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Allegheny Institute


Pittsburgh Job Counts Revised

by Policy Brief
 

For the second year in a row the Department of Labor
and Industry has made downward benchmark revisions to the
establishment payroll employment data for the Pittsburgh region,
altering the jobs picture as portrayed in the numbers originally
released the prior year.

In March of 2014, the revisions erased virtually all of the strong
employment net gains initially reported for 2013. Recently, the
Department released revised numbers for 2014. While 2014's
originally released numbers showed employer payrolls to be growing at
a less than robust pace, the revisions produced gains that were even
more anemic than the initial reports depicted. For example before the
revisions, the monthly average of nonfarm (including government)
payrolls in 2014 increased by just over 6,100 compared to the 2013
average. After the revisions that number fell to just over 3,600
jobs, a growth rate of less than three tenths of a percent. A
similar change happened with private employment as the rise in the
monthly average was lowered from 7,760 to just fewer than 5,000 with
the benchmark adjustments.

Going back even further, we can see that job growth in the Pittsburgh
MSA has cooled considerably since the rebound following the end of
the recession that began in late 2008. From the pre-recession peak in
May 2008 to the low point in February 2010, seasonally adjusted
nonfarm jobs fell by 42,500. As the economy rebounded from early 2010
to March 2012, nonfarm jobs recovered the losses incurred during the
downturn and tacked on 12,000 beyond the May 2008 peak. However,
since March 2012 growth has virtually stopped with the March 2015 job
count at almost the same level it was in March 2012. In short,
nonfarm employment recovered rather quickly after the recession, but
has sputtered along since 2012.

A similar pattern emerges for private jobs. Employment dropped by
41,000 from February 2008 to February 2010. Growth then resumed and
accelerated throughout the year and into 2011 finally returning
private jobs to the level from the same month in 2008 with the
September 2011 reading. Job gains continued at a strong pace through
the summer hitting new record levels in 2012 and then slowed sharply
throughout with virtually no growth for the year. The pace picked up
again in the second quarter of 2014 but remained much weaker than the
heady expansion months of 2011 and 2012--a pattern that has persisted
into 2015 thus far. Bear in mind that, as noted above, the private
job counts were lowered by an average of over 2,500 for each month of
2014, this on top of very large downward revisions in the 2013
numbers.

How did the individual sectors fare in the revisions? For the goods
producing sector overall the average annual employment count was
adjusted upward by about 2,400 jobs. There are three goods producing
industries--construction, manufacturing, and mining and logging. The
construction sector was virtually untouched by the adjustments,
while, promisingly, manufacturing picked up nearly 1,800 of those
jobs with mining and logging realizing the rest.

However, the private service providing sector did not fare as well as
the average annual number of jobs was revised downward in the
aggregate by nearly 5,000 employees. Most of the subsectors such as
trade, transportation, and utilities, information, professional and
business services, and education and health services were virtually
unchanged. The financial services sector was revised downward by
about 700 employees. The biggest change occurred with the leisure
and hospitality sector which is explored in more detail below.

During the recessionary period from mid-2008 to early 2010 the drop
in the average annual job total for the leisure and hospitality
sector was very slight--fewer than 300 jobs. In the first two years
of recovery jobs grew 3.7 percent (3,950) before slowing a bit from
2012 to 2014 (2.6 percent or 2,950 jobs). But what made this sector
noteworthy are the enormous revisions to the 2014 employee count.
Based on the original data, the monthly average for jobs for 2014 was
listed at 119,933. But when the figures were released in the spring
of 2015, that number was adjusted downward by 5,300 jobs to 114,633.

At the MSA level, only the accommodation and food services subsector
is large enough to be estimated. Accommodation and foods services had
its 2014 average monthly job count revised downward by about 1,270
jobs. However, the remaining subsector, identified by the BLS as
arts, entertainment, and recreation but not tracked for the
Pittsburgh MSA, had its jobs count lowered by the remaining 4,000
plus jobs. While this subsector accounts for only a tiny fraction of
total employment, during 2014 it was responsible for a large share of
private job growth. After revisions, those unexplainably large gains
were a mirage. Something we have repeatedly suggested was likely to
happen.

The revisions to the last two years' jobs number show just how
volatile and unreliable labor data can be. As was just demonstrated,
on first reading, the 2014 Pittsburgh MSA economy appeared to be
sluggish compared to 2013. Then revisions pushed the economy from
looking sluggish to being anemic when the one sector with strong
employment gains during the year, leisure and hospitality, saw those
gains wiped away.

All of this underscores a key point. The Pittsburgh economy has been
languishing under the weight of heavy taxation and a restrictive
regulatory and labor environment. Until the area and state adopt
more business friendly, pro-free market growth policies, we can
expect more of the same for years to come.

Jake Haulk, Ph.D., President
Frank Gamrat, Ph.D., Sr. Research Associate

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to the Allegheny Institute.The Allegheny Institute is a 501(c)(3)
non-profit organization and all contributions are tax
deductible.Please mail your contribution to:

The Allegheny Institute
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Suite 208
Pittsburgh, PA15234


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