A Supply Side Problem

 

It’s been a while since I’ve vented my spleen over economic development events in Pittsburgh.  Things are definitely on the right track with lots of good news coming from the autonomous vehicle sector, artificial intelligence startups, various robotics enterprises, and not just health care but biotech and medical related startups.  And there’s a new optimism coming from the locals as evidenced by positive predictions not only from the chamber-of-commerce types but also business executives at the major corporations as well as the startup crowd.

What’s not to like?  Well it seems, as we used to say in a previous software company employer of mine, all is not smurfy in our smurfy world.

A report caught my eye recently that should cause concern among the crowd crowing about Pittsburgh’s new “tech hub” status.  The software company Zoom, which announced back in May that they were establishing a large development office in Pittsburgh, last month pulled back on that.  They noted that their Phoenix office, announced at the same time as Pittsburgh, was further ahead in hiring software developers and would take priority over Pittsburgh.  Huh?

In case anyone hadn’t noticed, metropolitan Phoenix is now literally twice the size of metro Pittsburgh, so undoubtedly there is a larger talent pool to draw from.  But who thinks of Phoenix as a tech hub when, huff and puff, Pittsburgh has all these software geeks being pumped out by our vaunted CMU?  The problem seems to be the only place pumping out software geeks IS Carnegie Mellon.  Zoom specifically mentioned Arizona State University as a source of developer talent.  OK, ASU is a major State university.  I’ve visited their campus in Tempe myself and it’s, well, big.  And I’m sure it pumps out a lot of software talent.  And in today’s high-tech economy there’s not time available to fiddle fart around searching for potential employees.  Human resource people are just like us: they’re going to follow the easiest path. And it seems Pittsburgh is not providing that pathway.

Thank goodness for CMU in this regard.  But I must ask, what about the, oh, two dozen or so higher education institutions in the greater Pittsburgh area alone, not to mention another dozen or so in the Tri-State?  What are they producing?  Obviously not what’s needed.  Here I’m calling out my own beloved alma mater, the University of Pittsburgh.  While Pitt is pulling its weight in the fields of medicine and bio-tech [at least it seems such although frankly I’m not sure it’s in the same league as Harvard, Emory, UCSD, or Stanford; yet] Pitt seems glaringly deficient in helping to satisfy demand for software engineers.

Let’s note that not everyone associated with software companies has a degree in computer science.  Software companies hire electrical engineers, mathematicians, mechanical engineers and others with STEM degrees as well as computer science majors.  While Pitt has only established a credible comp-sci program within the last decade, I believe it has a long history of engineering graduates, or at least I believe such.  The expression “if you’re not part of the solution you’re part of the problem” applies here.  Is Pitt, and many of its compatriot institutions in the area, putting out too many social science majors in an economy looking to hire STEM grads?

And what about CCAC?  Not everyone in a software company needs be a math PhD from Stanford.  Community colleges have proven they can train competent software programmers to the degree needed by firms such as Zoom.  Given the size of CCAC there should be a strong pipeline of those grads coming out.

Yup, the time for celebration has not yet arrived with regards to Pittsburgh’s shiny new economic future.  Competition from Pittsburgh’s cohort cities is tough and getting tougher; not to mention competition from locales worldwide.  Pittsburgh’s has always built its economic success on the foundation of more and better knowledge.  Its educational institutions need to and can do more.  Just sayin’.

Leading Indicators?

Well, well, well, downtown Pittsburgh is hitting the big [Texas] time with the announcement that Del Frisco's Double Eagle Steakhouse will be opening a location in downtown Pittsburgh in 2019.

Del Frisco's original location in Dallas is THE restaurant of choice for the oil and gas crowd.  Think gold Rolexes and black Escalades.

Could this be a nod to recent price increases in oil and natural gas, and thus the revival of the Marcellus region?  Can a $100 per steak restaurant chain be a leading indicator?

Along those lines I noted that Geekwire.com reported last Friday, in fact before any other media outlet did such, that Facebook was establishing artificial intelligence development hubs in Seattle and Pittsburgh.  Over the weekend there's been more reporting in the local Pittsburgh media as well as nationally based tech pubs and even the New York "Times".  Interesting to note that many of the pieces focus on how higher education institutions like CMU are being 'brain-drained' when academics can as much as triple their salaries at these corporate led AI efforts.

Well as long as this new push to establish technology hubs includes Pittsburgh on the locational map - and it would seem that is happening - what's the worry?  One of the most perplexing questions regarding Pittsburgh's economy over the last 20 years has been that salary levels are consistently lower that its peer cities, even as Pittsburgh expands jobs in high tech, finance and medicine. I for one wondered when we were going to catch up and stop the regional brain-drain that took our best and most creative off to coastal cities and places such as Denver and Austin?

Maybe this is a leading indicator that is the start of competition for Pittsburgh's talent that will ultimately, finally lift the local salary scale.  Here's hoping for more good leading indicators.

Pittsburgh Makes Me Want to Live

There’s simply too much – well, there’s never TOO much – good news in Pittsburgh’s economic and community scene these days.  There’s always much more to accomplish but the recent news of growing companies and big money funded start-ups and a healthy real estate sector and the seemingly endless creativity in the restaurant and bar scene that changes almost daily, it seems Pittsburgh has hit its stride on a path to sustainable growth.  And it seems to be a growth that will benefit all residents in the metro and Tri-State area.  After all, even though it’s a platitude it’s still true: a rising tide floats all ships.

I’ve been around through a lot of the bad economic times for western Pennsylvania – and the northern Appalachian region in general – and I always knew what a wonderful place it was and is.  This new energy and optimism and excitement makes me, well, want to live forever [or at least a very, very, very long time] simply to see how much greater a city and region greater Pittsburgh will become.  I trust many others feel the same.

Happy holidays to all.

Back to Everyday Reality

Now that Anthony Bourdain has done his usual hatchet job, or insightful tour depending on your perspective, of Pittsburgh and our dining scene, let’s take a step back from the always fraught and fleeting waters of celebrity and return to the topic that originally spurred me years back to start blogging about Pittsburgh: the need for more jobs and higher incomes in this great city.

In the midst of Pittsburgh’s frenzy over “Parts Unknown”, a second frenzy was afoot both in the Burgh and across the country: Amazon’s HQ2 competition.  I believe HQ2 is simply one of the world’s wealthiest corporations looking to find out what government body will pay them the most amount of money.  Period.  This is not even a “pay money in exchange for jobs” scheme.  If a company is growing profitably, the jobs are a foregone conclusion – no one needs to chip in.  In addition, the location of those jobs will develop organically from what makes the most sense for the organization.  No, I believe our reportedly civic-minded CEO Mr. Bezos [recall it was he who “saved” the Washington “Post” by purchasing it] is rubbing his hands with anticipation to find out which governments [State, local] will pay how much to Amazon in order to “win” this competition.

And that disgusts me.

Therefore, at the risk of being considered a false prophet when I highlight continued growth in the Pittsburgh economy, or not sufficiently chauvinistic to champion an economic PR win for the City, let me say I hope Pittsburgh [and any other city one cares about] is not selected for HQ2.  My bets are on two cities that seem to have most of what Amazon is seeking: Atlanta and Dallas.   They are large even by international standards and thus have a workforce of sufficient size that 50,000 jobs would only produce a minor blip in employment statistics.  Both have true international airports with connections to all six inhabited continents.  And while Atlanta has a more developed mass transit system, Dallas [and the State of Texas] has the deep pockets to come up with many hundreds of millions if not a billion dollars in corporate welfare [or extortion].

What I hope for is an expansion of Amazon’s current Pittsburgh offices.  A thousand?  Two thousand?  Even five thousand highly paid, highly technical Amazon employees in Pittsburgh would be a boon to the City.  In my humble opinion, fifty thousand of those [too often entitled, elitist and gentrifying] techies would be a burden, especially in a metro area of Pittsburgh’s modest size.

Finally getting back to Mr. Bourdain, let us talk TV programming and what he sells.  Pittsburgh’s newfound sheen is merely Pittsburgh catching up to other well-regarded American cities.  There’s nothing new to report here.  It’s being done all over the country from Providence to Salt Lake, Milwaukee to Nashville.  “Parts Unknown” producers need to come up with some sort of “hook” to keep the show from sounding like a travelogue puff piece.  The best travel writing does that; think Paul Theroux as the curmudgeonly observer.  So yes, there is a true culinary renaissance in Pittsburgh exhibited by some generally acknowledged groundbreaking restaurants.  But heck: go to San Francisco and New York and Miami for REAL glitz and glamour.   No friends, Mr. Bourdain had to find something different about Pittsburgh that would keep him and his show in viewers’ minds until the next episode.  So wrestling and grunge bands and old steel mills as backdrops filled the bill. Are the decaying neighborhoods and the people left behind in a new economy a bit of lazy journalism on CNN’s part?  Well it’s not journalism; it’s an entertainment show.

One other thing Pittsburghers should come to grips with is the City’s history.  That history is as heavily industrial as it gets – maybe as it ever will get. It was dirty, sooty and smelly as well as dangerous and life threatening or at least life-shortening at times. It resulted in areas of the City that still have little to no charm. New and clean and pretty will always beat dirty and smelly and nasty.  Pittsburgh will never be the California coast or the picturesque parts of the Deep South. So don’t expect every report on the City to be a glowingly enticing travel piece.  It can’t be.

All of this comes with the price of fame, Pittsburgh.  Get used to it.

Some Hard Truths

President Trump pulled out of the Paris Climate Accord and stated his intention to renegotiate the terms.  For anyone in business who has ever dealt with a tough negotiator, this approach should not surprise.

But as someone who literally happened to be within earshot of an office television at the moment he mentioned “Pittsburgh, not Paris” and then later on when he spoke of “Pittsburgh, Pennsylvania, Youngstown, Ohio and Detroit, Michigan” in the same context, I figured then and there some poo-poo was gonna hit someone’s fan.  Don’t get me wrong; this kerfuffle [only in Pittsburgh] over Pittsburgh being mentioned by the President who, for many, is making a colossal mistake in this Climate agreement pull-out is "mouse nuts" in the larger scheme of the world’s current issues.  But it has some relevance to how Pittsburgh perceives itself as well as how it’s perceived by the larger world.

I myself was not happy to have our burgeoning high tech hub described alongside Youngstown and Detroit [though full disclosure makes me admit there are many lovely parts of and fun activities in both those metro areas] as that typecasts Pittsburgh as one of the stereotypical dead and dying cities.  Well so be it.  Our President is from New York with all the prejudices that encompasses.

What I am dismayed with is the attitude, again, of Mayor Peduto who was “offended” that Pittsburgh was mentioned in the context of pulling out of the Climate agreement.  Or was it that the Left’s latest “evil one”, the anti-Christ to Peduto’s political party, simply uttered the term “Pittsburgh” from his lips?  Your call.

Here’s the thing: Peduto needs to admit to and then face up to the hard truth – as our friends in AA would have him do – that the popular perception of Pittsburgh as an economic backwater compared to more successful cities is, well, true.  Unemployment rate?  We have been consistently one percentage point higher than the national average during this anemic recovery period.  And let’s not talk about that rate compared with other second tier cities in our so-called “cohort group”.  We have an unemployment rate fully two-plus percentage point higher than cities like Charlotte, Columbus, and Nashville.   And don’t get me started about income levels.  It’s ALL ABOUT income, and Pittsburgh is a historical laggard when it comes to per capita income. What good is inexpensive housing when you don’t have income to afford a lifestyle you really want?

Lastly, while I’m on this rant, let’s talk about how the Pittsburgh region is still a net exporter of young and talented people to other parts of the country.  This is personal for me today.  Just this week my cousin’s daughter who was married last year to a great guy, both having jobs they enjoyed and a new house in Bellevue, announced they are moving to Atlanta for better jobs.  I lived in Atlanta and I know the god, bad and ugly and believe me there’s a lot of that.  But jobs?  Those it has in spades.  Something a young couple looking to make their mark on the world have a much harder time finding in metro Pittsburgh.

I realize Peduto isn’t the mayor of the metropolitan area.  But he’s the most visible spokesperson.  Maybe when he admits Pittsburgh still suffers from a century long economic malaise that shows little signs of going away will we finally see some concrete [tax cuts? more economic incentives for relocating companies?] actions to help stimulate the local economy.

Ending this screed on a positive note, I see that Milllcraft Investments has decided that the downtown Pittsburgh market is ripe again for condo development and is returning to a plan that puts condominiums on the former Saks Fifth Avenue site on Smithfield Street.  Millcraft believes there is demand for owner-occupied apartments as opposed to rental units.  This is great news for downtown.  Homeowners, even high rise homeowners, bring a level of social and economic stability to an area that can only translate into even more development. 

Kudos and Cranks

Kudos for the planned new Oaklander Hotel on the Pittsburgh Athletic Association property. Being managed under the Marriott Autograph Collection marque is a real coup for the neighborhood.  The architecture is pleasing and the brand is sufficiently high end to complement the development progress in the gem that is Pittsburgh’s university district.

Cranks on Mayor Bill Peduto’s smear campaign on Uber.  First he accuses Uber of being the reason Pittsburgh did not win the Smart Cities Challenge competition.  [Full disclosure: a friend of mine works for a global engineering construction firm that has been hired to assist Columbus with their winning projects and he tells me Columbus’ approach was more in line with what the feds wanted for this initiative.]  Then he launches a public relations campaign accusing Uber of not using its resources to benefit more Pittsburghers.  Huh?  Seems to me Uber is providing a lot of benefit to Pittsburgh and the region by locating a major research effort in the City and providing hundreds of jobs that may grow into the thousands.  And high paying jobs at that.  Being blunt, let’s face facts:  beggars can’t be choosers.  In my DNA I know, and in my bones I feel Pittsburgh is truly one of the most special places on the global map.  However, it’s certainly not a hot spot for economic success by most current definitions.  Companies like Uber are the way to make up for a period of economic stagnation tracing back to WWII.

Kudos to Ford Motor Company and Argo AI for bringing $1B in investment “to Pittsburgh”.  I qualified that statement as I will wait to see how many jobs are actually created in Pittsburgh given Ford’s plans to also spread research across Detroit and the Bay Area. Still it’s a nice public relations win for us.

Cranks again on Peduto’s Administration for somehow screwing up the Penn Plaza redevelopment.  Now there are lawsuits and counter lawsuits.  WTF?  OK, I know I will be lambasted for saying this but I’ve lived in gentrifying cities all my life – from Boston in the 70s to a New York back from bankruptcy’s brink in the 80s to the Buckhead neighborhood of Atlanta when its total metro area was [believe this or not] still smaller than Pittsburgh’s.  Gentrification happens.  You cannot stop it if a city is to grow and prosper.  Stopping development is not the way to make impoverished citizens’ lives better nor encourage the arrival of new citizens who can create wealth for a larger community. Pandering to the overly progressive crowd may score political points for a politician who is seeking future offices but it has never been shown to make citizens lives better.  I would hate Pittsburgh to become another… Caracas.

Kudos to Angelique Bamberg and Jason Roth of the Pittsburgh “City Paper” for their always well-reasoned and well-explained restaurant reviews.  Particular props for a recent review that complimented a restaurant’s restrained use of the “industrial look” in their fixtures.  Bamberg and Roth noted that it may be time Pittsburgh broke out of its adulation of its industrial past and went for interior architecture that provides more light and air. Bravo!  Less brick and more glass please, interiors and exteriors!

Kudos to Pitt, CMU and UPMC for their April 18^th conference, The Next Big [Data] Thing.  Let’s finally get some momentum on Pittsburgh putting together the obvious pieces of high tech know-how, software engineering, medical and bio-engineering expertise, and a good quality of life environment to start a world class, world ranked, world beating digital health industry.  The Pittsburgh Health Data Alliance is thinking the right way when UPMC’s Program Director notes that Pittsburgh has all the components present to become as dominant in digital health as coastal university centers.  Bravo!  Let’s get competitive here, economically speaking.

Lastly, I have to quote HM Queen Elizabeth who famously referred to a bad year in the Royal Family’s life as her “annus horribilis”.  Well over the last few months, Pittsburgh has suffered the same with the deaths of Thomas Starzl, Arnold Palmer, Dan Rooney and Henry Hillman.  Great cities always find new blood to carry on the vision and work of their best leaders.  Let’s support those who can fill the shoes of those Steel City heroes.

Good News x 2

There’s more evidence Pittsburgh is firmly established as a “high tech” locale.  This past week, two Pittsburgh start-ups were purchased by publicly traded “new economy” behemoths.  Thar Pharmaceuticals was purchased by privately held pharmaceutical company Grunenthal GmbH.  Headquartered in Aachen, Germany, Grunenthal has operations in Europe, Australia and Latin America, and reports 2015 revenues of approximately US$1.3 billion.  That news was followed by Pittsburgh-based startup FacioMetrics being purchased by Menlo Park, CA based Facebook which needs little introduction.

The acquisition of innovative startups by larger, more established and better capitalized companies is one of the ways technology progresses. Acquisition of the region’s creative startups by large, established companies is one of the ways that Pittsburgh’s high tech community progresses, growing larger and establishing its bona fides in the global economy.  Here’s hoping that both acquisitions result in the establishment of local Pittsburgh offices for Grunenthal and Facebook.  Equally as important, let’s hope an additional outcome of these purchases will provide Thar Pharmaceutical’s and FacioMetrics’ founding entrepreneurs with new capital to pursue future ideas and dreams here in western Pennsylvania.

An Early Christmas Present

That’s the only way to characterize Amazon’s announcement of a software development center for Pittsburgh.  This is when it gets good, as they say: Uber, Apple, Google and now Amazon.  Reports from the leasing agent say it’s an office of about a dozen people.  Well no need to guess – all one has to do is go to Amazon’s Web site [c’mon, you know you have it bookmarked for your daily visits] and scroll down to the bottom of the landing page [which you have never visited before since it’s not the part where you buy stuff] and look for “Careers”.  Search on “Pittsburgh” and about a dozen job postings will come up.

An exciting part of this news is that the company is taking a lot more space than is needed for 12 people.  My prediction is that within 18 months it will be 120 people.  Stay tuned.  And there are still plenty of coastal high tech names that should be taking advantage of Pittsburgh’s software talent pool and lower business costs.  I’m still waiting to hear that Amazon’s neighbor across Lake Washington, Microsoft, has finally figured out it makes more business sense to hire all those CMU engineers into a development center in Pittsburgh – independent of CMU’s on-campus facility – rather than move them to Seattle.

A Sad Day, for Nice People

OK allow me to say it: it’s a very sad day with the announcement of Arnold Palmer’s death.  The last few times he was seen on TV he was clearly showing his age which made this blogger think “Whoa, we will all pass away but this is gonna be a “big one” for western Pennsylvanians when Arnold goes”.  And so it’s happened.  Always a bad morning jolt to hear that 6AM National Public Radio report with news like this.

Later, on that same “Morning Edition” broadcast, an ESPN golf analyst heaped praise on Mr Palmer for what he did to raise the status and awareness of golf in America.  What caught my ear was the report’s focus on what a “nice guy” Palmer was, in all aspects of his life including his businesses and his sport.  A couple of Palmer’s contemporaries provided short excerpts giving testimony to how Palmer would engage with people – his Army or those that became his Army as a result – many of whom were dismissed by other golfing professionals.  Of course he did.  He was from western Pennsylvania.

Recall that Mr Rogers, Fred Rogers, was from Latrobe also.  I was really sad when I awoke to news of Mr Rogers death as well.  And I cried the morning I awoke to the news of John Heinz’s death.  Heinz was one of the nicest guys in politics and in my mind, destined to be President.  In light of this 2016 campaign, heck, the last four Presidential campaigns, I don’t think nice will ever again make a national political comeback.

Nice is Pittsburgh, western PA and the Tri State region.  Growing up our family would regularly car trip to the beaches and historic sites along the East Coast and people would say “Oh of course you’re from Pittsburgh; you’re so nice.”  It’s been a bit of an economic handicap for years when the region’s leaders could never be seen to brag about all the advantages for living and working here.  But it also has made the area a desirable place for many who seek the authentic in their lives and community relationships.  It should always remain so.

And so sad to know Mr Palmer is no longer among us.  We all need a hug.

Hail to Pitt!

No.  Not for their victory in last week’s rematch of the rivalry with Penn State.  [Full disclosure: I am a proud Pitt alum.]

Kudos to Pitt and Penn State for bringing back the game that put Pittsburgh back on the college football map AND brought in revenue to everything from the RAD to the businesses and workers in the city’s hospitality industry.  With the largest sports crowd in Pittsburgh history, about a dozen people shy of 70,000, this event certainly is a milestone for Pittsburgh’s sports reputation.  I’ll be the first to admit, these attendance numbers are small potatoes compared to most every Fall Saturday in college towns from Tempe to Westwood, Athens to Oxford, and Columbus to Austin – and if you don’t recognize those towns and what schools play there well, better stick to pro sports.

But this is a great reappearance of a tradition that will pay benefits to both Pitt and Penn State in terms of alumni involvement [and contributions], an economic boost for the City, and an added entertainment feather in Pittsburgh’s leisure industry cap.  Big events are “things to do” that excite residents and visitors.  As I’ve so often said, Pittsburgh needs more party.  Kudos to these universities’ athletic departments for having the vision to resurrect a fun tradition.

A Wake-Up Call for Downtown

Recently it was widely reported that groups of young people gathering downtown at night went on a “rampage” that involved a subsequent police chase on foot.  There were bystanders injured during this disturbance, including an elderly woman who was sadly at the wrong place at the wrong time.  Simply enjoying what has become an increasingly vibrant downtown area should not be cause for even the threat of harm, much less physical abuse.  Immediate action by City government, and I am not referring to only the police, is needed.

Back in June I was downtown for Stanley Cup viewing in a Market Square restaurant.  Prior to the match I decided to wander a bit to see what new businesses were in old familiar places.  Walking along Wood Street I noted to myself, and did so later to friends, that there was a particularly rowdy group of young men in front of the McDonald’s outlet.  Being older, and less cocksure of my abilities these days. the scene made me very uncomfortable as I squeezed by.  I can understand how any number of visitors or residents, seeing that type of behavior at the relatively early pre-8PM time, would think twice about strolling downtown again.

The bottom line here is that Pittsburgh’s downtown “ecosystem” is physically compact and metaphysically still in a rebirth phase.  Everything is scrutinized under a media reported magnifying glass.  It cannot sustain incidents that result in physical harm as well as negative reports of such and still expect to develop day-and-night vibrancy.  City officials must work with law enforcement but also with the appropriate social service agencies to address the causes as well as the very presence of this behavior.  Crime is a complicated issue that results from a complex sets of circumstances.  However, that can never excuse inaction on the part of those responsible for the public welfare.

In Case You Haven’t Seen This One

In the May issue of “Conde Nast Traveler” magazine that featured their Hot List of the 60 “hottest” hotels in the world, Pittsburgh’s Ace Hotel was listed among that group, chosen by their editors.  It’s a nice piece of city publicity to have one of the “dots” on their “hot list” map be Pittsburgh.

But for those who appreciate a good written review, it was the June/July Summer issue of the same magazine that had more words on Pittsburgh as a “cool” travel destination this summer.   Some quoted excerpts, with attribution to “Conde Nast Traveler” include:

“Cool means a food scene that’s both current and cozily retro, globally informed yet grounded in place.  Where thirty and seventy somethings drink at the same perfectly aged bars.”  [Blogger’s note: If that social interaction DOESN’T happen in other places then as a society we’re in deeper trouble than many believe this election season.]

“Cool means a fanatical sports town that’s also defined by high culture …where Roberto Clemente and Andy Warhol are held in equal esteem.”

And the money shot here:

“If Pittsburgh isn’t a contender for the coolest city in America right now, someone’s got “cool” all wrong.”

Oh ya.  Just don’t get all ahead of yourself Pittsburgh.  Note that “cool”, like its cousin “hip”, can never be self-declared.  It can only be bestowed and must never be referred to by the cool one; to do so takes it all away and is the antithesis of the term.  Once you declare yourself cool or hip, you are no longer.  Walk the walk and never, ever talk the talk.  I have confidence Pittsburgh understands that.

A Good Development in the Start-Up Scene

This week a piece in the Pittsburgh “Business Times” announced that Jason Yablinsky, VP of Finance for local jobs recruitment platform company Jazz [formerly named The Resumator] is leaving that firm to become CEO of a brand new startup, SubCentral.io.  Good for Mr. Yablinsky but more importantly this speaks to the growing strength of Pittsburgh’s startup scene.

SubCentral.io has received an initial investment of half a million already and already has five employees.  Jazz itself is well on its way to greater success by all accounts and is thus spinning off talent to other ventures.  Most importantly, the fact that staff feels comfortable enough to jump from one startup to another newer [re: riskier] one means that Pittsburgh is building an ecosystem of companies that rely on similar skill sets.  When people make decisions about job locations, one consideration is always “If I have to leave a position, will there be other job opportunities for me within the same area?”  Regions around Seattle , Boston and the Silicon Valley all provide a large enough pool of jobs that people looking to build their careers are confident in accepting jobs in those areas.  Pittsburgh needs more of that and seems well on its way.

A small story with big, positive implications.  Congrats to all.

Our Employment Problem, Part 2

OK let’s start out with this: it has nothing to do with the weather.  Or even the perception of the weather. One person’s chaff is another’s wheat, you might say.  So to all those regional crepe-hangers who claim Pittsburgh’s growth is held back by its weather, I say “you need to get out more”.  Do you think higher growth locales like Chicago, Minneapolis or Boston have better weather?  Really?  OK. Now let’s get serious.

I still believe Pittsburgh and the Tri-State region’s job creation woes can be helped with more, better, increased, and improved education of its citizens.  For this piece allow me to present empirical evidence based on anecdotal reports, with a nod to a couple statistics.

In Part 1 of this commentary I referenced the “Tribune Review” article that featured a Fayette County resident working as a part-time supermarket cashier.  The gentleman is 20 years old and has already moved back to Fayette County after trying his job luck in Orlando, FL where he found he couldn’t make ends meet even in that high growth market.  But now he’s thinking of moving back to Orlando.  Let’s not “pile on” when analyzing this young man’s path however, at age 20, with no defined job skills and what would seem to be no post high school degree, his prospects in Fayette County or Orlando or just about any other economically integrated area on planet Earth are severely limited.  Changing locations will solve little if anything long term.

Also as mentioned in Part 1, the Uber Advanced Technology Center’s Director, John Bares, is seeking dozens more staff members and is recruiting candidates from California’s Bay Area.  I imagine there will be some resistance by residents of weather-perfect northern California over a move to a less benign Great Lakes climate.  But notwithstanding the list of positive traits that Pittsburgh can offer aside from climate, why, with over two dozen major colleges and universities in the region producing thousands of graduates annually, does Mr. Bares need to turn to California for staff?  The only answer is a disparity of skill levels but more specifically it is clear Pittsburgh’s institutions are not educating enough residents with skills needed in this economy.

My final anecdote comes from Austin, TX, a city that Pittsburgh is getting a lot of comparison with these days.  In the past year, Austin has seen thousands of high tech jobs created from companies as diverse as Apple (which has over 1,000 employees and has announced another 2,300 more to be hired in the next 18 months), Home Depot [financial security software development], General Motors (software jobs, not manufacturing), Athena Health [medical software] and Conde Nast (again, software programming for the publisher’s digital media).  And the reason cited by all these new entrants into Austin’s job market: the availability of talent.  Austin has a fifth the number of higher education institutions that Pittsburgh does.  But the University of Texas is a powerhouse school with large programs in engineering, computer science and artificial intelligence.  And to say UT constantly churns out graduates in those fields is putting it mildly.

So here’s the statistical comparison set, and pardon that it’s a bit dated from the 2010 US Census, specific to educational attainment for Pittsburgh’s and Austin’s Metropolitan Statistical Areas (a large city and its surrounds that are connected by employment numbers).  In 2010 Pittsburgh’s MSA had 28.8% of its population with a bachelor’s degree or higher.  Austin’s MSA had 46.6% of its population with bachelor degrees or higher.  Does education translate into economic success? I believe so.  Using per capita income as one countermeasure, US Census statistics for samples taken in 2013 have Austin’s MSA pegged at 21st in the country with per capita income at $24,500.  Pittsburgh is 90th with per capita income at $20,900.  In absolute dollar terms, not huge, but as measured on the overall ranking, and when you account for the nearly $4,000 per person difference across similarly sized metro areas of 2 million plus people, the comparison of income levels is striking.

It’s education.  Period.  As I finished this piece I had trouble developing a summary paragraph.  But later in the day I read the following in the May/June 2016 issue of “Foreign Affairs” magazine.  With credit to Jacob S. Hacker and Paul Pierson in their excellent article “Making America Great Again: The Case for the Mixed Economy”, allow me to quote verbatim.  “the most important thing that big states [defined in their piece as “countries” not US “States”] started doing was educating their citizens.  More growth commenced when people rapidly increased their ability to do more with less.  They were able to do more, in part, because they knew more, and they knew more, in part, because they were taught more.”  QED.

Our Nagging Employment Problem, Part 1

Chris Fleisher in a weekend Pittsburgh “Tribune-Review” article [go here: http://triblive.com/business/headlines/10310205-74/growth-job-region] nails it when reporting on the surprisingly stubborn low job growth in southwestern Pennsylvania.  Job creation in our region is quite simply the most important issue the region faces.  It’s not an exaggeration to state that this is the Pittsburgh region’s existential issue.

Over the past couple years since I’ve been putting my thoughts to electronic “paper” in this blog, I think it’s clear that most of my pieces focus on jobs and income.  Both must increase if the region is to continue to provide residents with the lives they deserve.  And I admit it: I am completely stymied as to why the region continues to lag woefully behind just about every other place in the country when it comes to job creation.  For all the accolades Pittsburgh now garners, in the final analysis, those count for diddly-squat if residents can’t make a good living.

It’s been widely reported that an Uber executive publicly noted that he could “hire 100 more people tomorrow if…” he could find candidates with the right qualifications.  That’s NOT a “good problem” to have.  So here we are: Pittsburgh attracts one of the world’s hottest “new economy” companies to set up a major facility and now they have trouble staffing it.  What gives?  What about the hundreds of eager computer science grads who come out of the region’s colleges and universities?  Not qualified?  Oh but then we read that Pittsburgh is still having trouble retaining young people who are leaving for higher paying areas like the big coastal centers. Really?  Is it simply that companies like Uber can come into town paying third-world salaries because Pittsburgh has a lower cost of living than Palo Alto?  I bet not. So is it just that Pittsburgh’s college grads are so much more sophisticated than those coming out of UNC who stay in the Research Triangle, or those out of UT who then stay in Austin, or those silly grads from Stanford and Cal who triple up in $4000 a month one bedroom apartments in San Francisco?  I bet not and I’m sure I’ll win that one.

You understand my confusion?  And concern.  No region holds onto all its children.  There are a million ways in this world to make your success and there is a whole planet’s worth of locales in which to do that. But if a region is not generating enough new jobs to retain those individuals for whom staying put is the easiest path, how can we possibly expect to attract and hold new residents who will by definition expand the economic and intellectual vitality of the area?

However, having said all that, I still believe there’s a solution here.  Part 2 to follow.

Something Good and Something Getting Better

Something good – really good - is that the August Wilson house in the Hill District is finally getting the long term funding it deserves as the home of what many believe [this blogger for one] is Pittsburgh’s greatest 20^th century playwright.  This is an example of the vision of many individuals being translated, transformed really, into concrete action.  Bravo. More of this please.  The Hill District has been the too-often unacknowledged cauldron of so much creativity vis a vis its music [primarily jazz] scene, journalism [The “Pittsburgh Courier”], arts [photographer Charles ”Teenie” Harris] and theatre [Mr. Wilson’s work as well as other theatre and cabaret ventures].  Let us celebrate that history to build a new one for what some of us believe can become the living room atop downtown’s front door entrance.

Getting better is the region’s air quality.  In the latest American Lung Association “State of the Air” report on the air quality in the nation’s metro areas, Pittsburgh is still at an unacceptably low level – 14^th worst in the nation.  BUT that is better than just a few, like five, years ago when we were the second worst metro area, only outranked by either Los Angeles or Bakersfield.  More importantly, there has been steady improvement in all measurement categories year over year.  Let’s keep it going.  It’s amazing that a very small number of industrial emitters, and a couple as far away as Weirton, WV, have such a detrimental effect on Pittsburgh’s air.  Still, progress is progress.  Pittsburgh got complacent for a bit when the skies brightened after decades of grey.  Let’s continue to support those who work to get our air quality into the TOP 10.

Audrey Russo Gets It!

What an exciting thing to read in the latest NEXTPittsburgh Web site edition comments by Audrey Russo of the Pittsburgh Technology Council.

Yes, yes and more yes those of us that love Pittsburgh are thrilled with all the positive attention our city has recently received from both national and international sources, some of whom, other than those ubiquitous “best of” lists, actually matter.  But there is a discomfort about this and I suspect it comes from informed Pittsburghers realizing there remains a lot missing from those rosier views of our fair city.  Audrey Russo is one of those informed realists.

Here’s the money shot quote from NEXTPittsburgh’s piece with the cumbersome title “What We Love And Don’t Love About All The National Press Pittsburgh Is Getting”:

“Despite the significant press, new Census Bureau estimates show the Pittsburgh metropolitan area lost 5,051 people last year. It’s down 3,240 overall since the 2010 census, the only one of the nation’s 30 largest metro areas to have lost population.

That worries Audrey Russo, president and CEO of the Pittsburgh Technology Council, who works to cultivate relationships with investors outside the region, because telling the city’s story isn’t enough.

“There’s not real investment happening here and let’s face it, that’s what matters,” says Russo, who acknowledges she’s “the biggest fan” of cool things happening in Pittsburgh but she’s troubled by the population loss.

Pittsburgh doesn’t need to grow as quickly or as much as Raleigh, N.C., but it needs to keep up, Russo says. “It’s not a marketing campaign—it’s not the days of New York saying, ‘We’re the Big Apple.’ The world is a different place and you can’t fool people. It’s a campaign to get investment here. It’s a matter of designing public policy to be attractive, and making sure the relationships are cultivated.””

Here’s the link to the whole article.  And thank you Audrey Russo.  There’s still a lot of hard, fun, rewarding, frustrating work to be done on building a better Pittsburgh.  Long may Ms. Russo and people like her work in and for Pittsburgh.

http://www.nextpittsburgh.com/

Local Pride and Commitment

With Jamie Dixon demonstrating that his heart has always been in Fort Worth despite all these years of telling Pittsburghers how much he loved being here and at Pitt, I found it heartening to read that local high tech success story Duolingo is showing real commitment to staying in Pittsburgh.

Even more than the fickle world of college athletics [and who can blame players or staff for chasing gold, given their limited life spans within that ecosystem] the high tech game is one where start ups have to seek environments conducive to their success.  In other words, go to where the money, personnel and support resources will do the most to ensure an enterprise’s longevity.

It was reported last week that Shadyside-located Duolingo is taking 15,000 square feet of office space in East Liberty and plans to almost double its employee count within the next year.  That’s all great news but what caught my eye in the company’s announcement was the founders’ statement: “We’re proud to be a Pittsburgh-based company and to stick to our roots despite having been advised by leaders in the space to move elsewhere.”

Moving to greener pastures of funding is absolutely the norm in the high tech start-up world. But it has all too often been the path taken by many promising new companies started and fed in Pittsburgh’s nurturing environment as soon as they bring in some Boston or Silicon Valley or Research Triangle funding.  As I’ve railed against many times in this blog, the bleeding of local talent has to stop.

Duolingo is one company proving it can make itself a success right here in Pittsburgh. They may be the billion dollar public “hit” that our high tech scene has been waiting for and finally breaks the dam to where a succession of large high tech enterprises call Pittsburgh home.

Happy 200th Birthday Pittsburgh!

And it’s a monumental event that demands recognition, especially in this blog.

Two hundred years is a long incorporation, especially in our relatively young nation.  The sweep of history not only witnessed by but also made where the three rivers converge is rarely seen by other metropolises.  So everyone who now lives in Pittsburgh, or within Pittsburgh’s orbit, or has at one time lived in Pittsburgh, or visited Pittsburgh, or is simply aware and concerned that Pittsburgh and places like it prosper and grow, let them raise their glass to the next 200 years. We’ve seen so many great things come about recently. The best is yet to come.

Here’s to Pittsburgh, the essential American city.

Where's the Commitment?

Today brought news that Cohera Medical, a growing medical device company headquartered on Pittsburgh’s North Side, is leaving town for Raleigh, North Carolina. Raleigh is the biggest city in the Research Triangle Park area which has an established base of medical and biology centered companies.  It’s where a lot of Philadelphia based pharmaceutical firms established offices when looking for a sunnier clime and friendlier tax environment.  So while this makes sense on a number of business levels, I have to say that this sort of outmigration happening once a local company is nurtured to a sustainable phase has got to stop if Pittsburgh is to economically progress in any meaningful way.

The galling element of this story is that Cohera Medical is a spin out of the University of Pittsburgh.  The company had just received a $50 million investment by New York investors KKR and I have no doubt is under much pressure to now produce on a scale proportionate to that investment.  But I must point a finger at Pitt and ask how much of a role they could have played in helping this bio-med company maintain its Pittsburgh base?  Did Pitt even try?  What of Pitt’s vaunted efforts to build enterprises in the region as an outgrowth of their medical research?

Where’s the commitment Pitt?