Has Recession Loosened Its Grip on the Pittsburgh Region?

Member Group : Allegheny Institute

Is the recession loosening its grip on the Pittsburgh area? According to the latest payroll employment data for August, the answer may be "yes". August marked the third straight month that total private jobs showed a year-over-year increase. The August 2010 figure of just over one million jobs bests the August 2009 figure of 994,300 by more than one-half percent. This follows on the heels of small year to year increases in June and July. While relatively miniscule, these gains represent the first positive upswing in the year-over-year payroll employment since October 2008.

The seven-county area showed an increase of 5,800 total private jobs from August 2009 to August 2010. Which sectors led the growth in jobs?

Leading the way, professional and business services posted a pickup of 3,800 jobs in the August year-over-year tally. The biggest gainer in this sector was administrative and support services with a rise of 2,900 jobs. These are clerical, security, and other office administration functions. Hiring support personnel might be a signal that companies see the end of the recession and are willing to hire support staff.

Construction is also notable for meaningful job improvement with 2,000 jobs added from August 2009 to August 2010. Considering that most major projects in the area—such as the new PNC Tower and Consol Energy Center—have been completed, this increase is somewhat unexpected. It’s possible that road and bridge projects are propping up construction employment. It could be also attributed in part to construction and site preparation of Marcellus Shale gas drilling sites that use construction companies to do some of the work. While these gas drilling sites are not common in Allegheny County, they are plentiful in Fayette, Washington, and Westmoreland Counties which are part of the Pittsburgh MSA.

Nonetheless, it is important to bear in mind that the 57,100 construction jobs in August are still seven percent below the 61,400 recorded in August 2008.

What has happened to jobs in the mining and logging sector of the economy? This sector, which includes coal mining as well as natural gas extraction, gained 400 jobs in August compared to the twelve month earlier level. Back in August 2005 there were 5,000 employees in this sector. By August 2010 jobs had risen by 900 —just under 20 percent. The Marcellus Shale gas formation may be a great source of employment in years to come, but the types of jobs created will be dispersed throughout various sectors such as construction, manufacturing and transportation as well as mining, making the jobs impact of the gas drilling hard to pin down with great accuracy.

Other sectors with large jumps in year-over-year employment include "retail trade" with 1,800 more jobs and "educational services" gaining 1,500. The "health care and social assistance" sector added another 1,000 people to payrolls led by 600 new jobs in "social services". As we have mentioned in previous Policy Briefs, the social services subsector has been steadily adding jobs, growing more than 50 percent since 2000. But keep in mind that social services is very heavily dependent upon government spending and typically does not offer many high paying jobs—and therefore is not a good indicator of economic growth or labor market strength.

While some sectors showed year-over-year job gains, several sectors did not fare very well. Manufacturing continues to shed jobs as another 2,000 were lost between August 2009 and August 2010. The recent total of 84,900 manufacturing jobs is the lowest August count in at least two decades. Meantime, "financial activities" shed 1,700 jobs and the "government" sector lost 1,300 with local governmental education jobs dropping by 700.

Overall, payroll employment data seem to suggest the recession is loosening its grip on the Pittsburgh area—albeit very slowly and unevenly. Some sectors are showing signs of an upturn while others are still losing jobs or remaining flat—not an uncommon picture for the early stages of an economic recovery.

Clearly, the stability and recession resistance shown by education and health related jobs together with the huge decades long decline in the proportion of the area’s jobs in manufacturing and the absence of a housing boom have helped dampen the region’s employment losses during the current recession. Still, that is little consolation in light of the fact that employment remains well below levels reached in 2000.
FrankGamrat, Ph.D., Sr. Research Assoc.Jake Haulk, Ph.D.,President

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