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

2 Comments:

Anonymous MH said...

Does it say when wages for SAS programmers will catch up? Asking for a friend.

Tuesday, April 18, 2017 2:23:00 PM  
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Friday, April 21, 2017 9:31:00 PM  

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