Pittsburgh’s Population Drop in 2014: What Does It Mean?

From July 2013 to July 2014, the date of the latest estimate, the City of Pittsburgh’s population fell by 1,314 people. This decline followed two years of gains that lifted the count to 1,000 higher than the April, 2010 Census figure of 305,704. On a net basis, the City now has 300 fewer people than four years earlier. Essentially, the population is probably flat within the margin of statistical error. All data are taken from the Census Bureau’s American Fact Finder report on the Community Survey.

 

This four year flatness in the City’s population is interesting considering that although the County population fell by 1,700 between 2013 and 2014 to 1,231,255,  the 2014 figure was nearly 8,000 above the 2010 Census number, a rise of 0.65 percent.  That represents reasonably good growth for the County but it is still well below the 2.4 percent gain recorded by the national population over the same period. If the County had grown at the national rate, its population would have reached 1,252,708, a rise of 29,500. Likewise a growth of 2.4 percent would have placed the City population at 313,040, a pickup of 7,300.

 

The City’s population, while fairly steady since the 2010 Census, has now dropped to 62nd highest among U.S. cities, a far cry from the number 12 ranking in 1950 when there were 676,000 inhabitants. It is worth noting several cities have fared as badly or even worse. For example, Detroit’s decline from just under 1.9 million people in 1950 to less than 700,000 now provides some perspective on how bad things could be. Cleveland has also been very hard hit with a decrease of well over half of its population count during the period.

 

It is also interesting to note the comparison of the City’s recent population changes with those in the seven county Pittsburgh metro area. After tacking on about 4,500 people between 2010 and 2012, the region saw back to back declines in 2013 and 2014 that completely reversed the earlier gains, dropping the latest count about 300 below the 2010 reading. Over the period, Westmoreland, Fayette, Beaver and Armstrong were down measurably led by a significant drop in Westmoreland, while Butler and Allegheny posted gains and Washington was essentially unchanged from 2010 to 2014 after a small rise in 2011 and 2012. Indeed, according to the Census estimates, most western Pennsylvania counties have struggled to maintain their population levels during the last four years.

 

Among the U.S cities with 200,000 or more people in 2010, nine, including Pittsburgh, showed population declines over the four-year span from 2010, some were fairly dramatic when contrasted with Pittsburgh’s small 300 person drop. Detroit continued its long slide posting a four-year drop of 34,000. Other sizable falloffs were seen in Cleveland (-7,000), Toledo (-6,000) and Montgomery, Alabama (-5,500). Smaller but no doubt worrisome dips were recorded for Buffalo (-3,000), St. Louis (-2,000) and Akron (-1,200). Rochester and Baton Rouge had measurable but not overly frightening decreases of around 500. Note too, that New York City and Chicago managed to grow over the period despite weakness in the rest of New York and Illinois. The data indicate that in all likelihood, international migrants are heavily responsible for much of the net population gains in these cities.

 

Pittsburgh is not alone in its troubles of trying to grow population. And certainly the gain in Allegheny County takes away some of the sting of its failure to post gains.

 

One of the oft-repeated explanations for the City’s inability to grow rests on the claim that the City’s population is very old and has a high ratio of deaths to births because of the elderly population. But that argument does not hold any more.  In fact in 2013, the latest data for age distribution shown on the Census website, the City has a lower median age (33.4 years) than the nation as a whole (37.6 years). How can this be? It is true that the over 75 age group in Pittsburgh represents a slightly higher percentage of the population than in the nation, 7.3 to 6.2 percent. However, from 65 to 75 years, the national percentage was 8.0 compared to the City’s 6.7 percent.

 

The real, substantial gaps between the national age distribution and the City’s distribution occur in the younger age groups. From birth to 14 years of age, the share of population in the City was 13.6 percent and the national was 19.3. The Pittsburgh share of population was 20 to 30 percent lower in every five-year age group in the fifteen year span from 0 to 14. This suggests a much lower birth rate or a preferential out migration of young children from the City as compared to the national behavior.

 

But a dramatic shift happens when the 20 to 34 year age category shares are compared. This group accounts for 30.5 percent of the City’s population while the national percentage is only 20.9. That is an astounding gap and reflects, in all likelihood, the college and graduate school students as well as a substantial number of other in-migrants to the City in this age group—certainly well above the national norms.

 

Then something very interesting happens.  The age group from 35 to 65 accounts for a substantially higher portion of the national population than it does in Pittsburgh, 39.0 to 33.8 percent. This is the age group that by and large represents the highest income earners (those at the top end of this age range) and accounts for the lion’s share of those with middle and high school age students (in the middle portion of the range).

 

These statistics point to an almost indisputable fact. As people get married and start to settle down by their mid-thirties, their focus shifts to concerns about children, especially education. And for quite a long time Pittsburgh schools, with a few rare exceptions, are failing to deliver the quality of education responsible parents want and expect for their children.  There may be other factors affecting Pittsburgh’s favorability toward families as well: taxes, government services, and safety come to mind. In any event, there can be little doubt that parents who cannot afford high quality private schooling, while also paying high property and wage taxes in Pittsburgh, are voting with their feet.

 

Finally, it appears that the birth rate among Pittsburgh childbearing age groups could be running below the national average. It could be a lot of factors, delayed marriage, career concerns that prevent having babies, or simply life styles that delay or downplay having children.  Combine that with out-migration of families with school age or nearing school age children and the outlook for enrollment in City schools is far from rosy. This is occurring despite the enormous spending per student and the Promise Program that was supposed to fix this problem.

 

The big question:  Can a population that is not growing and has an increasingly large share of its population concentrated in the late teens through early thirties age category be sustained at its current level unless birth rates for this age group increase and the City’s public schools improve sufficiently to stem the decline in the share of the population represented by 35 to 65 year olds? Attracting young people will not be enough if a high percentage leave when they get older.

PA Labor Market Develops Signs of Weakness

March’s employment news for the Commonwealth was quite unwelcome. Both the household survey and the establishment payroll survey brought signs of marked weakness in employment.

 

 

People reporting themselves as working fell by 14,000 in March after a 6,200 decline in February and a slight 1,000 drop in January. In short, the entire first quarter exhibited a pattern of steady weakening in the number of people working.  Meanwhile, private payroll employment at establishments fell by 6,500 in March, sliding below the January level and up by a mere 1,000 compared to a March 2012. Indeed, private payroll jobs are still 40,000 below the March 2008 number, the high watermark for a March job count, and just before the effects of the national recession pummeled the state’s labor market.

 

Misguidedly, the headline about the labor market situation was the unemployment rate dip from 8.1 percent in February to 7.9 percent in March. But in light of the fact that the number of people working tumbled by 14,000, it is reasonable to ask; how could the unemployment rate fall?  It fell because the labor force plunged by 33,000. That is to say, an additional 33,000 people in the non-institutional population old enough to work chose not to seek work. While this is a startling number it does mirror the massive half million decline in the nation’s labor force in March. As a result of the 33,000 plunge in the number of people not looking for work, the number of unemployed went down 19,000, mathematically lowering the percentage unemployed.  In sum, the apparent good news of an unemployment rate decline hid the bad news of a significant drop in the number working along with a substantial decrease in the labor force.

 

Why the recent Pennsylvania weakness?  Based on the national employment situation in March, there has been a similar abrupt slowing countrywide.   Apparently, the state has not been able to sidestep the impacts of the forces restraining the national economy-Obamacare effects, the tax hike in January and the regulatory onslaught coming from the DC governing apparatus.   

 

Looking back over the three years of the recovery so far, what was the pattern of job gains and what have been the sources of strength-and recent weakness?

 

From January 2003 to January 2008, private sector employment rose at an average annual rate of 0.8 percent to reach 5,074,400 jobs. Nationally, private employment climbed at a 1.2 percent annual rate over the same period with several states enjoying well above national rates of job gains.  With the steep national recession hitting in 2008, Pennsylvania employment fell to a low of 4,810,100 jobs in February 2010 before starting to rebound. Over the next twelve months, the job count had risen by 110,000, reaching 4,919,000 in February 2011. Between February 2011 and February 2012 jobs grew by 85,000 bringing the two year increase since the recovery began in March 2010 to 195,000. Unfortunately, the solid gain between February 2011 and 2012 marked the end of the good employment growth period. As noted above, from March 2012 to March 2013, private employment managed a statistically insignificant uptick of only 1,000 jobs.

 

The question that arises is: Which sectors accounted for the two years of fairly good gains and which have led the slowdown? 

 

Surprisingly to some perhaps, the professional and business services sector posted the largest pickup in employment from March 2010 to March 2012 registering a gain of 51,200. But for those who follow the data closely it is not a surprise. Over the period 2003 to 2008, this sector actually grew more jobs than the larger and rapidly growing health sector. Rebounding from the recession it recovered all lost employment and added to the pre-recession peak level. Over the past year (March 2012 to March 2013), the sector managed another 3,900 increase-a far cry from the year earlier pace but still a positive contribution to the Commonwealth’s employment count. 

 

Health care and social assistance, the largest individual private sector in terms of employment, supplied 31,200 of the 195,000 total net gain in private employment over the first two years of expansion and was the second largest contributor to the rise. The good news is this sector appears to be recession proof and added another 13,000 jobs over the March 2012 to March 2013 period continuing its decade long upward trend.

 

Close behind health care in job growth, the leisure and hospitality sector (led by accommodations and food service) added 31,100 to payrolls over the first two year period of recovery and rebound from the recession. That strength has not continued, however, as jobs slipped a bit over the last twelve months. 

 

The remainder of the 80 thousand or so increase in private employment from 2010 to 2102 was spread over several sectors each of which experienced gains between 10 thousand and 17 thousand. This list includes construction (+17,000), mining and logging (+14,300), transportation and utilities (+13,000), retail (+10,000), education (+8,700) and manufacturing (+10,100).   

 

Of these sectors that contributed to the burst of solid overall employment gains from 2010 to 2012, only transportation and utilities managed to eke out a modest gain over the last year. Many sectors including mining and logging, construction, retail, finance, leisure and hospitality and the information sector saw employment levels decline during the last twelve months. These declines largely offset the rise in health, professional and business services and transportation and utilities resulting in the slim 1,000 uptick in total private jobs.

 

In short, employment growth at the major job drivers has slowed dramatically while the slower growing sectors have stopped expanding or even slipped into negative territory. This is not a healthy position for the Commonwealth. Unfortunately, there is little the state can do in the short run to boost employment expansion. The weakness in Pennsylvania stems principally from national policies that are restraining the economy.  Policies that deter investment and punish savings, budget deficits that threaten the national fisc together with continuous calls for higher taxes and reams of new regulations daily are having a smothering effect on the economy. Pennsylvania has been fortunate to have had the substantial boost from Marcellus Shell gas operations but that by itself is not enough to overcome the dead weight of the anchor Washington has attached to the economy.

Hits and Misses in Pew Report

Elected and appointed officials in the field of economic development are often long on the benefits of proposed spending to stimulate growth but very short on the follow up to find out if the programs actually work.

That’s not new news. Pennsylvania’s Legislative Budget and Finance Committee (LBFC) did a report in 2000 that served as a fairly comprehensive performance audit on DCED’s programs and found the monitoring of efforts ranged from "rigorous to none" and that the Department rarely "verif[ied] the accuracy of jobs data". More recently, the Auditor General looked at the Opportunity Grant program and found lax effort to check on job creation numbers.

So the new Pew Center on the States report on evaluating how well states do in monitoring their incentive programs is treading on familiar ground. It is a very ambitious undertaking, ranking all 50 states and DC. All states spend the money to attract and retain jobs, the report notes, but there is great variation in how well the states do in monitoring the effectiveness, the "bang for the buck" of the incentives. There should be more emphasis on measuring whether what is promised is what is delivered, and there should be consequences for not achieving targets.

By reviewing documents and interviewing officials, Pennsylvania comes out in the middle of the pack, along with 11 others, labeled as having "mixed results". Under the dual evaluation of "scope" and "quality" PA got high marks for having a schedule for reviewing programs and determining whether incentives are achieving stated goals. The problem is that the rating came from the review of two documents from LBFC, one on tax credits and one on Keystone Opportunity zones.

Besides the 14 tax credits reviewed in the LBFC report that Pew referenced a quick look at DCED’s program and funding finder shows that 53 links for "loans" and 61 links for "grants" come up, meaning that PA might be rigorous on a fraction of its incentive programs reviewed by Pew. The same could hold true for the other 49 states based on what the evaluators examined, meaning they could look rigorous or lax in relative standing. This does nothing to include the plethora of incentive programs states might have authorized for their local governments to carry out but are not monitored by the state itself.

Legislature Ready to Undermine the Supreme Court

The Pennsylvania House has once again put on display its utter contempt for the rule of law by passing a bill that would overrule orders from the courts including an order of the Supreme Court that upholds the state Constitution. Amazingly, the House passed a bill that allows county leaders to decide whether they will obey court orders to update property assessments.

One can only hope the Governor will veto this threat to the separation of powers enshrined in the Constitution. One must wonder if the members of the Legislature who have sponsored this monstrosity have considered the oath they have taken in which they swear to obey, protect, and defend the constitutions of the United States and Pennsylvania. Those constitutions empower the Supreme Courts to decide on constitutionality of laws written by the legislature and actions brought before it through lawsuits. When the Legislature decides to enact legislation that directly contravenes a Supreme Court decision based on the Constitution we have the making of a crisis in governance.

Assuming the Senate also passes the bill, and the Governor signs it, the bill will face an almost immediate challenge in the courts and will certainly be ruled unconstitutional. At that point, how does it get to be enforced? Will the Legislature write another law saying it is alright to ignore the new court rulings? Or will the county leaders go merrily on their way ignoring the court orders to reassess? If the courts acquiesce and yield to this assault on their power, they will have effectively neutered themselves as the citizens’ best hope for protection of liberty and property and relinquished those powers to a Legislature, which, by virtue of passing court crippling legislation, has shown itself to be unfettered by the Constitution or its oath to obey and defend the Constitution. This bill and its probable aftermath will make Pennsylvania the laughing stock of the nation.

The asininity of the situation is more clearly seen in the fact that the Legislature has had years to write assessment laws that would conform to and show for respect for the Constitution House members have sworn to obey. In their fear of property owners whose properties are grotesquely under assessed they have chosen not to risk the ire of those voters by passing needed reforms that would bring Pennsylvania into the 20th century, let alone the 21st century. In so doing they have allowed horrendous inequities to develop in property assessments for which only the courts can offer a remedy to property owners forced to pay far more than their fair share of taxes.

Now the courts come with orders to fix the problem as mandated by the Constitution’s requirement of uniformity of taxation and the Legislature has chosen to attempt to block the only avenue open to taxpayers seeking correction of illegal and inequitable treatment.

If the Legislature wishes to do something that shows their true colors and would be helpful to their cause, it could pass an amendment to the Constitution that removes the uniformity clause. Or if they cannot muster the political courage to do that they could pass an amendment forbidding the taxation of property.

But they will do neither. It is easier to pass bills that flout the Constitution and the rule of law. Better to stay in good stead with those getting enormous and illegal advantages in their tax bills than to deal with the problem of their own making through the years of unwillingness to tackle what has been staring them in the face. We are witnessing self-government at its most feeble.

How Would PA’s Income Tax Compare?

The proverbial "other shoe" dropped today in the state budget deliberations when the Governor proposed a temporary, three year increase in the state’s personal income tax from 3.07% to 3.57%. The Governor says that even with the increase PA will still have the "third lowest" income tax rate.

Here’s what the latest data from the Tax Foundation shows on personal income tax rates in the nation. Seven states have no income tax; two tax just interest and dividends, not wages; that leaves 41 states with a personal income tax.

Pennsylvania and five other states (CO, IL, IN, MI, and UT) have flat income tax rates (as opposed to graduated rates). Right now PA has the next to lowest rate out of those six states. An increase to 3.57% would move it ahead of IN (3.4%) into second next to lowest (IN and IL, at 3%, would be lower). Only CO and PA have no standard deduction or personal exemptions according to Foundation data.

Going back to 2000 data, CO and MI have lowered their rates; UT moved from a graduated system to a flat rate; IL and IN made no changes; PA increased from 2.8% to the current 3.07%. A boost to 3.57% would represent a 30% increase in the income tax rate since 2004, when the rate was raised to the 3.07% level.