Wednesday, April 03, 2013

Post Soylent Pittsburgh redux

Twitter followers already saw I caught a news snippet out of Rhode Island of a family that has moved to Pittsburgh (via Tampa) for what sounds like economic reasons, as indeed what most motivates most migration across the nation. Yes people moving into Pittsburgh. So why do I care?

News out yesterday, but into ink today is latest labor force stats on the Pittsburgh MSA.  Now I suggest you take a close look at the graphic the PG has of county-level unemployment data and compare to what the 'same' data is for the region (MSA unemployment rate of 7.4%).   I have a explanation for the discrepancy you may note, but it is even too wonkish to go into here.  So really painfully technical and if you want more the answer starts with this old post.  Still, the county-level numbers for the region are even in aggregate far more positive than the msa level data.  Funny that.

But looking more at the trend. We do tend to miss the forest for the trees when obsessing on the latest monthly labor force stats each month. Often preliminary and prone to all sorts of estimation variability.  Here is what most interests me.  This is a graphic of the year over year change in the Pittsburgh region's labor force calculated monthly. Of note, the last few months have seen greater jumps than recorded over the last decade and the trend does not seem to be abating.


 
 
Various folks like to pundificate that the change in the labor force month over month, even year over year is all about folks moving in and out of the labor force.  Former workers becoming discouraged.  Former discouraged workers starting to look for work again and innumerable other flows like that.  While that really has to be the reason explaining short term variability in national labor force changes, at a regional level there is usually a bigger factor in the long run.  People move.  Nationally, the labor force is impacted by migration, but by definition international immigration which can be significant, but still pales in comparison to the flows of folks between regions within the country. That is especially true for places like Pittsburgh with such low rates of international immigration. (yes, still low). 
 
So sure, part of the answer is an increase in local labor force participation (LFP), but why we ignore the migration angle is curious.  Even the labor force participation story is quite a story.  If the local jump in the size of the labor force is entirely due to increasing labor force participation among the population here, then you have to ask yourself why our LFP is jumping up while national LFP is still trending down. Either way, there are stories to be told here.
 
If thinking in the deltas is not quite clear.  Here is just the graph of the Pittsburgh region's labor force over the last 40+ years. Note recent trends. Lots of economic history embedded in one picture:
 
 

3 Comments:

Anonymous DBR96A said...

From the looks of it, the labor force shrinkage in 2009 was no worse than the labor force shrinkage in 2003, which is pretty remarkable.

Wednesday, April 03, 2013 11:53:00 AM  
Anonymous BrianTH said...

DBR96A,

I'd say that was a combination of the Great Recession not being as bad around here as many places, and even more so the fact that the labor force reduction during the recession and early recovery was being layered on top of a pre-existing labor-force-increasing dynamic, meaning one that pre-dated the recession beginning locally, and which in fact is still continuing.

And as I have agreed with Chris in the past, there is really no way to attribute all (or even more than a tiny fraction) of that longer-term, underlying, labor-force-increasing dynamic to changes in participation rates. It pretty much has to be mostly about increasing net in-migration of jobseekers (noting that can include changes such as fewer graduating students heading elsewhere to seek jobs).

That doesn't mean the recent macroeconomic history hasn't influenced this trend--but if anything, it has likely increased it, and there may be even more to come if the labor force starts gaining additional mobility with the recovery in housing prices starting in earnest.

Wednesday, April 03, 2013 1:17:00 PM  
Anonymous Anonymous said...

"If the local jump in the size of the labor force is entirely due to increasing labor force participation among the population here, then you have to ask yourself why our LFP is jumping up while national LFP is still trending down. Either way, there are stories to be told here."

This has totally stumped me as well...really interesting situation here, and much more to write about than the PG and Trib care to look into (seriously, this week's PG columns have been particularly pathetic).

Wednesday, April 03, 2013 4:08:00 PM  

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