Cleveland Fed releases Rust and Renewal: Retrospectives on Cleveland, Cincinnati, and Pittsburgh

A nearly 50-year look at disparate ascents, declines, and recoveries in the ‘industrial heartland’

The traditionally manufacturing-heavy middle of the country and its near ubiquitous smokestacks have been the backdrop for an immense amount of economic upheaval over the last half century. The decline of many industries has left an indelible scar across the Midwest, but what caused the “Rust Belt” to rust? How do the affected economies compare, not just to the nation, but to each other? And what lessons can be learned from the differing outcomes across the region?

Three new reports from Federal Reserve Bank of Cleveland’s economists Mark Schweitzer, Guhan Venkatu, and Gary Wagner examine key indicators such as employment, population, real per capita income, and educational attainment during the period from 1969 to 2016 in Cleveland, Cincinnati, and Pittsburgh to answer these questions. The result is the Industrial Heartland Series, a big picture view of where the region has been and where it’s headed now.

Pittsburgh

In Pittsburgh, Venkatu finds a comeback story. The collapse of the steel industry sent severe shocks through the region, leading to Pittsburgh recording the steepest decline in population during the 1980’s among the nation’s 50 largest metropolitan statistical areas (MSAs).

Today, the Pittsburgh area can lay claim to being an emerging energy center and high-technology hub evidenced by the opening of offices in recent years by major technology companies including Google, Apple, and Uber. “The result of this transformation has been the attraction of young, educated workers who are likely to propel the Pittsburgh MSA’s economy now and into the future,” says Venkatu.

Cleveland

In Cleveland, the manufacturing shocks that rippled across the industrial heartland led to employment trends that lagged both the area’s peer regions and the country as a whole. Between 1969 and 2016, employment in the Cleveland metropolitan statistical area (MSA) grew more than 20 percent. But this growth was much weaker than that in either the industrial heartland or the nation: The nation’s employment grew by more than 100 percent, and the average industrial heartland MSA saw its employment level grow by 50 percent.

In terms of per capita income, the Cleveland area managed to remain above average through 2000, but “The decline in manufacturing experienced in the Cleveland area between 2001 and 2010 appears to have further dampened income growth,” according to Schweitzer. Today, the Cleveland MSA is notably below the national MSA average for per capita income.

Cincinnati

In Cincinnati, Wagner finds a culture of innovation that’s transformed the region from its manufacturing roots. In 1969, roughly one in every three people was employed in manufacturing in the Cincinnati metropolitan statistical area (MSA), while just one in 12 works in the industry today.

In addition, patents are distributed to businesses and individuals at a higher rate in the Cincinnati area than is typical across the industrial heartland. “However, the distribution of patents is highly concentrated among a few organizations, a situation which could result in [Cincinnati’s] future growth prospects’ being more vulnerable to disruptions,” says Wagner.

Also part of the Industrial Heartland Series:

• What’s Gone Wrong (and Right) in the Industrial Heartland?
• Manufacturing Employment Losses and the Economic Performance of the Industrial Heartland, a working paper that examines the development of the Rust Belt through the lens of several detailed indicators.

Federal Reserve Bank of Cleveland

The Federal Reserve Bank of Cleveland is one of 12 regional Reserve Banks that along with the Board of Governors in Washington DC comprise the Federal Reserve System. Part of the US central bank, the Cleveland Fed participates in the formulation of our nation’s monetary policy, supervises banking organizations, provides payment and other services to financial institutions and to the US Treasury, and performs many activities that support Federal Reserve operations System-wide. In addition, the Bank supports the well-being of communities across the Fourth Federal Reserve District through a wide array of research, outreach, and educational activities.

The Cleveland Fed, with branches in Cincinnati and Pittsburgh, serves an area that comprises Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia.

Media contact

Doug Campbell, doug.campbell@clev.frb.org, 513.218.1892