Meet the Author

Timothy Dunne |

Vice President

Timothy Dunne

Timothy Dunne is a former vice president and economist of the Federal Reserve Bank of Cleveland.

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Meet the Author

Kyle Fee |

Economic Analyst

Kyle Fee

Kyle Fee is an economic analyst in the Research Department of the Federal Reserve Bank of Cleveland. His research interests include economic development, regional economics and economic geography.

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01.22.08

Economic Trends

The Erie Metropolitan Statistical Area

Tim Dunne and Kyle Fee

The Erie metropolitan statistical area (MSA) is located in the northwest corner of Pennsylvania on Lake Erie.  Home to 279,811 people, Erie, a Great Lakes city, has an employment history of heavy industry and manufacturing.  In 2006, Erie was still heavily invested in manufacturing industries, having about an 80 percent higher proportion of its workforce in manufacturing than the nation as a whole. Meanwhile, Erie’s service industry workforce was proportionately higher in health services industries relative to the nation and lower in information, financial, and professional business and services industries.

Looking at the components of annual employment growth in the Erie MSA, the strongest driver of employment growth from year to year has been the service sector industries of education, health, leisure, government and other services. Not surprisingly, manufacturing employment is the biggest drag on Erie’s employment growth.

Erie’s most recent employment growth has come from growth in tourism-related industries.  Erie’s total nonfarm employment growth from October 2006 to October 2007 is 0.7 percent, while employment in the leisure and hospitality industries has jumped 6.6 percent over the same period.  On the down side, goods-producing industries lost employment at a rate substantially above the national rate.

Since the last business cycle peak in March 2001, Erie lost 0.9 percent of its total nonfarm employment, compared to Pennsylvania’s gain of 1.6 percent and the nation’s gain of 4.4 percent. From its lowest employment levels in July of 2003, Erie has expanded its employment 4.5 percent. Over that same period, Pennsylvania’s employment grew 3.7 percent and the nation’s grew 6.5 percent.

Compared to other cities on Lake Erie, Erie actually has performed reasonably well. While employment is still below the city’s 2001 level (similar to the decline experienced by its neighbor to the north, Buffalo, New York), the Erie labor market has been stronger than Cleveland’s or Toledo’s.

Disaggregating employment into manufacturing and nonmanufacturing components, we see that the Erie metropolitan area underperformed relative to the U.S. average in both sectors. Since the last business cycle peak in March 2001, Erie lost 25.5 percent of its manufacturing jobs, while the nation lost 17.5 percent. This manufacturing drag on Erie’s economy is particularly important because Erie has a much higher share of manufacturing than the United States as a whole. Alternatively, Erie’s nonmanufacturing employment growth has tracked the national trend pretty closely over the past six years.

Like Buffalo and Cleveland, Erie’s manufacturing employment has suffered a steep decline, though the time-series patterns for Buffalo and Cleveland differ.  Erie’s steepest drop occurred in the 2001–2003 period, but since mid-2003 it has stabilized somewhat, while in Buffalo and Cleveland it has continued to contract.  Toledo’s decline has mirrored that of the United States, though recently, Toledo is showing some relative weakness.

Where Erie looks quite different from the other cities along Lake Erie is in the growth of nonmanufacturing employment. Erie has consistently added nonmanufacturing jobs at a faster rate than the other Lake Erie cities.  Erie’s 6.8 percent nonmanufacturing growth exceeds Buffalo’s 2.7 percent gain, Toledo’s 0.6 percent loss, and Cleveland’s 1.5 percent loss.

The relatively slow growth of Erie’s labor market is also reflected in the metro area’s statistics on per capita personal income.  Over the last six years, Erie’s nominal growth in per capita income has been substantially lower than Pennsylvania’s or the United States’.  Nominal per capita income grew in Erie at 17.9 percent, while Pennsylvania and the United States had similar rates of 23.5 percent and 22.7 percent, respectively.  Moreover, Erie has substantially lower per capita income.  In 2006, the Erie metro area’s per capita income was only 79 percent that of Pennsylvania’s and the United States'.