152,081 employed and 6,989 unemployed, making the unemployment rate 4.4 percent. At the same time, the Benchmark City’s labor force was 334,132 with 322,491 employed and 11,641 unemployed, making the unemployment rate 3.5 percent. Pittsburgh’s labor force-to-population ratio was 0.525 and the Benchmark City’s was 0.542.

Annual Average Labor Statistics for Pittsburgh and the Benchmark City, 2019-2021

The pandemic took a huge toll on the economy in March-April 2020 with recovery beginning in the second half of the year to varying degrees among the cities.  For 2020 as a whole, Pittsburgh’s labor force averaged 156,781 (a decrease of 2,289 or 1.4 percent from 2019) with 141,780 employed (a decrease of 10,301 or 6.8 percent) and with 15,001 unemployed (an increase of 8,012 or 114.6 percent). The unemployment rate averaged 9.6 percent and the labor force-to-population ratio stood at 0.517.

The Benchmark City’s condition worsened in 2020 as well. It had an annual average labor force of 332,755 (a decrease of 1,377 or 0.4 percent) with 309,008 employed (a decrease of 13,466 or 4.2 percent) and 23,747 unemployed (an increase of 12,106 or 104 percent). The labor force-to-population ratio decreased to 0.540. The Benchmark City had an unemployment rate of 7.1 percent, 2.5 percentage points lower than Pittsburgh.

Economic recovery continued to gain momentum in 2021. However, the labor force in Pittsburgh fell a further 4,025 to an annual average of 152,756, a 2.6 percent drop. There were 143,312 employed (an increase of 1,532 or 1.1 percent) and 9,444 unemployed (a decrease of 5,557 or 37.0 percent). The labor force-to-population ratio continued to decrease to 0.504. The unemployment rate decreased to 6.2 percent. But factoring in the shrinking labor force makes this improvement less impressive.

The Benchmark City’s labor force rose to 336,886 (an increase of 4,131 or 1.2 percent) with 321,608 employed (an increase of 12,600 or 4.1 percent) and 15,278 unemployed (a decrease of 8,469 or 35.7 percent). The labor force-to-population ratio increased to 0.546, greater than the ratio from 2019. The unemployment rate was 4.5 percent.

This was an overview of the annual data of the pre- and post- pandemic economy of Pittsburgh and the Benchmark City. The pandemic reached its peak of economic impact in April of 2020. A focus on employment and labor force in April months from 2019-2022 will follow.

April Employment and Labor Force for Pittsburgh and the Benchmark City,

2019- 2022

In April 2019, Pittsburgh’s employment count was 151,688 and the labor force stood at 157,697. The Benchmark City had 319,453 employed and 329,817 in the labor force.

Three years later in April 2022, Pittsburgh’s number of employed was 145,966 and its labor force was 151,687.  From the pre-pandemic April 2019 reading, this was a decrease of 5,722 (3.8 percent) and 6,010 (3.8 percent), respectively. In all three subsequent April readings both employment and labor force were lower than April 2019.

The Benchmark City presents quite a different picture. There was an increase of 12,583 (3.9 percent) in the number employed and the labor force is up by 12,551 (3.8 percent) from the pre-pandemic measurement. The Benchmark City has apparently recovered from the pandemic and continued the improvements from before the pandemic while Pittsburgh is languishing.

While there is substantial federal COVID relief to the cities themselves as well as businesses and other entities that is still unfolding, relying on federal aid is not the path to sustainable and solid economic growth.

As many earlier Policy Briefs have noted, the City of Pittsburgh is not very free-market oriented or business-friendly. If Pittsburgh is to recover and come out of the pandemic stronger than it was going in, it must significantly change its economic climate by reforming its regulatory regime and eliminating burdensome taxation.

SEA attendance and finances during the pandemic

Summary: The Sports & Exhibition Authority (SEA), a joint authority of the City of Pittsburgh and Allegheny County that owns Heinz Field, PNC Park, PPG Paints Arena and the David L. Lawrence Convention Center, saw attendance and finances significantly affected as a result of the coronavirus pandemic. 

Based on SEA audits and reports, COVID had a significant impact on attendance at the four venues due to games and events being canceled, postponed or having limited attendance due to government restrictions on capacity.

From 2019 to 2020, convention center attendance fell from 576,315 to 215,134 (63 percent), Heinz Field from 863,760 to 24,769 (97 percent), PPG Paints Arena from 1,608,104 to 408,554 (75 percent) and PNC Park from 1,276,950 to 0 (100 percent).  When considered in total, attendance fell from 4.3 million to 0.6 million, a decrease of 3.7 million attendees (85 percent).

Reports note that the number of convention center events, concerts and post-season games fluctuate year-to-year; typically, there are 10 pre- and regular-season Steelers games, six to eight Pitt Panthers games, 81 Pirates games and 43 Penguins pre- and regular-season games. 

As an example of the impact COVID had on scheduling and attendance, the Steelers’ 2020 season at Heinz Field (Aug. 2020 to Jan. 2021) had two pre-season games canceled; fans were permitted at five of the eight regular-season games, two of which were rescheduled to different days; no fans were permitted to attend the lone post-season game.  The game with the highest attendance was in November with 5,909 fans, roughly 10 percent of 2019’s lowest-attended game. There was a decrease in the number of home regular-season games played by the Pirates (81 in 2019 to 32 in 2020) and Penguins (41 in 2018-19 to 35 in 2019-20).  Events at the convention center totaled 198 in 2019 and 56 in 2020.

Through the end of 2021, total attendance rose to nearly 2.5 million, which was a three-fold increase over 2020 but 42 percent lower than 2019.  Another 9,000 people attended events virtually. Attendance at the convention center was lower in 2021 while the other venues improved from the decrease they experienced in 2020. In 2021, the National Football League enacted a 17-game regular-season, giving the Steelers an additional home game.

SEA Venue Attendance, 2019-2021

The SEA’s operating revenues—a mixture of surcharges; parking revenue; fees and event revenue that are generated from games and events—were negatively affected.  Revenues totaled $29.4 million in 2019 and fell to $14.3 million in 2020 ($15.1 million or 51 percent).  The 2021 figure of $15.8 million was slightly above the previous year. 

Specific payments from the sports facilities to the SEA declined from 2019 to 2020.  Total payments were $11.8 million and dropped to $9.5 million ($2.3 million or 19 percent). Heinz Field from $5 million to $3.5 million, PPG Paints Arena declined from $6.1 million to $5.9 million and PNC Park dropped from $0.7 million to $0.1 million.  In 2021, with activity returning, total payments were $10.6 million, or 10 percent below 2019. 

Operating expenses—operations and maintenance, administration and depreciation and amortization—were $65.3 million in 2019 and fell to $59.3 million the year after ($6 million or 9 percent).  Expenses then climbed slightly through 2021 to $60.9 million.  Depreciation and amortization represent the bulk of the SEA’s operating expenses, averaging 79 percent over the three years.

The difference between operating revenues and operating expenses is the operating loss.  This figure rose from $35.9 million to $45 million ($9.1 million or 25 percent) from 2019 to 2020.  The loss in 2021 was essentially identical to 2020’s.   

The SEA’s finances include non-operating revenues that reduce the operating loss.  This money comes from various entities, mostly to pay for the debt service obligations. The Regional Asset District (RAD); Allegheny County; the commonwealth; the federal government and the Rivers Casino are among these.  Total non-operating revenues, on net, after accounting for interest and development expenses, rose from $7.8 million in 2019 to $28.2 million in 2020 ($20.4 million or 261 percent).

Much of this growth was attributed to money received from the state and federal government for the I-579 “cap” project.  Last year, the SEA also received a $10 million grant from the Stadium Authority—the entity that was supposed to dissolve when Three Rivers Stadium was demolished (see Policy Brief Vol. 17, No. 33)—to help with operations.  Allegheny County gave the SEA $1 million from its CARES Act allocation and granted $20 million from its American Rescue Plan allocation. 

The SEA’s net position at the beginning of 2019 was $360.9 million and at the end of 2021 was $301.7 million ($59.2 million less or 16 percent lower).

Before COVID, the SEA sought to secure recurring sources of tax revenue to pay for its responsibilities at the sports facilities under current lease agreements and at the convention center, which it owns and oversees management (see Policy Brief Vol. 18, No. 34).  The SEA received a RAD grant of $800,000 in 2019, 2020 and 2022 and $760,000 in 2021.  Of the $2.3 million spent from 2019 through 2021, $1.8 million (78 percent) has been spent at the convention center and $0.5 million (22 percent) at Heinz Field.

The General Assembly repurposed a $1.7 million annual allocation the SEA was receiving for the convention center’s operating deficit to the creation of the SEA Sports Commission (see Policy Brief Vol. 18, No.16).  This past November when the SEA board set-up its procedures for distributing financial awards, a restricted account to hold 25 percent of the revenue for capital repairs at the four venues was approved. 

If a proposed special assessment on hotel stays becomes law (see Policy Brief Vol. 22, No. 7), there is language in the bill that would set aside an unspecified percentage of revenue to be directed to the SEA for facility maintenance.

Rather than cobbling together more sources of taxpayer dollars, the professional sports teams should be responsible for more expenses related to the structures they benefit greatly from and the promises of the convention center being an economic engine need to be realized. 

In a news article, the chair of the SEA board stated in regards to the Pirates’ and Steelers’ leases that “I think the lease as a whole, you almost have to blow it up and start over again to make it as fair as possible to each [side].” 

That’s something for present and future SEA board appointees, who are appointed by elected officials of the City of Pittsburgh and Allegheny County, to consider as the end date for leases of two of the facilities are less than a decade away.