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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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09.23.09

Economic Trends

Pittsburgh's Labor Market Performance over the Recession

Kyle Fee

For two days, the leaders of the world’s 20 largest economies will meet to discuss potential reforms to the global economic system. Where will this international meeting take place, you ask? London? New York? Tokyo? All wrong. None other than the Fourth District’s own Pittsburgh, Pennsylvania. While not the center of the global finance universe, Pittsburgh’s recent history provides its own story of economic reform. The economic metamorphosis from steel town to a health and high-tech services center is remarkable but nowhere are its successes more apparent than in the performance of Pittsburgh’s labor market over the “Great Recession.”

Unlike most of the Fourth District, Pittsburgh’s local labor market has held up relatively well over this recession. Over the past 10 years, Pittsburgh’s unemployment rate has closely tracked the nation’s rate, although since December 2007, they have begun to diverge. Pittsburgh’s unemployment rate has increased only 2.8 percent, while the national rate has increased 4.5 percent. Other large metropolitan areas in the Fourth District have experienced unemployment rate increases ranging from 3.1 percent to 4.7 percent. Pittsburgh&’s unemployment rate (7.5 percent) as of July 2009 is well below the nation’s (9.4 percent) and other large Fourth District metropolitan statistical areas (MSAs).

Declines in payroll employment over this downturn have been severe across all locations, with losses ranging from −2.1 percent (Columbus, Ohio) to −6.8 percent (Cleveland, Ohio). Pittsburgh’s payroll employment declined 2.6 percent, much less than the nation’s loss of 5.0 percent employment over the recession.

Similar to other Fourth District MSAs, the main driver for Pittsburgh’s employment losses has been the manufacturing sector, accounting for 40 percent of payroll declines. The professional, business, financial services and information sectors are large loss leaders in Cleveland (36.9), Columbus (34.0) and the nation (32.5) while in Pittsburgh these sectors account for smaller proportion of losses (28.3). Similar comparisons can be made for the natural resources, mining, and construction sectors in Pittsburgh as well.

Going into the downturn, Pittsburgh’s allocation of labor proved favorable. The once-industrial behemoth allocated only 8.7 percent of its workforce to the manufacturing sector in 2007. As discussed in “Employment Loss in Ohio’s Manufacturing Industry,” manufacturing employment declines have accelerated during this downturn, adversely affecting local labor markets significantly. On the other hand, Pittsburgh has 19.7 percent of its workforce in the education and health services sector, which has been one of the few sectors to produce jobs during the current downturn. The concentration in the complementary fields of education and medicine not only enabled Pittsburgh to withstand some the ill effects of the business cycle but also provide a solid foundation for future growth.

Labor Allocation, 2007

Percent of employment

Cincinnati, OH

Cleveland, OH

Columbus, OH

Pittsburgh, PA


U.S.
Natural resources, mining and construction
4.8
3.8
4.0
5.4
6.1
Manufacturing
11.6
13.3
8.1
8.7
10.1
Trade, transportation and utilities
20.4
18.5
20.3
19.6
19.4
Information
1.5
1.7
2.0
1.9
2.2
Financial activites
6.3
6.7
7.7
5.9
6.0
Professional and business services
15.0
13.4
15.9
13.6
13.0
Education and health services
13.5
16.3
11.8
19.7
13.3
Leisure and hospitality
10.2
8.7
9.5
9.4
9.8
Other services
4.1
4.1
3.9
4.6
4.0
Government
12.7
13.3
16.7
11.0
16.1
  1. Source: Bureau of Labor Statistics