Monday, April 24, 2017

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. 

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Monday, April 17, 2017

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

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Tuesday, April 11, 2017

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.

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Sunday, January 22, 2017

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. 

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Thursday, January 12, 2017

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.  


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Monday, January 02, 2017

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,    


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Monday, December 12, 2016

Uninsurance trends across Pennsylvania

I saw this data journalism story out of Michigan, 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

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Friday, December 02, 2016

unemployment trends (how is that for a boring title)

This is the first Friday of the month and all economic data geeks know that monthly labor force data was released by the Bureau of Labor Statistics.  This includes the headline unemployment rate number that most of the business news keys off of.  So today the national unemployment rate dropped to 4.6% which is the lowest it has been since in 2007.

Something I’ve always wanted to do, and I am sure others have done this – though I can’t find quite the same graphic out there.  How has the national unemployment changed over the course of recent presidential administrations.  Since 1948 there have been 12 presidents. Truman was of course already in office in 1948, and Obama’s term is not quite over.  Of those 12, if you look at literally the month they took office (usually January data of the respective year) to the January they left office (or other months were history intervened) I have graphed the trends.  6 presidents saw the unemployment rate decrease over the course of their administration. 5 presidents say the unemployment rate increase.  6 + 5 = 11 so the 12th.   President Carter’s administration both began and ended at 7.5% unemployment, so no change. 

Here is what I get, and I've split gainers and decliners into two graphs for presentation:

Caveats as always.  I've included the inauguration, or other form of transition, month in both the beginning or ending of each time series.  The bigger question is whether it is fair to attribute - implicit in this type of graphic - unemployment rate changes to a particular president in the first few months of their administration.  They say the American economy is more cruise ship than speed boat, which means it take a long time to turn.  Probably fairer to redo these graphs based on a 6 month lag to the month of taking office.  Maybe for another day.

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