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Regional Insights: Recession deepens here as job cuts mount
Sunday, April 05, 2009

Until recently, the Pittsburgh region seemed almost immune to the national recession. Although the U.S. economy started losing jobs last May, our regional economy kept adding jobs all the way through October. Even when we started losing jobs in November, the job losses here paled in comparison to the tens of thousands of jobs lost in regions as disparate as Detroit and Phoenix.

Unfortunately, our economic immunity has begun to wear off in the face of tight credit markets and weak consumer demand worldwide.

The latest job statistics show that between February 2008 and February 2009, the Pittsburgh region lost 19,200 jobs. That's the largest loss of jobs in a 12-month period that we've experienced in the past 20 years. Even at the height of the last recession, in February 2002, the region had lost only 16,900 jobs over the prior year.

The good news is that the rate of job loss here is still well below the nation as a whole and most other large regions. For example, Detroit and Phoenix have each lost about 140,000 jobs in the past year, Charlotte, N.C., has lost 48,000 jobs and Cleveland lost 40,000 jobs.

The bad news is that the rate of job loss here has accelerated rapidly. Between January and February, the Pittsburgh region had the third largest increase in the rate of job loss among the top 40 regions.

What caused the sudden jump in job losses here? The single biggest factor was manufacturing -- we've lost more than 6,000 manufacturing jobs in the past year, and more than 3,000 of those were lost in the last month.

We have now experienced a higher rate of loss in manufacturing jobs than 22 of the top 40 regions. Because manufacturing jobs have high wages, these job losses will likely have negative ripple effects in the retail and service sectors in the months ahead.

The second biggest factor was in temporary employment services. After holding steady throughout 2008, it suddenly fell 2,300 jobs into the negative column in February, a faster one-month drop than any other major region in the United States.

The region's Leisure and Hospitality sector, which includes sports and cultural facilities, hotels, restaurants and bars, has lost 5,300 jobs in the past year, the second highest number of job losses after manufacturing.

For reasons that aren't clear, we've had the fifth highest percentage loss of leisure and hospitality jobs among the top 40 regions. More than one out of every 20 jobs in that sector has disappeared in the past year.

Only a few subsectors have continued to add jobs despite the recession -- health care and social services (2,600), higher education (2,000), company headquarters (700), mining (400) and local government (300). But recent news reports suggest that layoffs in health care and higher education may be coming, meaning that overall job losses for the region are likely to increase.

The past few months have made it clear why the region's "slow and steady" job growth over the past decade wasn't good enough. The job losses of the past three months have wiped out all of the small amount of job growth our region had experienced since the last recession.

The Pittsburgh Region now has fewer jobs than in the year 2000, whereas most of the major regions of the country, despite having higher job losses during the recession than we have had, still have more jobs today than in the year 2000.

Although it is understandable that everyone's primary focus now is on getting through the recession, we also need to position ourselves for job growth when the national recovery finally arrives, through actions such as expanding cutting-edge research at our universities, supporting the creation and growth of startup firms, and creating a more competitive business climate.

Harold D. Miller is president of Future Strategies LLC, a management and policy consulting firm based in Pittsburgh, and adjunct professor of public policy and management at Carnegie Mellon University. He publishes www.PittsburghFuture.com, an Internet resource on regional economic development issues, and contributes to regional indicators at www.PittsburghToday.org.
First published on April 5, 2009 at 12:00 am