Wednesday, May 20, 2009

Great Recession in Pittsburgh and Milwaukee

Update: Speaking of regional indicators, I recently came across this article about a new initiative that models itself after projects in Indianapolis, Philadelphia and Pittsburgh.

I'm a big fan of Milwaukee. I was introduced to the city thanks to an academic conference about human rights research held at the University of Wisconsin-Milwaukee. I had a great time and Milwaukee's transformation reminded me of Pittsburgh's. However, there are also notable differences:

A little background. In the early 1980s, Pittsburgh lost 56,000 of its steel jobs, 61% of the total, and an equal number of other related manufacturing jobs. The 110,000 jobs lost was matched by a concurrent and comparable loss of industrial work throughout the region, a contraction in less than six years that economists have since described as unique in the manner of the exodus of the textile industry from New England to the South at the end of World War II. An out-migration of men and women in their 30s and 40s, young adults able to leave for better economic circumstances and willing to do so, was integral to this social upheaval.

The consequences of that diaspora continue to this day. Pittsburgh is the only major metropolitan region in the nation to consistently experience natural population loss (more residents die each year than are born). The result is that small but steady population declines have been the norm for three decades going on four. (Offsetting in-migrations from other states and abroad have not made up the difference.) Another consequence has been all those Terrible Towels you see on a fall Sunday in San Diego, Nashville and Houston.

So what is it that jumps out at me about Milwaukee? Probably what jumps out at you: Jobs. And not just jobs in these tough times. The data clearly suggest that while Milwaukee has not had the nagging population problems of Pittsburgh in the past decade, its job growth since 2000 has been more sluggish.

Milwaukee never recovered from the Bush (or so-called recession of 2001. Of the 15 regions we track, only five had fewer jobs in 2008 than in 2001: They are, in order (high to low percentage losses), Detroit, Cleveland, Boston, Milwaukee and Pittsburgh, with Detroit's negative experience being unique.

Milwaukee's vulnerabilities are shown off more starkly when the experiences of our benchmark regions are compared for 2008 and the first quarter of 2009. Only Detroit and Charlotte experienced a higher year-over-year job loss than Milwaukee in the 12 months ending March 31. (Two job categories, professional services and manufacturing, accounted for 26,000 of those losses).

Bankruptcies and foreclosures as a percentage of total housing stock also are two indicators we watch in recessionary times. Pittsburgh's and Milwaukee's rates of bankruptcy were in the large middle range last year. Ten regions had more bankruptcies than Pittsburgh, eight had more bankruptcies than Milwaukee.

No region had fewer residential housing foreclosures as a percentage of total housing stock than did Pittsburgh in 2008, while Milwaukee's rate of 1.57% was better than both the U.S. and benchmark region but lower than only Detroit, Denver, Cleveland, Indianapolis, Cincinnati and St. Louis, in that order. The average price of a house in Pittsburgh in the last quarter of 2008 was $118,400; in Milwaukee, $212,300.

Let me note parenthetically that you will find more about Milwaukee on the excellent Web site than you will find on, but our commitment to several rules may offer different insights. We report information as soon as it is available, which in many cases means monthly updates. Wherever possible, we publish data for the 22 counties that make up the Pittsburgh region. We see the Pittsburgh region as a unique market and economic system engaging the residents and communities in parts of three states. Within this large "city state" are smaller "neighborhoods," with the seven-county Metropolitan Statistical Area being the Pittsburgh choice in most instances because it permits apples-to-apples comparisons with other places. Being able to compare your region to comparable places is a key to putting data in context.

A final word about unemployment, unemployment rate and employment. There is a great deal of confusion about jobs and employment because the statistics track different things. In the first instance, it is the total number of people working in various job categories within the region; in the second it is the total number of residents of the region who are employed in any work anywhere - either in or out of the region. Both numbers are published monthly, as well as annually.

John Craig, writing in the Milwaukee Journal Sentinel, provides a sobering view of both cities. I particularly appreciated his overview of the Pittsburgh redevelopment trajectory. There's something about writing for another city audience that brings out a fresh perspective. Perhaps I haven't read enough or done enough research, but the succinct narrative Craig weaves about Pittsburgh really helped me to understand where the region might be heading.

I'll end with Craig's impression of the current Pittsburgh mindset:

Change can come, but so can disappointment. The process is hard and slow.


Dave said...

Yes, Milwaukee has seen a lot of job losses due to our still large manufacturing industry. That said I believe Milwaukee has slowly been evolving away from being an industrial city and as its reliance on this one sector is reduced it may allow it to do even better.

Jim Russell said...


Any sense of how Craig's opinion is playing in Milwaukee?

Paz said...

This was a very good article, but I'm curious, to what extent does Milwaukee's success hinge on it being a part of greater Chicagoland? It seems to me that, much as Baltimore has been able to parlay it's proximity to DC into investment, Milwaukee can do the same.

Jim Russell said...

That would be a good question to ask Aaron Renn (The Urbanophile). My guess is that his answer would be that Milwaukee hasn't done enough to leverage its proximity to Chicago.