Wednesday, January 16, 2008

Rust Belt Divergence

All the news about Michigan over the last week had all the obligatory talk about how to 'save' the Michigan economy which most know is not doing well. It was hard not to hear echoes of all the debates that have gone on here for decades. On that note it is interesting to look at the recent trends in Detroit and Pittsburgh. Looking at just the last 5 years, the unemployment rate in Detroit, Pittsburgh and Cleveland (thrown in for good measure) were once fairly close to each other...

But if you play it out to today, the most interesting thing is not that Pittsburgh is doing better than the other two, but that the difference between the three is so large and how consistently the divergence has been. Where once the three regions showed nearly identical unemployment rates, Detroit's unemployment rate is nearly double Pittsburgh's. So again, just something to watch.


Blogger EdHeath said...

Just speculating, but could the lower unemployment rate have something to do with our higher than average retiree population? It's not like we have a lot of new economic activity around here.

Thursday, January 17, 2008 7:07:00 AM  
Anonymous Anonymous said...

Cleveland and Detroit have poor demographic trends as well.

Pittsburgh shed much more of its manufacturing base in the 80s and is less susceptible to major manufacturing losses today. Pittsburgh MSA has had small employment gains in the past few years after the post 9/11 recession, while Detroit and Cleveland have suffered major losses. About 8.5% of Pittsburgh MSA's workforce is in manufacturing. That figure is 13.4% for Cleveland MSA (don't have Detroit's number on hand.. but it's probably similar to Cleveland). Steel was the big loser in the 80s... today, the auto industry is the failing sector. Detroit is the hub of auto manufacturing... and auto manufacturing has a heavy presence in Cleveland. Auto is quite minimal here other than some ancillary industries.

Thursday, January 17, 2008 8:35:00 AM  
Anonymous Anonymous said...

Thank you, Anon.

I've been saying for a long time that the difference is the (domestic) auto industry in Ohio and Michigan. The domestics are finally doing what they (and Allegheny County and Pittsbrugh City Govenment) should have done 30 years ago: right-sizing to meet demand rather than hoping beyond hope that market share would return. Trucks bolstered the domestics in the 90s and early 00s, but higher gas prices and the end of the housing boom have seriously hurt truck sales.

I'm not sure that many people understand how many auto jobs are evaporating--some 120,000 at the Big Three alone. That's Mon Valley mill employment circa 1975, folks.

Friday, January 18, 2008 9:39:00 AM  
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