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Pittsburgh's Hidden Economic Boom

Just because job growth numbers appear weak at first glance doesn't mean there's not something much more interesting going on beneath the surface.
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(Photo: Brian Donovan/Flickr)

(Photo: Brian Donovan/Flickr)

Population change is a poor measure of economic health. A region, such as Pittsburgh, can become wealthier while struggling with demographic decline. Dwindling residential numbers don't indicate a city is dying. A good recent example of such dynamics is the supposed exodus from California. Breaking down the dismal data:

Those moving to California tend to have higher incomes. About 35% of working-age people moving in make more than $50,000 annually, compared with 27% of those moving out.

The disparity gets progressively pronounced at the lower end of the income scale.

For those making $40,000 to $49,999, for instance, the net loss of population is 15,403 residents since 2007. The loss is 22,754 residents in the $30,000 to $39,999 range, then more than doubles to 46,318 residents in the $20,000 to $29,999 range.

As one should expect, the same trend shows up in the educational attainment level of migrants. California imports the wealthy and well educated. It exports poorer and less educated households. Please don't take the numbers at face value. Lower-income households tend to have more dependents (i.e. children). A home of six may be the typical out-migrant with a home of one or two moving into the state. I'm unclear whether or not the analysis accounts for that. However, I'm fairly certain that domestic migration is making California's workforce smarter. Net out-migration is economic development.

In Pittsburgh, a similar story is taking shape. Struggling to make sense of in-migration:

People move for reasons besides employment. Pittsburgh's net gain may point more to quality-of-life advantages than economic opportunity because the city's job growth has not been that much better than the state's over the past year, said Kurt Rankin, an economist at PNC Financial Services Group.

Pittsburgh's job growth numbers are anemic, well below the national average. Apropos that both above articles focus on housing costs as driving migration (albeit in different directions). Might Pittsburgh be destroying jobs that require less education while creating jobs that demand a college degree? The metro "logged the largest percentage point increase since 2000 in the proportion of its population that is college-educated" among 51 MSAs with one million or more people. That dramatic brain gain couldn't occur without strong job growth. Nationally, the well educated aren't chasing cheap housing. See California.

Hidden beneath Pittsburgh's lousy job growth numbers is a boom related to regional economic restructuring. It sheds manufacturing jobs, replacing them with eds and meds. The net gain won't impress anyone unless economists disaggregate the data.