Pittsburgh unemployment near record lows, but region is slow to regain workers

Pittsburgh’s unemployment rate is one of the lowest the region has seen in the past 50 years, but that isn’t necessarily a sign that Pittsburgh’s economy is humming, according to a University of Pittsburgh economist.

The unemployment rate for October was 4.1%, the Pennsylvania Center for Workforce Information and Analysis reported. The two other months when unemployment was 4% or lower in the Pittsburgh region occurred in the 1970s, the center said.

“People don’t realize how low” the rate is, said Chris Briem, regional economist at Pitt’s Center for Social and Urban Research.

Pittsburgh, like the rest of the nation, has been recovering from economic hardship created by the covid pandemic. Signs of improvement include boosts in the construction, air travel and restaurant industries.

But the low unemployment is not necessarily a sign that Pittsburgh’s economy is running at full efficiency. The percentage of working-age people employed in Pittsburgh is actually lagging behind the national average and has not recovered to pre-pandemic levels.

A third-quarter report from the pro-business Allegheny Conference on Community Development showed that the Pittsburgh region has recovered more than 96% of its labor force, which is below the U.S. average of about 101% recovery.

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In fact, the Pittsburgh region has one of the worst post-pandemic labor force participation recoveries of any large metro area in the country. The regional labor force participation rate has been increasing since the start of this year, but it is still about 3% below where it was in 2019.

Pittsburgh isn’t the only region suffering from this discrepancy, but it is arguably one of the worst in this metric. And the discrepancy raises questions about just how much more Pittsburgh’s economy can fully rebound and if it can regain all of the prowess it saw before the pandemic arrived.

Unique circumstances

Pittsburgh’s low unemployment will probably never match the height of the Steel era during the 1950s and 1960s, Briem said.

Then, the region was reliant on heavy industry to drive the economy. Now, education, health care and technology are leading the way.

There are some unique factors that could be holding back Pittsburgh’s employment growth.

Briem said that during the Great Recession of the late 2000s and early 2010s, Pittsburgh wasn’t hit as hard as the rest of the country. This gave it a leg up and likely made it an attractive region for employers to find workers. It also could have been a factor in driving some minor population growth during the early 2010s.

Now, the whole country is experiencing low unemployment at the same time as Pittsburgh. Briem said that makes it more difficult for local employers to recruit workers to Pittsburgh, because workers have nearly endless options.

“It is not just tight here, it is tight everywhere,” Briem said. “(Local employers) might not have any experience in hiring when the labor market is so tight here and the national market is so tight.”

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It appears Pittsburgh is merely topping out of its current labor pool and employing nearly every worker already in the region who wants a job, Briem said.

“I think we have gotten over the covid impacts,” Briem said, referencing a time earlier in the pandemic when workers were hesitant to return to the workforce because of anxiety or were holding out for better benefits, pay and working conditions. “A lot of folks are thinking there is a body of workers that are still sitting and waiting, but I don’t believe they are coming back.”

Briem said in order to boost labor force participation back up to pre-pandemic levels, employers need to recruit more workers and likely hire from a national labor pool, instead of just the region.

Areas of improvement

The Allegheny Conference’s Ellen Gaus said Pittsburgh’s growth in labor force participation has been “sluggish,” but she added that not every factor of the regional economy is showing signs of weakness.

“We are not across-the-board performing poorly. It’s a case-by-case metric,” she said.

For example, the region’s industrial real estate sector is strong and has grown significantly since before the pandemic. Industrial construction has increased nearly 200% compared to the third quarter of 2021, according to the Allegheny Conference.

The region also has recovered 100% of seated diners compared to before the pandemic, indicating a resurgence in the local restaurant industry.

Gaus said the region’s labor pool shrunk to its lowest level in 30 years earlier this year. It has been rebounding since, but a slew of retirements in Pittsburgh and an aging workforce are contributing to the shrinking labor pool.

However, Gaus said certificate and training completions at two-year institutions have increased 25% over the past five years. These include certificate programs for nurses and medical assistants, welders, commercial drivers, machinists and computer systems network specialists.

“I think we are finding the conditions to create that optimal performance,” Gaus said.

Can Pittsburgh grow?

Since the pandemic, Pittsburgh has been economically underperforming benchmark regions such as Austin, Charlotte, Denver and Indianapolis. All those regions have more than fully recovered their labor force participation rates.

Gaus said those regions have rapidly growing populations, while Pittsburgh’s population growth is either stable or in slight decline.

“Population growth is a big factor in Pittsburgh not growing or recovering,” Gaus said. “Since the majority of a region’s economy exists to support that region, the more the population grows, the more jobs a region is organically creating. Since the Pittsburgh population is stable (or) declining, we do not have that benefit.”

Susie Puskar, the chief policy and research officer at the workforce development group Partner4Work, said there are places that Pittsburgh’s labor market can grow.

She said full employment hasn’t returned to the local retail and hospitality industry. If employers in those sectors want to bring back workers, they need to improve working conditions.

Puskar said retail and hospitality employers should improve scheduling practices and provide consistent hours to workers. They also should give legitimate reasons for background checks for applicants and not just universally apply them.

Benefits such as child care and elder care could also be provided to help bring workers into the labor force that might have been hesitant to join because they had children or family to care for.

“There are a lot of resources available for workers for things that might prevent them from coming back into the workplace,” Puskar said.

Pittsburgh is also facing competition it didn’t have before the pandemic.

With the rise of remote work, Briem said employers across the country are letting workers live anywhere. That can be a disadvantage for Pittsburgh, since the region typically offers lower salaries than other regions.

“Local employers have to compete with national offers,” he said. “The workers are going to have to be convinced to work here in spite of that.”