Pittsburgh’s Labor Market: the Future is Now

There’s been so much talk in both political and business pages about the Trans-Pacific Partnership, or TPP, that it got me to thinking about Pittsburgh’s increasingly smaller part in this larger and, for most, unsettling economic world order.

These far reaching economic partnerships are both credited with and condemned for broadening product and labor markets, with the result that both products and workers are further exposed to market forces.  But these international trade agreements are nothing new.  Trade pacts have always been concomitant with the actual trade.  Or maybe trade pacts were just realized in different guises than today.  Whether between Great Britain and China, Arabia and Africa, Portugal or Spain and the Americas – who knew if it was a trade pact or a police action or enslavement?  However characterized, contracts were drawn up and pathways of goods and people were established.

My concern here is how will Pittsburgh survive in this new global market, [same as the old global market, to paraphrase The Who]; one that shifts the rewards of income ever more quickly among producers.  We’ve all read the articles about income inequality and how higher incomes are going to better educated workers in “knowledge industries”.  One disconcerting item often noted about these industries is that they create employment in the hundreds, or low thousands at best.  The era of heavy industry or consumer goods production that employed tens of thousands with decent wage rates has moved away from America to cheaper labor continents.  And still America continues to lose at an astounding rate those types of jobs that require large number of workers, skilled or otherwise, engaged in a large production [I don’t want to limit this to “manufacturing”] enterprise.  Gone are the days when one company can supply enough jobs to build a whole town in America, Silicon Valley burgs notwithstanding.

Adding to this outlook is a piece recently featured on CNBC’s Web site where one well-regarded investor proffered that artificial intelligence will make “most” current jobs “obsolete”. Robotics has a lot to do with that and Pittsburgh will hopefully continue to develop that expertise cluster.  But more generally, I believe the only real growth in employment will come from those jobs that can only be provided by one human being to another.  Medical research, health care, education, and to a lesser extent what are known as business services such as legal, accounting and sales.  Yes, oil and gas production provided a boost to Pittsburgh’s and the nation’s economy recently, but it has also declined almost as quickly due to its cyclicality.  And jobs in software development have been a boon to a number of local economies but aside from over-developing the Bay Area, Boston and Seattle, the increase in GDP is again, so uneven, that these industries seem to be drivers of the new income inequality.

Pittsburgh needs and deserves a more well-balanced economy and one that provides employment in areas that will generate higher incomes to more workers.  Many careers that are characterized as “creative” industries, while injecting elements of excitement into the local scene, are not those on which to raise a family or build an economic engine.  I hope Pittsburgh’s leaders in education, healthcare and government see the distinctions among various job creation project in light of the larger, much larger, and very rapidly changing global economic landscape.

To echo a recurring theme of my own and so many others, and as the only idea I can think of to end this piece, I have to note that educational attainment seems to be the key to income and quality-of-life development.  More discussions on that topic to come.

It’s All Gonna Be Fine

OK, we’ve all been here before.  Everyone relax and keep doing what Pittsburgh is doing: moving forward to a continually brighter future.

It was just announced that US Steel Corp will not be building a new [architecturally mediocre, IMHO] headquarters in the Lower Hill.  Anyone who’s been reading the business sections recently has smelled this coming.  US Steel is no longer the leviathan of metal it once was.  In fact, it may have missed the survival boat altogether.  Larger primary metals companies have built worldwide operations, mostly via the Third World, admittedly where environmental and employment concerns are sadly less of a concern.

US Steel played their own part in this current state of affairs.  My father was a draftsman in their engineering department.  Besides working on projects from Pittsburg, California to Birmingham, Alabama to Gary, Indiana he also helped US Steel sell its project expertise [and maybe sell off its intellectual capital] to steel companies in South Korea and India and beyond.  But in the 1960s and 1970s, US Steel was invincible, right?

But back to Pittsburgh’s brilliant future.  Let’s acknowledge the future of any world class city is and has always been in “knowledge industries”.  Not to deprecate manufacturing with that statement: in the late 19^th and early 20^th centuries, making steel [or glass, or aluminum or ketchup] WAS a knowledge industry.  What Pittsburgh gave the world a hundred years ago was nothing short of an economic revolution on the same scale as what the Silicon Valley is doing today.  But in those lyrics of George Harrison, all things must pass away.

Alcoa took its headquarters to New York and that was a gut punch.  But there are still many hundreds on the North Shore and more importantly, many well paid high tech researchers at their suburban research center.  Mellon Bank’s purchase was almost worse in terms of local prestige.  That was truly a sell-out by an outsider [from Charlotte, of all the upstart places] who was simply climbing the Wall Street C-level ladder.  But in the aftermath of all that Pittsburgh has more BNY Mellon employees here than they have in New York City [albeit probably not on the same pay scale].  And Kraft Heinz says it will maintain dual headquarters after the merger.  Dual headquarters almost never work [unless you are Shell Oil].  What galls most about Heinz is that the Heinz name is woven into Pittsburgh’s psychic fabric.   But that speaks to my point….

It’s time to make new history; weave a new pattern.  It’s time to keep that social and economic loom working [pardon my overplayed analogy] full time to produce the cloth that will be Pittsburgh’s re-emergence as a world class city taking a prominent place among those cities located on humanity’s mental map.