Job Growth Is a Poor Measure of Economic Health

In a global era of demographic decline, the quality of employment trumps the number of jobs.
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In a global era of demographic decline, the quality of employment trumps the number of jobs.
Pittsburgh's skyline. (Photo: ANG SHERPA/Flickr)

Pittsburgh's skyline. (Photo: ANG SHERPA/Flickr)

About a month ago, I took issue with the focus on Pittsburgh's anemic job growth as a negative economic indicator. An analyst tried to reconcile robust in-migration to the region with disappointing employment numbers: "Pittsburgh is a very attractive cost-of-living center.... The facilities, the education, medical, all of the core social aspects are present in Pittsburgh whether we're creating jobs at a rapid pace." Translation: Beyond the basic economic rationale, people move for amenities. But between regions, people do not move for amenities; people move to make more money. As research shows, people move to Pittsburgh for jobs (not amenities):

Jobs were the big reason people moved to Pittsburgh, according to a new survey conducted by Highland Park-based Moderna Relocations, and connecting to people was the biggest adjustment challenge for newcomers.

What's more, Pittsburgh's highly touted "livability" quotient only attracted 7 percent of 120 respondents surveyed. It was the least popular reason.

Livable Pittsburgh, an amenity attraction, only explains seven percent of the migration. Sixty-four percent moved for jobs. Since 75 percent of those surveyed were expatriates, I'd guess the rest moved for friends and family reasons (i.e. taking care of elderly or ailing relatives). Superficially, neither job growth nor amenities explains the uptick for in-migration to Pittsburgh.

So the theory goes, robust job growth outstrips the local supply of labor. Workers from places of weak job growth move in and fill the gap. The newcomers further prime the regional economic pump with increased demand for "non-tradable" products, fueling a boom in industry sectors such as construction. When such economic models fail to map a migration, amenities step in as the main attraction.

When trying to figure out the why of migration, exhaust the economic rationale before turning to alternative explanations. In the latest Pittsburgh Economic Quarterly (from the University Center for Social and Urban Research at the University of Pittsburgh), regional economist Christopher Briem disaggregates the jobs data to reveal the "Impact of Migration on the Pittsburgh Workforce":

Population migration plays a major role in regional growth and change across Southwestern Pennsylvania. Even if the rate of net migration is low, larger flows of both in-migration and out-migration continue each year. Population migration has a focused impact on the regional workforce. A significant part of migration within the United States is considered economic migration, driven in large part by workers and their families relocating for employment-related reasons.

Migration rates vary significantly for different parts of the population. In particular, migration rates are much higher for the younger working-age population than for older working-age cohorts. Migration also varies significantly across industries and occupations based on differential rates of employment growth and other factors.

What kind of Pittsburgh jobs are most likely to attract talent from other regions? Certain industries may outstrip local supply and look elsewhere for employees. The slack in the labor force, as indicated by the lousy job growth numbers, is not qualified to fill those open positions. Migration ensues.