Tag Archives: Pittsburgh MSA employment

MSA’s labor force growth slow to rebound

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Summary: The seven-county Pittsburgh Metropolitan Statistical Area (MSA) experienced very little labor force growth from 2000 to 2019. And all that growth and more disappeared during the pandemic and remains well below pre-pandemic levels through August 2021.

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August job readings

When the August employment data for the Pittsburgh MSA were released, much of the focus was on the 41,000 payroll jobs that had been added compared to August 2020—but not much attention was paid to the sluggish (0.5 percent) change to the labor force.  But the labor force will play an important role in the economic growth of the area as many jobs remain unfilled. Indeed, total nonfarm payroll employment in the Pittsburgh MSA is still woefully short (67,300) of the level reached in August 2019.  Private employment is 85,000 below what it would have been if the 2020 count had risen from 2019 at the previous 12-month rate of growth.

The U.S. Bureau of Labor Statistics (BLS) conducts a household survey (the Current Population Survey) to estimate labor force, employment and unemployment at the national, state and local level.  The BLS defines the civilian labor force as all persons who are either employed or unemployed but actively seeking work.  The unemployed who are not actively seeking work are not counted as part of the labor force.  Because seasonally adjusted data are not available, this Brief looks at non-seasonally adjusted data for the MSA. 

Long-term performance

As mentioned above the August 2021 labor force rose 0.5 percent from 1.171 million in August 2020 to 1.177 million but remained 3.4 percent lower than the 1.219 million in August 2019.   Both the 2020 and 2021 readings were the lowest August readings since 1992.  The good news is that August 2021 was the first month this year that labor force was above the same month in 2020. Still, the latest count was 41,650 below the August 2019 figure. The 12-month shortfalls ranged from -4.4 percent (January) to -0.4 percent (April).

Note that the 12-month annual averages over the last two decades show a very slow growing labor force in the Pittsburgh MSA.  In 2000 the annual average number in the labor force was 1.195 million.  In 2019 it had reached only 1.211 million—a miniscule 1.35 percent rise in 19 years.  Over the last 21 years there have been 10 years in which the annual average was lower than the year before (including 2020 and thus far in 2021).  The largest year-over-year declines occurred in the pandemic year of 2020 (-2.14 percent) and the recession year of 2010 (-2.11 percent). 

For the years when the average monthly levels did increase over the previous year, 11 in total, the largest jump was in 2008 at just 1.48 percent while the smallest increase was a tiny 0.04 percent rise in 2002.  The high-water mark for the annual labor force count occurred in 2008 with a 12-month average of 1.226 million.   

Comparison with two-decade U.S. performance

In 2000, the national labor force stood at 142.6 million and by 2019 had reached 163.54 million —a gain of nearly 15 percent in marked contrast to the MSA’s 1.35 percent over the same period. And some states no doubt rose much faster than the national rate.  In 2020 the U.S. labor force fell 1.7 percent from 2019’s level to 160.7 million.  Thus far in 2021 the monthly average is 160.8 million, so it, too, has been increasing at a very slow rate during the pandemic.

Labor force participation

A very important analytical measure of the labor market situation is the labor force participation rate—the number of people in the labor force as a percentage of the civilian non-institutional population 16 years and over.  The BLS maintains statistics for the national rate. To calculate the Pittsburgh MSA population, this Brief used data from the U.S. Census Bureau. 

In 2000, the civilian non-institutional population 16 years and over in the U.S. was 212.58 million.  With 142.6 million in the labor force, the labor force participation rate stood at 67.1 percent.  While the civilian non-institutional population has continued to climb since 2000, the labor force participation rate has fallen, dropping to 62.7 percent in 2015.  It began to tick up over the next few years, climbing to 63.1 percent in 2019 before dropping to a new low of 61.7 percent in 2020.  In 2020, the civilian non-institutional population 16 years and over in the U.S. reached 259.18 million—an increase of 22 percent.  The growth to this segment of population is outpacing the growth in the labor force.  In short, a higher percentage of working age people are choosing not to work, or are not looking for work, compared to two decades ago.

For the Pittsburgh MSA, the civilian population 16 years and over (Census data which includes the institutionalized population) was 1.88 million in 2000.  By 2019 it stood at only 1.89 million —virtually no change.  The labor force participation rate in 2000 was just 60 percent and increased to only 60.6 percent in 2019.  Thus, the MSA participation rate was little changed as the U.S. rate fell, although it has remained significantly below the U.S. rate over the two decades.

It is reasonable to assume that no surge in labor force participation has occurred and it is reasonable to expect the MSA’s labor force would have been relatively stagnant even if there had been no pandemic. However, the pandemic, with its mandated business closings—especially in the leisure and hospitality sectors which endured multiple closings or severe limitations on operations over the duration of 2020—exposed the danger of a stagnant labor force. 

With the uncertainties created by the virus, it is possible many people, feeling vulnerable, decided to drop out of the labor force out of caution.  They may not return for quite a while.  Others may find that their families can live on one income and are content to stay home.  Perhaps those in the leisure and hospitality sectors grew tired of having their establishments shut down without warning.  Whatever the reason, the labor force has been slow to rebound.

It doesn’t help that public policy in the Pittsburgh MSA, and in Pennsylvania as a whole, is not business friendly.  As we have documented repeatedly over the years, businesses are being treated as cash-cows to be milked for tax dollars which are typically squandered away.  The Pittsburgh area was once known as a manufacturing hub and had a large number of goods-producing jobs as a ratio of total private jobs.  In 1990, 20.35 percent of the jobs in the MSA were in goods-producing sectors.  It had dropped to 30-year low of 14.24 percent in 2016 before ticking up marginally to 15 percent in 2019. 

By contrast, the private service-providing sectors rose from 79.65 percent in 1990 to 85.76 percent in 2016 and then slipping to 85 percent in 2019. 

One sector that grew steadily over the last three decades has been the leisure and hospitality sector.  Leisure and hospitality jobs were just 9.77 percent of all total private jobs in the Pittsburgh MSA in 1990.  That number rose to 11.30 percent in 2017 before falling back to 11.18 percent in 2019.  During the pandemic it fell to 9 percent of all total private sector jobs—a value not seen since before 1990. 

People typically don’t migrate to an area for low-paying, service-providing jobs.  Those jobs can be found anywhere across the country.  That’s especially true in the waning days of the pandemic where help-wanted signs are found in every part of the country. 

Until policy makers become more welcoming to business—and can do so without throwing taxpayer money at them—the situation will not change.  There will be no meaningful employment growth and the region will continue to founder.

Pittsburgh MSA jobs data disappoints

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Summary: A recent Policy Brief (Vol. 21, No. 6) outlined the 2020 statewide job losses owing in large part to the pandemic lockdowns.  As that Brief noted, nearly every sector in the state posted employment declines.  Data for the Pittsburgh Metropolitan Statistical Area or MSA (Allegheny, Armstrong, Beaver, Butler, Fayette, Washington and Westmoreland counties) show similar results.

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The pattern for most sectors in 2020 was a slight year-over-year gain in both January and February before the sharp year-over-year losses began in March as the state-mandated lockdown was put into place and restrictions continued throughout the remainder of 2020.

As with the state analysis, non-seasonally adjusted U. S. Bureau of Labor Statistics employer payroll survey data are used to calculate a monthly average for the year and to compare months in 2020 to the same months in 2019. 

Total non-farm jobs

Total non-farm jobs for the Pittsburgh MSA averaged 1.106 million per month in 2020.  This represents a drop of 88,000 or 7.35 percent from 2019’s monthly average of 1.194 million.  Furthermore, the 2020 figure represents the lowest jobs count since 1997. The previous low reading since 2000 was 1.120 million in 2009.  The very weak 2020 number is the result of steep year-over-year drops in April (17.92 percent), May (14.25 percent) and June (9.79 percent).  Even though the year-over-year losses diminished steadily over the remaining months of 2020, no month posted a smaller decline than 7.05 percent.

The Pittsburgh MSA’s percentage loss of non-farm jobs in 2020 mirrors the state’s decline (7.36 percent) and both were significantly worse than the national drop (5.75 percent).  It’s a not surprising finding since the MSA’s non-farm jobs growth has been very sluggish since 2000. Indeed, private-sector employment rose at a paltry average annual rate of just 0.3 percent in the 19 years from 2000 to 2019 and saw all those gains wiped out in 2020.

In only three years since 2010 were annual non-farm job gains greater than one percent—in 2011 (1.74 percent), 2012 (1.09 percent) and 2018 (1.01 percent). Note that 2010 and 2012 were bounce-back years from the sharp downturn in 2009-2010 and are not indicative of a speed up in underlying growth in the region.

Goods-producing sectors

Goods-producing sectors include mining and logging, construction and manufacturing.  After posting solid year-over-year gains for 2017 (2.42 percent), 2018 (3.02 percent) and 2019 (3.20 percent), the overall goods-producing sector lost 7.10 percent of its jobs in 2020 which is worse than the statewide loss of 6.30 percent. 

Mining and logging has had strong growth since it was first estimated (as a separate goods-producing sector) for the Pittsburgh MSA level in 2005.  That’s in large part due to the presence of Washington County, one of the state’s leading shale gas producers.  In 2005 the monthly average was 5,100 jobs in the Pittsburgh MSA.  By 2014 it had grown to 11,800—a 131 percent increase.  It did tumble to 8,900 jobs by 2016 before ratcheting back up to 11,900 jobs in 2019.  The monthly average in 2020 fell to 10,100—a drop of 15.57 percent.  The statewide loss was less at 14.43 percent.   

Construction’s growth was also strong over the last few years.  In 2017 the monthly average number of construction jobs was 56,900.  In 2019 that number climbed 10.5 percent to reach 62,900.  In 2020 it fell back 7.63 percent to 58,100.  The statewide drop to the construction sector was just 6.75 percent.   

The manufacturing sector has been losing jobs in the MSA for quite some time.  The monthly average number of manufacturing jobs in 2000 was 129,800.  It fell at a steady pace until bottoming out at 85,700 in 2017—a decline of 34 percent.  It then ticked up a bit over the next two years to reach 87,300 in 2019—a growth rate of 1.9 percent from 2017.  In 2020 that number dropped again to a new low of 82,500 (-5.56 percent).  The percentage loss was close to the statewide fall of 5.68 percent. 

Service-providing sectors

The trade, transportation and utilities super sector is comprised of sectors such as retail trade, truck transportation and warehousing. Since 2000 this super sector has not done well, posting job losses in 15 years before the pandemic of 2020.  In fact, there were only three positive annual gains posted in the 19 year period—2010 (0.11 percent), 2011 (1.27 percent) and 2014 (0.44 percent).  The decline in Pittsburgh MSA jobs in this super sector (6.73 percent) is slightly worse than the statewide decline (6.55 percent). 

The retail sector is of particular interest as grocery stores and general merchandise stores were exempted from the statewide lockdown even though they were subjected to capacity restrictions.  However, the retail trade sector has been in nearly constant decline in the Pittsburgh MSA for quite some time.  In 2000 there were 141,500 average monthly jobs in this sector.  But by 2019 employment had slumped to 118,500 (-16.30 percent).  The average number of monthly jobs in 2020 fell by another 6.22 percent to 111,200 jobs.  The drop in retail from 2019 to 2020 in the MSA was smaller than the state’s decline of 8.50 percent. 

Education and health services are sizable producers of jobs. This is one sector where there has been consistent growth over the last two decades, owing to the large number of colleges, universities and major medical facilities in the area. In 2000 jobs in the “eds and meds” sector posted a monthly average of 198,100. By 2019 it had steadily grown to 259,200—an impressive jump of 61,000 or 31 percent—before dropping back 5.47 percent to 245,000 in 2020. The sector’s gain over the 19 years was greater than the increase in total non-farm jobs of 47,000.

In comparison, “eds and meds” statewide grew by a much stronger 41.3 percent from 2000 to 2019 and fell back just 4.96 percent from 2019 to 2020. 

Educational services—all colleges, universities and private k-12 and training centers—also suffered a large drop in the monthly year-over-year employment count in 2020, coming in 9.11 percent lower than in 2019.  This decline was slightly smaller than the statewide drop of 9.75 percent.

The healthcare and social services sector had strong growth from 2000 to 2019 (35.9 percent) but suffered a loss of 9,400 jobs or 4.54 percent in 2020. The ambulatory care sub-sector (doctor offices and out-patient services) lost 5,300 jobs (7.35 percent) while hospitals lost another 1,400 (2.33 percent). 

Leisure and hospitality suffered the hardest hit from the lockdowns.  Across the state 25.96 percent of leisure and hospitality jobs were lost from 2019 to 2020.  The Pittsburgh MSA had a similar experience, shedding 26.68 percent—32,300 jobs.  This sector was among the fastest growing in the MSA for a long time with 24.8 percent growth from 2000 (97,000) to 2019 (121,100).  In 2020 that average monthly total fell to just 88,800.

Within this sector, the restaurant sub-sector took huge losses as its average monthly jobs count plunged by 32.29 percent.  In April, when the lockdown was in full force and restaurants were forced to close in-person dining, restaurant employment was 58.51 percent lower than in April 2019.  That monthly year-over-year decline gradually diminished as in-person dining was reinstated, albeit at a maximum of 50 percent capacity, until it hit 33.64 percent in November before another shutdown was instituted in December, pushing and the year-to-year loss back to 40 percent. 

The arts, recreation and entertainment subsector also lost jobs as large gatherings were prohibited, which affected concert venues, theaters and sports arenas.  While this is a relatively small sector, its employment losses were the largest in percentage terms.  In 2020 the average monthly employment level was 35.20 percent lower than in 2019. This sub-sector was enjoying strong growth of 14.29 percent in January, and 10.11 percent in February, before the pandemic began in March (6.91 percent).  In April, the year-over-year drop was nearly 60 percent.  In May, the decline was 54.15 percent.  It stayed above 41 percent in each subsequent month of 2020.

While the economic calamity of 2020 is well known, it is also worth remembering that it continues into 2021.  As of the end of February, the pandemic continues and the restrictions on business are still in place with reduced capacity and limited customers.  While the vaccinations are increasing and reported daily infections are decreasing, the movement to lift the restrictions at any level of government is slow, leaving many businesses to struggle.  The governor’s recent announcement of an increase of occupancy for indoor events to 15 percent of capacity, up from 5-10 percent, with outdoor events being increased to 20 percent, up from 10-15 percent, will most likely just affect the arts, recreation and entertainment sector. 

The only news for them is bad as both the federal and Pennsylvania governments contemplate raising the minimum wage by 107 percent.  As we have mentioned before, raising the minimum wage is a tone-deaf measure that will only exacerbate the job losses for many sectors that employ low-skilled labor. 

It will remove opportunities for new labor force entrants as they seek their first job or force some businesses to close as they will not be able to absorb the increased costs.

It is more important now than ever before for the leaders of the state and region to push for a more friendly business climate with lower taxes and regulations to help struggling businesses recover, bringing back much needed job growth.