Amazon Cometh..... or not

So two days in a row.  It won’t be a pattern, but it's hard not to comment on the economic development news of the day/month/year, namely that Amazon dropped an RFP of sorts to build a 2^nd Headquarters outside of Seattle, somewhere in North America. It has set off a frenzy among cities and regions thinking they will land what Amazon promises to be a huge new job creator. Something on the order of 50 thousand net new jobs which is a number that huge for even the biggest metro regions and hard to imagine here. Thus it is that Pittsburgh is seeking to join the fray. 

Why did Amazon do this? I really think they were encouraged by the very recent news of how the site selection for new Foxconn production facility went. In the end,  Wisconsin was picked for the potential new site, a ‘win’ that came from what is reported to be up to $3 Billion in public incentives, a number and a deal that economists are only beginning to debate the efficacy of.  Seeing that states are still very much engaged in (pick your industry of choice) chasing, Amazon saw they should be able to extract a deal at least as good as Foxconn received, potentially much bigger. Given they are reaching post-saturation in Seattle, growth has to be placed elsewhere and most likely they can get somebody else to pay for it. It all becomes a no brainer to throw out the bone and see what comes back.  The full project size of what Amazon is teasing is far larger than Foxconn’s planned impact, think about that. 

So to be clear… everyone wants Amazon, but they have laid out some incredibly difficult criteria.  I suppose that if you are Amazon, you can ask for (and expect) to get a pony because it’s hard to see how their full criteria could be met by any site in any region. You can read their full RFP yourself here, but here are just a few of the highlights. 

They want some normal things: access to an airport and major highways to begin. They need a lot of space, and I mean a lot. More on that later but right there the choices in Pittsburgh get very narrow. This is all akin to the not too distant site selection Westinghouse Nuclear went through when they wound up deciding to move to Cranberry vice some alternatives including Charlotte, NC.

But this is Amazon and they also clearly spell out they want a downtown or downtown-like location. They want access to the major population center, someplace pedestrian friendly and access to “rail, train, subway/metro" and then lastly "bus routes". That makes this a very different type of site selection than is typical for projects this scale. I will note they have bus routes listed there last, but hold that thought as well. 

So if you take their criteria at face value, or honestly if you take each criteria at about half their asked for values you pretty much rule out anything in the greater Pittsburgh region, let only anything in the City of Pittsburgh.  How much space do they want?  One option is 100 acres of ready greenfield, and the potential to build 8 million square feet of office space How big is 100 acres of greenfield? The former civic arena site is advertised as 28 acres and is probably not even that, and is far from being a greenfield.  8 million square feet?  The US Steel Building is ~2.5 million square feet of usable office space.  So if you think you are going to get close to those criteria, it won’t be anywhere near Downtown or environs.  Oakland? Stop there. You will have to look to those locations again out toward Cranberry, or the Airport, but then you have to go back to the criteria to be close to a surfeit of public transit.

The long under development Almono site is obviously going to come up as an option. The site is big enough… 178 or so acres.  Not exactly a greenfield, but much work has already gone into it.  It is hard to see how the site meets the pedestrian friendly or public transit access criteria, but let's say they are not going to be too strict on either of those requirements. I think the big issue with the Almono site is that so much effort has gone into planning the site to include mixed uses and integration with the nearby neighborhood already, to go with a big corporate campus would almost require throwing all that away and starting over.  Again, possible I suppose but hard to see at this point.

But you think I’m being all Briem-naboby, which isn’t the case.  If indeed Pittsburgh has any chance of getting the Amazon site it has to start with some reality check based on what they have very publicly stated they are looking for. Otherwise, any attempt to bring Amazon here is just for show. That, and I have the location.

Really.

If you really want to plop down a big new campus, close to Downtown, not a bad commute from the airport, close to major roads and potentially ready for redevelopment, I say it would have to be the former Western Penitentiary Site on the Ohio River.   The site only recently shut down and would have to be cleared and prepared (not a trivial task).   If the site is not quite big enough, there are a lot of potential expansion spaces nearby that should work. Take a look:

A great location along the river is a big plus.  Public transit is a problem, but Amazon is clearly looking for better public transit than we have to offer. Their criteria lists rail, train, subway/metro before adding in ‘bus routes’.  The Western Penitentiary site….  The state would have to promise to fund the expansion of the North Shore Connector a few more stops. Seems like a big thing, but given all they are asking for that may be one of the easiest things to pull off.  So now you have transit right into Downtown.  Walkability is a little weak, but you can point out the bike trail along the river that also goes right to the site and extends already out to Millvale.  You could stretch it and call it the Lawrenceville to Amazon Bikeway, think what Larryville real estate prices will look like in a decade?  Personally if this ever came to pass I'm buying up all the Millvale real estate I can afford. 

Also this fits into another narrative.  If you really dig into the states decision to close the prison here, you will see that the data did not really support Pittsburgh being the one site to shut down. Marginally it should have been SCI Waymart. But in the end, the decision came down to close the site in Pittsburgh because it was beleived it had a greater, and unquantified, redevelopment potential. Well, here is that redevelopment potential on steroids. 

So there you go.  Of course, the real killer in all this is just where I started.  If Wisconsin was willing to put up ~$3 billion for Foxconn, you have to believe the incentives for this project will be much higher. Pennsylvania was long listed as a short list contender for the Foxconn project, but you really so no sign of that at the end and that is likely in part that Pennsylvania had no ability to play with those kind of $$$.  So where would it get a bigger fund to pull this off.  That I just do not know. Probably they need to pass a full budget in Harrisburg first. The great irony of this all is that the era of states putting up huge sums of money into ad-hoc tax competition chasing new investment was ushered in by Pennsylvania itself when it 'won' the competition to bring Volkswagen to New Stanton in 1976.  So old is new again, but Pennsylvania no longer has the resources to compete in the game it created. 

Roboburgh Redux

Long time, eh?   Well, something was eventually going to get me to post here again.  This caught my attention and it is way too much to fit into 140 characters.

The latest data from the Quarterly Census of Employment and Wages (QCEW) is out with data for the 4th quarter of 2016.  So a long time ago it may seem, but for detailed industry level data you have to wait and live with the lag. Here is just one quick factoid that deserves further attention. Below is the employment trend for a very specialized industry: Scientific Research and Development Services (NAICS 5417).

(if you do not see the interactive graphic above, please let me know in the comments.)

Notice anything? The latest quarter there has a big jump and has reached a new peak going back at least a couple decades, at least as far as we have been using NAICS industry classifications. The employment gain is +6.8% over the quarter, and +14% over the year; both solid gains in a region where overall employment change has been pretty flat. The recent trend in this specialized industry has been upward, and recent quarters have all been higher than in the past, but the gains appear to not only be continuing, but accelerating with the latest data.

Lots to unpack in that, and most will have to wait for later. But a fundamental issue in Pittsburgh has long been that the competitive advantage local universities demonstrated in attracting research funding has not always found similar success in private sector commercial enterprises. Most employment in advanced technology and research, if it occurred at universities, usually showed up in education or health related industries. This recent jump in NAICS industry 5417 employment should reflect private sector employment outside of the institutions of higher education.

Now I don't believe the private sector research sector in larger today in Pittsburgh than it was at all points in the past.  When the Westinghouse R&D operation was at its peak, with Gulf Labs going strong and a range of other industrial research operations all together gave Pittsburgh a real concentration in research employment. Most of that employment would have shown up in the respective industries that each lab supported, so not necessarily in this specialized industry, or whatever its SIC-classified industry was similar. Still, many of those big research operations have all been gone for decades and Pittsburgh's technology-based economic restructuring is in a new phase.

So yes,  we have robots... or more accurately we design robots. The Wall Street Journal may have jumped the gun when its writers described Pittsburgh as Roboburgh back in 1997, at least when it came to jobs and output outside of the laboratory.  But maybe we have crossed the Rubicon?

Pittsburgh Population redux

So the city population numbers are out. See PG  Census estimates see Pittsburgh's population standing still or Trib: Pittsburgh region's population decline continues

Note the new data is all about municipal level population change, the county and regional population estimates for 2016 came out earlier in the year and had their micro news cycles already. All we just learned was about the pattern of estimated population change at the municipal level.

As follows from the Allegheny County population estimates released earlier this year, the city of Pittsburgh's population is estimated to have continued a decline that goes back to 2013.  What is also interesting is that the city's population decline (-239) is proportionally much smaller than the county's population drop between 2015-2016. There have been years (and decades) when the city made up a disproportionately larger (not smaller) part of the county's population change.

Here's the deal, IMHO. These municipal level estimates really reflect the pattern of building permits issued in the the county. So pretty much this is all saying there have been more residential units planned in the city than the county average.  Building permits lead to housing in the future, which presumably lead to new residents is the logic. Implicit assumption is that they are all occupied and the new units do not displace residents elsewhere. Important to note that the estimates assume a lag in the time from when permits are issued to when population growth happens.  So for the mid-2016 population estimates just released, you need to look at past levels of building permits.

So go back to one of my rarer and rarer recent posts from a year ago suggesting data on building permits is something to take note of: Um, building Permits in the city of Pittsburgh anyone?   Take a look at the graphic showing recent building permits data.

So you can tie up a lot of things with that one time series on building permits.  Everyone who says the city is growing, a conversation I have a lot, always cite as their only evidence the many new big residential projects they see in concentrated in the East End of Pittsburgh.  I always ask how that balances with new construction in Pittsburgh's West End, across the South Hills and Hilltop neighborhoods and across  the northern reaches of the city. Most people extrapolate way way too far from construction concentrated in the East End.

But there is indeed this spike of new units in the East End, and you can see just how unusual that has been for the city in that building permits graphic. That big spike does indeed get factored into the current population estimates we are now seeing for 2016. The result is the city showing far less population decline than the county overall.  I also suspect that the natural population decline in the city is not as true in the city any longer because, as we have gone into here, the city's age demographic became much younger earlier this decade. Take that into account and it is probably true that the city's population is not even declining, but probably about net even.

But, can it continue? If true that the city's population is stable, it took a big spike in building permits in one year to get that result. Can the city sustain that level of building permits every year into the future? That is another topic.

Is the City of Pittsburgh growing? Or not?

So in a week and a half we will get the latest dump of municipal level population estimates for the nation. The primary interest here is likely to be the latest datapoint on population trends for the City of Pittsburgh. Why? There is an ongoing meme that the City of Pittsburgh is growing. But is it?

Undisputed is that the City of Pittsburgh has pretty much been shrinking unabated for over seven decades. Some say the City stopped growing in 1950, but parsers before me figured out that actually the most of the growth the city of Pittsburgh experienced in the 1930s and 1940s was due to municipal annexations. Net that out and decline may go back at least to 1930. Nonetheless, a long time.,

So you can see why some might make a big deal of the first big sign that the City of Pittsburgh might be growing came with the release of population estimates for 2011. You can see the story from that time that pretty much has generated the persistent idea that the City of Pittsburgh is growing. PG: (July 2, 2012) Census data shows unusual rise in (City of) Pittsburgh population.

Basically there was at the time a pretty noticeable net gain of 1,780 residents in the city between 2010 and 2011. That is a nontrivial gain for a city of 300K people, especially a city that has not grown in so long. But did it happen? Even at the time, you can read my quote in the article questioning what was going on in the data. In short, and I've gone into this in more detail in the past, the gain between 2010 and 2011 was an artifact two things.  One was an error in some group quarters data here in Pittsburgh, specifically a dormitory that was assumed to have been missed in the 2010 census, but actually did close. The second issue was a change in methodology the census used just for that year in estimating subcounty (i.e. municipal) population estimates. The impact of that change I explained more here: Newgeography: Misrepresenting Misoverestimated Population.

Still, the data said the city was growing, a factoid repeated to this day. But it turns out the Census gnomes themselves were not so sure. If you look at the revisions to 2011 data in subsequent data releases you see that the population gain mostly went away in data released the very next year. I’ve put this graph up here before, but here are the various releases of population estimates for the City of Pittsburgh.

You will see that ongoing revisions have modified that early population jump. Note it didn’t go away, and that is pretty historic for the city no matter, but the population gain was only a fraction what was initially reported. Not +1,700 or so, but maybe +400. Small gains did continue into 2012 and 2013 but then population began dropping again. In fact, between 2013 and 2015, the city has pretty much dropped in population by more than was gained in the earlier years. Folk tend to overlook the latter observation. We will see what the latest data brings.

Given that we already know the population estimates for Allegheny County in 2016 shows a significant decline from the year before, it is inevitable that the city of Pittsburgh will show a decline as well. The bigger question as to whether one thinks the population estimates are accurately depicting what is true on the ground is a bigger topic. I’ve gone into problems with building permits data – a key input for these population estimates – in the city of Pittsburgh in the past. But really the very common debate I get into of late is from folks who believe all the housing they have seen constructed in Pittsburgh’s East End of late is indicative of city population growth. I always have to remind everyone that Pittsburgh is a city of 90 neighborhoods and the vast bulk of them are still experiencing much of the same fundamental trends that has caused decline for decades. With just a few exceptions, aging and natural population decline is still ongoing if you move away from the areas of the city dominated by student populations. Now on top of that you also see lower income populations moving out of the city as they are drawn to lower cost housing outside of the city. If you really disbelieve that, cross a river or something and you may get the picture. Anyway.. that is all just preparatory for those who are planning on parsing the next round of data, with population estimates for 2016, which will come on May 25.

Conversations with Will

Even if I had completely given up on blogging, this post I would have to write. An understated obituary notes the passing of my friend Will Steger in the Post-Gazette today. If you do not know Will, if you are an Pittsburgh East-Ender you probably recognize his consulting firm if only from its name. At the center of East Liberty (on Highland, just a few buildings away from the corner of Penn and Highland) you would see the CONSAD building.  Basically Will founded CONSAD since he came to Pittsburgh in the 1960s and set up shop doing economic and policy consulting. If nothing else, he had a front row seat to a lot of East Liberty history, but that is just the beginning. 

As a lesson on what never to put off what you want to do, I long wanted to make time to do a more complete oral history project with Will on his life in urban economics and all things related. Alas, I let that slide and now regret it. But I have had the chance for many a long conversation with Will over the years (decades) and am grateful for that.

Really if you dig into it, Will was really at the beginning of all that would later be called urban simulation and modeling.  He was literally one of the earliest employees of the RAND Corporation and became one of the earliest folks to try and apply their skills in security world to urban problems. He told me he had been recruited here by Ben Chinitz, who was at the University of Pittsburgh then, to start work on urban simulation and modeling, and in particular to build a computer model of growth and change in the City of Pittsburgh. In the early years Will said he would share, or borrow, student programmers from the computing laboratory still in its early days at CMU. Really you will see his name routinely referenced in the academic literature on all the early work of folks trying to build computer models for cities and to apply the results to planning and policy. If you think that is normal stuff these days, 1) it still isn’t and 2) at the time was really an immense challenge. Basically he was years or decades ahead of the state of the field.

There was so much more Just in passing he once said he was a tutor for Daniel Ellsberg when they were both graduate students at Harvard.  Ellsberg being a game-theory economist of some note, but later much better known for his role in the leak of what became known as the Pentagon Papers. Will’s early work at RAND almost inevitably included defense and security work and he said he once was part of an interview with Curtis LeMay, famed commander of the Strategic Air Command early in the Cold War. 

I took the opportunity to scan where Will pops in the academic literature and some things I didn’t know.  Are you a transportation or citizen participation wonk?  Here is an article from the 1970s that was probably before its time: “Reflections on citizen involvement in urban transportation planning: Towards a positive approach” Transportation, Vol. 3, No. 2, July 1974. 

But one thing I’ve never been able to track down Will always thought that what later became the entire SimCity franchise of computer games (are they even really just games?) somehow grew out of his early work on urban simulation and computer models. I never was able to find any definitive provenance behind that, but I am sure it is true in some form.  The genesis of SimCity includes references toother urban computer modeling efforts from late in the 1960s, but not the jump to Will’s earlier work. If anyone has any more specific info on how that early history may have translated to what became SimCity, I would love to hear it.

CONSAD grew and he wound up working on a lot of other policy issues over the many many decades.  He would tell me about work with President Johnson on the War on Poverty and with subsequent administrations to include a few more presidents. Later the firm wound up doing more energy work and other topics, but still the field of urban infomatics (a term only coined long after he was practicing it) owes a lot to Will.  And the rest of us just appreciate the conversations. 

Pittsburgh's Long March

When I talk about Pittsburgh's economic history there are a few points that usually spark some pushback to this day. One is a basic observation that there are more jobs in the Pittsburgh region than there were before the collapse of steel-related jobs in the 1980s.  Some folks, probably anyone who has any memory of that period of local history, finds that hard to believe. For them, there were just were too many jobs lost, and its hard to see where all the new jobs came to replace so many of the lost mill jobs. But it really is true.

It is almost inevitable that the follow-on retort I get is that the jobs that 'replaced' the steel jobs were far less well-paying than the jobs that came before. One thing is very clear: for almost all of the workers who lost their mill jobs in the 1980s, very few ever regained the earnings power they lost. But for the region it is a more complex story. Yet it is certainly true that average earnings here are above where there were before the collapse of steel, even if adjusted for inflation. But that is true almost everywhere, the question is how have local earnings and wages compared to elsewhere.

I pulled a time series of "earnings per job" for the Pittsburgh MSA going back to 1969. I then adjusted the data for inflation to reflect 2015 $dollars. For comparison I also included the same data for the United States overall and also the metropolitan part of the United States. Why compare the metropolitan US and not just the US as a whole? Benchmarking is something of an art in regional analysis and what is a fair comparison to "Pittsburgh" is debatable. But there are stark disparities between the metropoltian and non-metropolitan United States, a long topic unto itself, but a fact that has become more widely known since the fall.  So it is usually true for income statistics, and related, that Pittsburgh fares better than the nation as a whole, but part of that is because all metropolitan regions compare favorably to the nation as a whole

The punch line, and the factoid of the month... Prior to the 1980s, Pittsburgh maintained average earnings significantly above the United States.  The collapse of manufacturing jobs did indeed bring down local earnings by the middle of the 1980s. We kind of muddled around the average for a decade, but by the mid 1990s we actually started falling behind the metropolitan United States. Look at the most recent data and you see for 2015 a rapid convergence. The chart makes it look like we have caught back up to the metropolitan United States for the first time in over 20 years. Technically we are still just below the metro US number ($60,318 vs. $60,371), but a difference of less that 0.1%, 

Cycling back to where I started. One other thing jumps out at this graph if you stare at it. While I push back on the idea that earnings are currently below where they were before the 1980s, wages in Pittsburgh were depressed for a long time. From an inflation-adjusted peak in 1978, average earnings in Pittsburgh only reached higher in 2004. So it took a full quarter century to get back to where we once were, long enough for a lot of memories to get set. And to be very sober about it, until just recently, average earnings have not really gained much above where we were in 1978, at least until very recently... and we will have to see if that holds up in 2016 data. Probably will be some pullback as those shale bonuses shrink.  

The footnotes:
-Average earnings per job from: Bureau of Economic Analysis, Regional Economic Information System, Table CA-30 Economic Profile
-Inflation index from: Bureau of Labor Statistics, CPI All Urban Consumers (1982-1984 = 100) - Series CUUR0000SA0

Death and Rise of the Creative Class

Thanks to various folks who have mentioned the blog here to me in recent months, suggesting it has been, at least marginally, value added in the past.  There is no single reason it has been quiescent here of late, and I'm not quite sure people read blogs any longer, do they?

Alas, I'll post this here for future reference.  Many will have seen this already, but in Sunday's Post-Gazette I had a review of Richard Florida's newest book in the boundless Creative Class series. You can read the review itself in the Post-Gazette here: 'The New Urban Crisis': Richard Florida updates his influential thesis

But for a historical footnote, I really meant it when I said that much of the the Creative Class concept was 'gestated' in Pittsburgh.  If anyone wants to read what may be the genesis of it all see this local report: Competing in the Age of Talent: Environment, Amenities and the New Economy, by Richard Florida, January 2000. You can almost feel that 'eureka' moment that set the path for all that followed.

What I think many younger readers may not appreciate is the economic context when that was written. Most of the 1990s were part of an extended economic boom that had generated jobs and pushed down unemployment across the nation. In broad measure, economic conditions in Pittsburgh were doing ok, but was not keeping up with the regions that were really booming over that time. The nation had sustained so much growth that finding workers was a major problem for many firms. For anyone whose career experiences have been more shaped by the impact of the Great Recession and since, that all may seem like another planet. Still, it's hard not to read back on Richard Florida's earlier work without taking into account the economic history that spawned it.

Unabated to the mall: The Rise and Fall of the Pittsburgh Mills Mall

It turns out that one of the first posts here was about the recently opened Pittsburgh Mills Mall in Frazer Township.  At the time local biz/politics guru journalist Jon Delano had a piece on how “Pittsburgh Mills future could be in doubt.”  Last week the mall was again in the news with plenty of national coverage of the fact that much of the mall was foreclosed on and as a result was ‘sold’ for all of  $100.  All a formality of course as equity owners of the site transferred ownership to the lien holders who lent money to the project. Yes, the project is worth more than $100 most likely, but apparently less than whatever $$ is still owed on the loans. Thus the lenders submitted a de minimus bid to complete the transfer of ownership. Somebody lost a lot of money on the project to date.

 

But a full accounting of the project is not limited to that.  There was a lot of public money that went into facilitating the project as well. Little mentioned in much of the media coverage, but at the time it was developed, the county's $58 million dollar TIF (or Tax increment financing package) that went along with the project was the biggest TIF in Allegheny County’s history.I am pretty sure no public entity retained a stake in the project, and much of what was spent will not be coming back, but I note I know of know formal accounting quantifying that.

The national coverage of the mall's 'sale' seems to imply that the developments are the result of greater travails in the nation’s retail industry.  I wonder.  The mall is one of the newer malls across the nation having only opened in 2005.  A model of patience and tenacity if nothing else, the mall had been in planning for  more than a quarter century before finally opening. 

Local developer Damian Zamias conceived the future Pittsburgh Mills project in the late 1970s.  That’s right, the late 1970s.  By 1997, local opposition to the project, lead by retail businesses near the new project, had been ongoing for 16 years. Some called the situation a veritable 'civil war' in Frazer Township and environs.  Still the project proceeded.  In 1989, Zamias and company threatened topull back from the project if Allegheny County did not continue support for a TIF to go along with the project.  There seems to be have been no risk that would actually happen, and the prevailing wisdom was that the mall was ‘needed’ here. Zamias kept plugging away even though the drain of the project was a major reason his development company went bankrupt in 2001.  You think that might have killed the project?  Of course not.  We all know now bankruptcy is merely a tool of the big developers and the very next year (2002) he raised new capital by bringing in some new partners.

Why was the project ‘needed?’  Apparently back in the 1970s Pennsylvania, and many would say the same thing about Pittsburgh, was considered under-retailed, if you believe that. The metric seems to be based on the number of big regional malls per capita, or so I infer.  

And so, in 2005, after over a quarter century in the works, the mall finally opened to great fanfare. More than a few things had changed in the county from the time the mall was conceived and when it opened.  There was this little tempest in the steel industry that impacted local jobs. The under-retailed Allegheny County over that period saw its population decline by ~370K people, and the opening of entirely new retail developments at projects including The Waterfront, South Side Works, Robinson Town Center (1998), Galleria in Mount Lebanon, the Mall at Robinson (2001), and expansions over that period at Ross Park Mall, the Waterworks, Settlers Ridge, and I am sure many more.

As the project development continued on, more than a few other mall developments in Allegheny county failed.  In 1979 Allegheny Center Mall was… well, an actual mall, as was Parkway Center Mall (sort of a mall?), and there was the long forgotten Eastland Mall (now returned to fallow in North Versailles).  So the market was taking down the major retail developments, Pittsburgh Mills proceeded unabated. The project proceeded pretty much under its own inertia because nobody was willing to question the underlying premise that public money was needed to push Pittsburgh Mills forward.  

The mall also is very different from many of those projects completed in the region since the 1980s. This was no redevelopment of a former factory 'brownfield.'  Again, the project was planned before that was really an issue here. The project was almost entirely built on formerly pristine "greenfield" described as late as: 

Frazer is home to 1,300 people, many of them elderly. The land is rural, and the trees huddle together in bunches, like broccoli clumps.

So you can't say the project in any way is part of the post-industrial transformation that Pittsburgh is proud of.

Worth noting, the news is the mall was 'sold' to its lenders, but the mall is not closed.  Far from it in fact and is still anchored by a few big retail outlets including Macy's.  Macy's Pittsburgh Mills location does not even appear to be on the recently announced list of locations Macy's is closing.  Just a few weeks ago the Pennsylvania Liquor Control Board announced a new location to open at the mall. Whomever winds up owning and operating the site in the future, the vastly lower debt burden that will have been written off will make for a more viable business going forward. 

There is a big point here that gets to economic growth across southwestern Pennsylvania and the region's future.  Long a region suffering from the loss of manufacturing jobs, most any new development was seen as worth doing no matter.  Questioning whether any project made sense was virtually impossible, and any possible opportunity cost left unaccounted for. Was the public effort put into building the Pittsburgh Mills Mall the best use of the money, let alone the public money, and effort involved?  Was there any alternative that could have had a better chance to catalyze long term economic growth? I propose no answer to that here, but do speculate the question was never asked. The project was projected to produce over 6,100 jobs, by one public document I have seen.  I don’t know the current job count out there these days, but it’s not 6,100 permanent jobs. Even the jobs that were 'created' there have to be just retail jobs that were likely displaced from somewhere else in the region.  Retail is retail and not ever really considered value creation in the long run. 

Pigskin Mythos

Maybe this blog will live on with only meta commentary looking back on past thoughts. But on this day the Pittsburgh Steelers began an era. Defeating the Minnesota Vikings (16-6) on January 12, 1975, the victory was the first of 4 Steelers Superbowls over just 6 years.

There continues to be this persistent mythos that the Steelers fans during those first Superbowl years were largely made up of vast number of unemployed workers who were cheering the team on as their jobs were being eliminated en masse. It remains to me an odd memory that only lacks in any economic data to support it.  So strong is this whole idea that whole books (by respectable authors)have been written on the topic. I have written about this here many times (for example in 2010: The Economics of Cliff Stoudt), but have had this conversation with innumerable folks who all, almost universally, disagree with me. Often quite vehemently.

Let’s start with this factoid.  Here is a short table of the unemployment rates in Pittsburgh and the United States during the months of each of Pittsburgh’s Superbowl victories.

Superbowl – Pittsburgh Unemployment Rate – US Unemployment rate

Superbowl IX (January 1975)      6.4%      8.1%

Superbowl X (January 1976)      6.7%      7.9%

Superbowl XIII (January 1979)      5.8%     5.9%

Superbowl XIV (January 1980)      6.8%      6.3%

So during 3 of those 4 games, the local unemployment rate was well below the national rate, and in two cases far below the national average.  If you want to take the last game as an exception, here is something to think about.  Pittsburgh MSA employment reached 1,099,600 jobs in February 1980, or just a few days after the Superbowl was played.  That was actually an all-time high in the region’s employment count.  By that I mean an all-time high going back as far as there is consistent metropolitan data reported in 1946. 

Not convinced or think, as some have tried to argue with me, manufacturing employment was collapsing at the time even if overall labor force stats were more positive?  I once posted here the manufacturing employment levels across the 10 counties of southwesternPennsylvania during the 1970s. In 1974 (when those games leading up to Superbowl IX were played), SWPA averaged almost 316 thousand manufacturing jobs, an increase over the most recent years and likely a peak going back over a long time before then.  In 1979 the same region still averaged over 300 thousand manufacturing jobs, about the number the region had at the end of the 1950s if not higher. There had been no big plunge of factory jobs here (yet). 

Still, there are few things I’ve been less able to convince people of than this.  Numbers don’t matter and I’ve had very thoughtful people just say it does not add up to them. What they remember is something very different and contradictory. It's not a question of memory persisting, its a memory that only came later. This may all mean something to recent political news as well, but I will leave that to other pseudo-pundits. 

So why the disconnect? I think the 1970s were a traumatic economic time with multiple oil embargoes making gas prices jump, high inflation and the dreaded ‘stagflation’ or inflation without growth.  Certainly those things impacted everyone in Pittsburgh, but they impacted all Americans.  Did manufacturing have slow times during the two national recessions of the 1970s? Yes, but even that has to be taken into context.  Manufacturing employment had always been highly cyclical and fluctuated with the national economy.  When national unemployment rates went up, unemployment in manufacturing industries, and manufacturing regions, went up even higher. Pittsburgh experienced multiple periods of double digit unemployment rates many times during the 1950s and 1960s, yet never even came close to a a double digit rate during the 1970s. Even in the two national recessions of the 1970s, US Steel - then still the region's largest employer - did not fare badly during the decade (again, strongly against popular belief).  Don't take that from me, here is a contemporary quote from then US Steel Chairman in 1975 saying the recession the nation was then in the middle of was "Steel's best recession ever."   

But history has many ironies.  In the very month the very last of those superbowls, Superbowl XIV in January 1980, the NBER later recorded that month as the beginning of a new recession.  Though it was a short recession, ending officially after just 7 months, there was only a brief respite before another recession started in 1981.  Some consider the two just part of one big economic downturn, but one which see the palpable collapse of so many local steel jobs.  But another Superbowl victory did not come for decades. 

Anyways…  playoff time is a funny time in pundit land.  The merging of sports and general opining can get kind of funny this time of year.   Who remembers our friend Bill Johnson from Denver who parachuted in to write a story criticizing Pittsburgh aesthetics during the championship game in 2006.  I am sure we have a few alien reporters among us from Kansas City right now.  

 

Population past - population future: migration and Pittsburgh

Reading the PG piece parsing some migration data from American Community Survey: Philadelphia to Pittsburgh, a moving trend.  The punch line: the data shows a net gain of population due to migration from Philadelphia to Pittsburgh (metropolitan areas, respectively)

I figure I should update my graphic tracking the relative difference between the unemployment rates in Pittsburgh and the United States.  Why do I care?   Mostly because when it comes to economic migration within the United States, this is a pretty solid predictor of net migration rates across metro areas, or at the very least it has been for Pittsburgh.  '

The PG piece used some data the Census gnomes have put out looking at migration between metropolitan areas over the period 2010-2014. That happens to be at the end of a unprecedented period when Pittsburgh maintained a streak of monthly unemployment rates below the national average.  Basically for 99 continuous months, the local unemployment rate was below the national average. For 109 months the local unemployment rate did not exceed the national average (there were a few moths in there where the two rates were the same.)   Few really noticed, but I do not there was any comparable period that was true for a longer period of time since metropolitan region unemployment metrics were regularly reported in the late 1940s.  Think about that. 

Unsurprisingly for most of those years the Pittsburgh MSA showed positive net in-migration, also an unprecedented demographic trend to be sustained for Pittsburgh since the 1940s. 

Alas, it probably isn't true right now.  See the  trend really was broken in February 2014, and since then the local unemployment rate has been above the national average.  That isn't the end of the world, but what is problematic is how far above the national average Pittsburgh's unemployment rate has been.  For both October and November, Pittsburgh unemployment rate has been 1.2 percentage points above the national average. That also is unprecedented in that you have to go back to the mid 1980s (not a good period for Pittsburgh) when the local rate was so far above the national rate.  As long as you have that type of differential, you will have folks finding better opportunities elsewhere and you will see working age population migration follow.

The future??   Pittsburgh's unemployment rate dropped 0.3 percentage points between October and November.  That, by the way, was the biggest month over month drop in 16 years one of the biggest month over month drops in decades. So a good sign for the local economy and a sign the local job market is tightening.  But the national unemployment rate dropped by the same 0.3 percentage points at the same time.  As long as you see such tight labor markets across the nation, and so much tighter than here, you just can't expect there to be net migration flows like what we saw over those 109 months where Pittsburgh fared at least we well as the nation.  Pittsburgh may do better than it has in the past, but there are just too many places with too many opportunities to expect Pittsburgh to pull folks given the relatively higher unemployment rate here. 

For now and for the next couple years at least - remembering most data like the Philadelphia migration story today, are pretty much backward-looking due to the latency of data coming out - the story will be of population loss due to net out-migration and continuing natural population decline (deaths exceeding births) endemic to Pittsburgh since the 1990s.  Lots of other local stories follow from all of this... Allegheny County population trends... city of Pittsburgh population trends and all sorts of real estate trends.  So....   watch this space?  Maybe,    

 

Uninsurance trends across Pennsylvania

I saw this data journalism story out of Michigan, Mlive.com: See how uninsured numbers have dropped in your Michigan county, and didn’t quickly see anything like that for Pennsylvania. So just if you are interested here are the comparable numbers for Pennsylvania counties. As noted for Michigan as well, this data (American Community Survey 1-year estimates) only reports annual data for larger counties. I will leave for others to punditfy.

Percentage of Population with no health insurance coverage
Large Pennsylvania Counties, 2010 and 2015
PA County	2010	2015	Change
Adams	9.5%	5.3%	-4.2
Allegheny	8.0%	4.8%	-3.2
Armstrong	8.5%	5.9%	-2.6
Beaver	7.4%	3.6%	-3.8
Berks	9.8%	6.9%	-2.9
Blair	10.8%	4.3%	-6.5
Bucks	6.7%	4.8%	-1.9
Butler	7.6%	3.2%	-4.4
Cambria	9.1%	5.0%	-4.1
Carbon	14.5%	4.8%	-9.7
Centre	8.6%	5.7%	-2.9
Chester	8.6%	5.2%	-3.4
Clearfield	11.1%	5.3%	-5.8
Columbia	8.2%	3.7%	-4.5
Crawford	14.3%	9.8%	-4.5
Cumberland	7.1%	6.1%	-1.0
Dauphin	10.3%	5.5%	-4.8
Delaware	9.2%	5.2%	-4.0
Erie	9.6%	4.9%	-4.7
Fayette	12.5%	5.3%	-7.2
Franklin	12.7%	9.9%	-2.8
Indiana	11.6%	8.5%	-3.1
Lackawanna	10.4%	5.7%	-4.7
Lancaster	13.3%	11.4%	-1.9
Lawrence	11.0%	5.2%	-5.8
Lebanon	10.3%	9.5%	-0.8
Lehigh	10.7%	7.0%	-3.7
Luzerne	11.0%	6.0%	-5.0
Lycoming	10.9%	5.0%	-5.9
Mercer	11.3%	6.6%	-4.7
Monroe	11.6%	7.3%	-4.3
Montgomery	6.5%	4.3%	-2.2
Northampton	9.3%	4.9%	-4.4
Northumberland	11.5%	5.4%	-6.1
Philadelphia	14.9%	9.7%	-5.2
Schuylkill	9.4%	7.8%	-1.6
Somerset	12.8%	8.1%	-4.7
Washington	8.6%	4.1%	-4.5
Westmoreland	7.9%	4.2%	-3.7
York	9.1%	6.1%	-3.0
Compiled from:
Census Bureau - American Community Survey (ACS)
1-year estimates data