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Allegheny Institute

City of Pittsburgh Labor Stats

by Policy Brief

Synopsis: The last 25 years have been largely a period of stagnation or slight decline for the City of Pittsburgh's labor force, residents working and the number of jobs in the City. To be sure there have been very large demographic changes including population loss and massive shifts in the age distribution of Pittsburgh's population associated with this trend.

Some background to preface the labor market findings.

Recently, the Allegheny Institute released the fourth in a series of reports comparing the City of Pittsburgh to a composite Benchmark City derived from statistics from four similarly situated regional hub cities. The series was created in 2004 to help track the City's progress under its Act 47 financially distressed status and the period of oversight from the specially created Intergovernmental Cooperation Authority.

While the City has made considerable progress in reducing its enormous debt burden and has made some halting progress toward getting pension plans to a funding level that avoided a state takeover, the City has made virtually no progress in actually reining in the size of its government. On a per capita basis, in 2015, Pittsburgh taxes remained 60 percent higher than the Benchmark City and overall revenue has risen from a gap of 33 percent to 41 percent. At the same time City government spending–excluding debt service and capital outlays–has climbed from 30 percent higher than the Benchmark in 2004 to 57 percent in 2015. Indeed, this measure is so bad compared to cities nationally that it caused a recent ranking of city management to place Pittsburgh 103rd out of 150 cities. Despite an erroneously and mysteriously high ranking on education and good marks for health and recreation, the City's six factor ranking of 50th was lowered to 103rd because of its 144th ranking in spending per capita.

In short, the City has not even begun to address its excessive taxes and spending problem.

Finally, note that despite the years of oversight, Pittsburgh's employee count per 1000 residents has not fallen appreciably and compared to the Benchmark City has actually moved up from 32 percent higher in 2004 to 43 percent higher in 2015.

All this background is by way of prelude to examining work force and job trends in Pittsburgh. No one should be surprised that a City with extraordinary spending and tax levels, along with a failing school district, would have trouble growing population or jobs. As a recent Policy Brief pointed out that although the precipitous decline in Pittsburgh's population from the peak in 1950 has ended, the last 15 years have seen a further 10 percent drop.

Workforce in the City: Let's begin by looking at the so called household survey statistics. This survey provides information on the number of residents of working age in specific areas or government jurisdictions who report themselves as employed or not and, if not working, whether or not they have looked for a job during the period covered by the survey. The resident's place of employment could be in or out of the City. These results are used to estimate monthly unemployment rates.

The household data are readily available back to 1990 through the Bureau of Labor Statistics. In 1990, with a population of 370,000 residents, the annual average Pittsburgh labor force (persons working or looking for work) stood at 165,816. That represents a labor force to population ratio of 0.45. Notwithstanding ongoing population loss, the City's labor force rose through 1994 reaching 167,800, the highest level attained between 1990 and 2016.

In a fluctuating pattern, but in a clearly downward trend, the labor force fell through 1999 to stand at 162,706. Then in 2000 the new Census figures showed a significant drop in population from 1990 prompting a re-estimation of the labor force. Not surprisingly, the new estimate of 156,650 was well below the 1999 reading. In fact, of course, not all the large drop of 6,000 happened between 1999 and 2000. The earlier figures, without benefit of the new Census data, were overstating the labor force. Then, a real decline set in reducing the labor force to 150,828 in 2006 the lowest point of the 25 year period. Remember this covered a period when the City was declared to be in distressed status by the Commonwealth.

During the 2006 to 2012 period there was an upturn in the labor force–despite ongoing population losses–that lifted the count to 160,036 which remains the highest level posted since 1994. The labor force to population ratio rose to 0.52 that year. Since 2012, labor force has slipped a bit, averaging 157,832 in 2015 with an apparent leveling off taking place in 2016. On net, after some fluctuations but with a downward trend, the 2015 labor force number has fallen by just under 10,000 persons from its 1994 high, much of that decline owing to population drops. On the brighter side, labor force has rebounded somewhat from the early 2000s slide and has been fairly steady for the last few years.

The rise in the labor force to population ratio since the 1990s reflects to a great extent the change in age distribution of the City's population and more female participation. As population has declined it has been led by substantial decreases in children too young to work and more recently by a drop in the retirement age group. This means there has almost certainly been a significant rise in work force participation by residents in the working age groups.

Working City Residents: Meanwhile, the number of City residents reporting themselves employed, again as gauged by the BLS household survey, has followed a 25 year pattern similar to the labor force, with a few notable exceptions. The primary difference is that the 1990 count of those employed, 156,988 was the highest recorded in the last 25 years. The number of Pittsburghers working slipped incrementally through 1999 before plunging to 149,602 in 2000. Again, as with labor force's big slide in 2000, the employment count was reduced by re-estimation taking into account the 35,000 plunge in residents between 1990 and 2000.

And parallel to the labor force trend, the household survey employment count slid another 6,000 through 2006 when it reached 143,643. After the dip, there was a two year upturn before the recession of 2009 brought the employment count to 142,715, the lowest reading over the 1990 to 2015 period. A post-recession recovery lifted the number working to 148,216 in 2012; since then the number working has edged up to 148,800 in 2015. Still, and unfortunately, the 2015 figure is below the 2000 number and over 7,000 lower than the 1990 reading.

By way of comparison, the U.S. labor force rose by 30 million (25%) between 1990 and 2015. Allegheny County on the other hand suffered the Pittsburgh problem. The highest reading for labor force was 666,330 in 1994; the lowest occurred 627,923 in 2006. By 2015, the work force rose to 647,884 about 20,000 below the 20 year earlier figure.

Jobs in the City. In addition to the household survey that gauges the number of residents who are working or not working, the BLS conducts an establishment survey to determine the number of people on payrolls of firms in the various governmental jurisdictions. This survey measures employment by firm regardless of where the workers reside. Unfortunately, the Labor Department does not conduct this survey in the City as it does for the Pittsburgh metro area so there are no official data on payroll employment in the City. There are jobs data by industry in the Economic Census that is performed every five years–the last for Pittsburgh was in 2012. However that data, while interesting, are incomplete in that not all sectors are covered in each census and the sectors covered vary from Census to Census. Nonetheless, there are some key findings from 2002 to 2012 that will be discussed later.

The LST as a Jobs Measure: Fortunately, there is an indirect measure of jobs in the City, the former Occupation Privilege Tax (OPT) of $10 and the current Local Services Tax (LST) of $52. These flat tax amounts were and are paid by everyone working in the City regardless of where they reside, with an exemption for persons earning less than $12,000 per year–exemptions that must be applied for. This tax is a paperwork nightmare for employers with high turnover rates.

Data for the $10 OPT are available back to 1985. This tax was in effect through 2004 after which it was replaced by the $52 LST in 2005. Recognizing that the tax collections are not a perfect reflection of the payroll jobs in the City because of exemptions and the possibility of the same job being held during the year by more than one person who pays the tax, they do represent a long term series that should provide a reasonable estimate of jobs and any growth or losses in jobs over time.

Throughout most of the 1990s, the OPT collections pointed to payroll jobs being 300,000 or higher. The highest level of jobs recorded over the 25 years was 334,000 jobs in 1991. For the decade of the 1990s, employment averaged 309,600 annually. There was a sharp drop in 1996 and 1997 to well under 300,000. It is not clear what caused the decline or if it was merely a collections problem since the job count rebounded from 267,000 in 1997 to 314,000 in 1998. Between 2000 and 2004, jobs, as measured by the $10 tax, averaged 317,000.

After the $52 LST was instituted in 2005, jobs calculated based on collections remained above 300,000 for three years. Then, owing to changes in the collection procedures that altered the collection process and better accounted for eligible exemptions, the estimated number of calculated jobs dropped to the 260,000 range. This lower number relative to the period from 2005 to 2007 is either a better reflection of those who can claim an exemption, or because of the collection now occurring at each pay period throughout the year resulting in many people not paying the full $52 because they leave jobs in the City well short of working the full twelve months. From 2010 through 2015, the LST revenues under the new collection regime show employees paying the tax averaged 266,000. The high point was reached in 2012 with employment at 271,700. Since 2012, the count has held in a tight range of about 266,000 with the 2015 count at 266,800. So, whether or not the LST is a worse proxy for jobs than the OPT, there is no indication of growth in the payroll jobs over the last five years.

In sum, there is little evidence that payroll employment in the City has changed much from the 1990s level and most likely is actually lower than the 1991 reading.

From the Economic Census data, we learn several interesting facts regarding important changes in the industry mix of jobs between 2002 and 2012. For example, manufacturing jobs fell from 13,416 in 2002 to just 7,303 in 2012. That decline has probably continued since 2012. Substantial drops were also posted in the retail, wholesale, information, professional and scientific, and administration and support sectors. Two sectors had increased employment, arts and recreation and accommodation and food services. Health care jobs held fairly steady.

Several key sectors that have probably shown employment increases are not covered in the Census. Universities and finance are two prominent such sectors where there is a likelihood of job gains. Government is also not included and it would account for a significant number of jobs in the City although it is not clear they would have grown during the 2002 to 2012 period.

The Census data is disturbing in that loss in manufacturing, information and professional and scientific services are losses of high paying jobs. Note too, that the industries showing job declines also had reductions in the number of firms.

To conclude, the City has been largely in a holding pattern in jobs with changes in the industry mix that are not necessarily helpful.

And until the anti-business, anti-free market mindset and the high tax, high spending, over regulation environment accompanied by a largely failed public school system are changed dramatically, there is no reason to expect the labor market data, especially insofar as the private sector is concerned, will show any major improvement.

Jake Haulk, Ph.D., President

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