Saturday, January 31, 2009

Economic Mysteries of Pittsburgh

Pittsburgh has its share of problems. Poor job growth is definitely one of them. I figure that local employers can offer relatively lesser salaries because of an over-supply of labor. But given that we are now talking about pay primarily for non-manufacturing jobs, the glut of talent is an indicator of a remarkable regional transformation:

To succeed in overcoming the shocks that rocked their industrial bases, educational attainment in Midwest metro areas may have been most helpful in adaptation and re-invention. Tim Dunne displays charts similar to [those above] which indicate a weaker correlation between educational attainment and growth in warm weather metro areas as compared to cold weather climes. In considering educational attainment of the populations, the [table below] displays the ranks of Great Lakes metropolitan areas among 118 metropolitan areas in 1970 and 2006. The two local leaders in 1970 college attainment, Columbus, Ohio, and the Twin Cities also experienced the fastest employment growth. While Pittsburgh ranked low in college attainment in 1970, its gains in this metric since then have been the most rapid. Perhaps not accidentally, Pittsburgh’s growth in per capita income also outpaced other cities in the region.

The Pittsburgh region successfully re-educated the workforce. I can say with confidence that the talent did not move in from elsewhere and that kudos should be extended to the system of higher education AND the leadership. However, I also suspect that this tale of dynamic labor mobility also fueled more out-migration. One reason Steelers Nation is so ubiquitous is thanks to the enhanced skills of its people. The lower the educational attainment, the more likely you are stuck in an economically depressed region.

Pittsburgh is rich in homegrown talent. Ironically, superior workforce development now puts the region at a disadvantage. Employers haven't needed to import brains, which explains the dismal immigration numbers. Demographics tell us that there won't be enough people to educate and thus fill job demand. Hence the rush to fill the talent pipeline for a job market that is far less than what you would typically find in a Texas city. Pittsburgh desperately needs to establish some pathways for substantial in-migration or local salaries will skyrocket.

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