Friday, August 05, 2011

hold em like they do in Texas plays

Remember when the Trib reported that the  Marcellus Shale Coalition threatened to boycott business within the city limits of Pittsburgh if they pushed ahead with legislation unsupportive of drilling within the city?  Seems to me that since then City Council has pushed ahead much further than they were planning to back then with the proposed ammendment to the city charter on all of this.  The boycott must be on don't you think? I mean, if they wanted to boycott the city before, they must really want to now?

Boycott is such a harsh word; makes me think of the Cuban Missile Crisis.  To be fair the article says "industry officials said they could take their non-drilling business elsewhere", so it is all hypothetical though still very threat-like.

At least to date, there does not seem to be much impact from a story today in the PG on local commerical real estate demand.   While it gets into some suburban developments, the article focuses on the rapidly tightening Downtown real estate market.  The irony is that I suspect many of the new property assessments for commercial property Downtown will actually be decreasing no matter.  More  some other time on the impact that is likely to have for residential property taxes.

But despite a lot of popular belief to the contrary, the ability of the City of Pittsburgh to attract and retain jobs has almost never been problematic.  If you ever hear someone talk about folks taking business out of the city because of (fill in the blank: taxes, politicians, crime, traffic, ???, oh and don't forget the potential of regulations on gas drilling that does not exist), you should call them on it.  They may have an anectdotal example for sure, but for every job 'fleeing' the city for some suburban location, some job is being created elsewhere in the city.  

I've said this before, but time series of jobs located in the City proper are about as stable as any economic metric in the region, or in any other Northeastern US urban core, over many decades.  In 1958, the late Edgar Hoover and his team studying the Pittsburgh economy counted 294,000 jobs located in the city proper and 107,000 in the Golden Triangle specifically.  1958!  So well before the collapse of heavy industry in town.  Those numbers are virtually identical today which tells me there is a certain limit to how many jobs can efficiently be located in what are some relatively (very) constrained areas.  So those jobs 'forced' out of the city are if anything, being forced out by the jobs that want to be located here, or are fairly immediately replaced.  Not exactly a bad situation to have and one that has persisted through some very good and very bad economic times for the region.

More recently, and with some more specific data here are the trends in jobs located in the city of Pittsburgh this is what you get:

So there is not more recent data for that, but if you believe the story today the recent trends are as positive as they have been in decades so there is no reason to think the fundamental picture has changed.

If you think the city is retaining lower paying jobs while the 'better' jobs are the ones fleeing to the suburbs you would be wrong again.  From the same data as that chart, the average annual income for jobs located in the city proper compared to the remainder of the MSA:

Average Annual Pay
Pgh (City)Rest of MSARatio

It seems that the pay premium for jobs located in the city of Pittsburgh proper is well ahead of where it was 20 years ago.  Go figure.  Looking at the ratio should get you past any inflation factors which you would think would apply equally to city and suburb within a region. Again, I would just speculate that more recent data is only expanding the divergence of pay at city-proper and suburan jobs within the region.  

So I dunno...  since I don't see any retraction of the MSC's threat against the city, one might presume they have pushed ahead with their intent to disuade members from business in the city.  Maybe the annual Furrie (Furry) convention makes up for the lost business.


Blogger Jim Russell said...

I'd like to see the same data for Cleveland and compare it to Pittsburgh. Are such numbers readily available?

Friday, August 05, 2011 11:18:00 AM  
Blogger C. Briem said...

Start with the special extracts from County Business Patterns:

Friday, August 05, 2011 12:36:00 PM  
Blogger Jim Russell said...

Very cool. Thanks.

Friday, August 05, 2011 12:38:00 PM  
Anonymous The Wiz said...

Other than withdrawing from using the Convention Center, there is little the MSC or the gas industry could have done. Where else could the industry hold the major events they have scheduled? Harrisburg? Philly? Too far away and they have been even less hospitable than Pittsburgh. Nemacolin doesn't have the same capacity.

EQT isn't about to relocate. And ancillary businesses such as environmental engineering firms, law firms, and financial institutions that do a lot of business with the industry and/or newly wealthy landowners have pretty strong roots.

It just ain't worth the fight. The gas play is huge, it will take a hundred years to develop all the gas fields so why have a big fight with the city over such a small % of the land area?

BTW did you hear that Chesapeake announced that they hit a major oil play the Utica Shale in east Ohio and extreme western Pa? Cramer of CNBC says it could be the biggest oil find in the US in 43 years. If it pans out, it will be much bigger than the Marcellus gas has been.

Friday, August 05, 2011 10:13:00 PM  

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