Tuesday, September 07, 2010

Rust Belt Reset: Pittsburgh

Two Twitter tweets set the stage for today's post about the restructuring of the national economy. The Pittsburgh Technology Council wonders aloud about the implications for Pittsburgh concerning the latest New York Times offering from Edward Glaeser:

Between 1940 and 1990, California’s population increased by 330 percent, while the United States population grew by less than 100 percent. Florida’s population was 4.95 million in 1940 and is expected to be 18.77 million in 2010, a 279 percent increase.

Some areas in California, like San Francisco, are among the most productive in the world, but other areas in both states are “consumer cities” that attract people primarily by providing a pleasant climate or a high quality of life. Florida also has some metropolitan areas that follow the recent Sun Belt pattern of attracting people by building abundant, inexpensive housing.

The consumer city works well if the area attracts well-educated, entrepreneurial people who make the local economy hum and protect it from extreme unemployment. But without those educated entrepreneurs, amenity-based places can end up with a lot of people relative to economic activity, just like the Rust Belt.

Glaeser is trying to connect three states where the recession hit the hardest. I think the take away is that the lack of economic activity doesn't justify the size of the population. Which brings me to the tweet from Civic Analytics. The disconnect that Glaeser describes is crippling Portland, Oregon:

“The city and the region have long assumed that investments in quality of life would result in job growth in the city,” the PDC’s 2009 Economic Development Strategy said. “These investments have succeeded in generating an unprecedented influx of creative talent to the city, but that alone has not created new jobs,” it concluded.

“We stand by that,” said Peter Quinton, the PDC’s Business and Industry Division manager. “We’ve invested in light rail and big projects that increase quality of life, and now we’d like to see investment in job creation.”

Quinton admits that the PDC’s economic plan is a departure considering that for the last several decades it’s been the PDC’s job to build those transportation and housing projects it now criticizes. The strategy, adopted by City Council in July 2009, is the city’s first official economic plan in 15 years. It represents the first time in a decade that the agency has specifically targeted job growth as a major priority.

Translating amenities migration into economic development is proving to be a difficult riddle to solve. Many of the boomtowns of the last two decades are now grabbing headlines for all the wrong reasons. Meanwhile, much of the Rust Belt plods forward under the radar:

For example, in 2008 Ohio landed the greatest number of new plants and expansions in the entire United States - a whopping 503. Texas had 497 projects. Michigan, Pennsylvania and North Carolina were the next top three.

In other words, the Rust Belt states ranked quite high in the number of new plants. But if you listen to the negative commentary and much of the news, you hear nothing but bad news about these areas.

Cold winters and a bad reputation have forced many shrinking cities to restructure in a more economically competitive fashion. The shiny example is Pittsburgh, where growth is not a product of smoke and mirrors:

News this morning in the Wall Street Journal about some skepticism over a Google takeover of the online travel search engine ITA. ITA is used by fare-compare sites like Kayak and Orbitz. Well, competitors are questioning whether Google would unfairly send web searchers to its own travel services if the takeover is approved.

The ITA acquisition is part of a larger picture at Google, a company that continues to expand and hire despite the tough economy. But before you punch up your resume and start looking for an apartment in Silicon Valley, you should know that the big part of Google's expansion is happening in Pittsburgh.

You would be better off looking for an apartment in Pittsburgh, as opposed to Portland or Silicon Valley. Southwestern Pennsylvania finds itself in an economic sweet spot as the country emerges slowly out of the recession. Not only is there tech, energy and manufacturing also promise job growth in the near future. Never mind the bedrock of eds and meds. The region sports a remarkably diverse portfolio. Pittsburgh is poised to reap the benefits of the Great Reset while the Portlands of the world steel themselves for a lost decade.

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