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Guhan Venkatu |

Vice President and Senior Regional Officer

Guhan Venkatu

Guhan Venkatu is vice president and senior regional officer at the Pittsburgh Branch of the Federal Reserve Bank of Cleveland, where he manages relationships with key stakeholders in the area and is responsible for monitoring the region’s economic environment. For the past several years, his economic research has focused on inflation and inflation expectations, housing and household finance, and factors related to regional economic growth.

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05.15.14

Economic Trends

Annual Revisions to Pittsburgh Jobs Data Alter Picture of Local Labor Market

Guhan Venkatu

In March, the Bureau of Labor Statistics (BLS) released revised data for employment at the state and metro-area levels, after its annual revision process in which existing employment estimates are benchmarked to employment totals from a census of the employer population. These revisions could affect data from as long ago as January 2009, though their primary impact is on data from April 2012 to December 2013. Initial employment statistics for states and metro areas can change significantly when they are benchmarked through this process, sometimes altering or even reversing altogether our previous understanding of an area’s labor market conditions (see Revisions to Metro-Level Jobs Data Shed New Light on Job Growth and Which Estimates of Metropolitan-Area Jobs Growth Should We Trust?). The latest revisions offer a case in point for the Pittsburgh metro area.

Before the revised data were published, employment in the Pittsburgh area appeared to have grown by approximately 25,000 jobs, or just over 2 percent, during the two-year period from December 2011 to December 2013. The revised data, however, indicate that the area added considerably fewer jobs during this period—just under 4,000—constituting a percentage increase of only 0.3 percent. Employment growth earlier in the recovery, during the preceding two-year period from December 2009 to December 2011, was notably stronger, with the Pittsburgh area adding almost 36,000 jobs, an increase of over 3 percent. (Pittsburgh’s employment data during this period were not meaningfully altered by the recent revisions.)

The revision to the area’s employment growth for the two years ending in December 2013 stands out as one of the largest reductions among major metropolitan statistical areas (MSAs) in terms of the percentage point change. Considering either the 30 largest MSAs, which tend to have populations in excess of 2 million people, or the 50 largest, which tend to have populations in excess of 1 million people, the Pittsburgh MSA saw the largest downward revision to its employment growth for this two-year period. The BLS notes that the absolute magnitude of revisions tends to be larger for smaller MSAs since these areas’ initial estimates are based on relatively smaller sample sizes. But even among the 100 largest MSAs, which generally have populations exceeding half a million people, Pittsburgh’s downward revision ranked third, behind Fayetteville, Arkansas, and Lexington, Kentucky.

Given the relatively large downward revision to the area’s employment growth, it is perhaps not surprising that most major industry categories also registered downward revisions to their employment growth during the two years ending December 2013. Mining and logging posted the Pittsburgh area’s largest revision (-9.5 percentage points), which cut the industry sector’s initially reported employment growth over the two-year period (22.1 percent) almost in half. While mining and logging is a relatively small sector, educational services and wholesale trade, which also saw sizeable revisions, collectively account for almost 10 percent of the Pittsburgh area’s employment. Notably, prior to the revision, both sectors seemed to have gained jobs, but the revised data show that both sectors lost jobs. On the other side of the ledger, the leisure and hospitality sector, which alone accounts for almost 10 percent of the area’s employment, flipped from an initially reported decline to a roughly 2 percent employment increase in the two-year period.

The revised data reveal that most major industry segments saw less employment growth than their national counterparts from the beginning of the recovery (mid-2009) to the end of 2013. One obvious exception is the mining and logging sector, whose employment in the area roughly doubled during this period. By contrast, the sector saw employment gains of about 30 percent nationally. The finance and construction sectors also saw notably stronger gains locally, while the (percentage) increase in professional services employment—which includes things like legal, accounting, and advertising services, as well as scientific research and the management of companies—was about the same in the Pittsburgh area as it was nationally. Educational services was an outlier on the other side, declining more than 2 percent from mid-2009 to the end of 2013; nationally, the sector saw an increase of nearly 9 percent.

Taken together, the revisions alter our sense of Pittsburgh’s performance during the recovery. Prior to the revisions, total employment in the Pittsburgh area appeared to have grown in excess of 5 percent from mid-2009 to the end of 2013, slightly stronger than the employment growth experienced nationally over the same span (4.9 percent). However, the revised data show that the area’s total employment grew about 1.5 percentage points less than the nation’s during this period. As a consequence, Pittsburgh’s employment growth fell in rank among the nation’s top 100 MSAs (by employment), from 45, just above the median MSA, to 72, close to the bottom quartile.