Tube City Almanac

January 21, 2009

'Old Pittsburgh' Still Important in New Economy

Category: Local Businesses, News || By

Pittsburgh's economy is holding up better during the recession than those in most other parts of the United States, and contrary to popular belief, we're not overburdened by government.

But Southwestern Pennsylvania is nearly as dependent now on higher education and health care as it was in the late 1970s on steel.

Those were the conclusions presented Wednesday by management and policy consultant Harold Miller, president of Future Strategies and an adjunct professor at Carnegie Mellon's Heinz College.

Miller was one of five speakers at a "Show and Tell" event sponsored by CMU's Project Olympus, a two-year-old initiative funded by the Heinz Endowments that links student and faculty researchers with venture capitalists in an effort to turn technological breakthroughs into viable commercial businesses that can be developed in the Pittsburgh region.

Olympus was founded by Lenore Blum, a distinguished career professor of computer science at the university.

Miller, former president of the Allegheny Conference on Community Development and former executive director of the Pennsylvania Economy League of Southwestern Pennsylvania, said that raw numbers about employment and unemployment don't tell the whole story of regional economic health.

For example, unemployment rates in Silicon Valley are higher than in some Midwestern metro areas. That can mean that more people are seeking work in Silicon Valley while able-bodied workers are leaving the upper Midwest.

And while Pittsburgh didn't add jobs as fast as some areas over the past 10 years, it also hasn't lost as many jobs during the current recession as similar metro areas, Miller said.

Perhaps his most surprising conclusion came in Miller's discussion of manufacturing in Western Pennsylvania. The loss of many basic steel industry jobs --- especially evident in the Mon Valley --- has led many residents to conclude that manufacturing is no longer important.

In fact, Miller said, manufacturing jobs accounted for about 13 percent of the regional payroll in 2006, making it the single largest employment sector. (The numbers are significantly smaller than they used to be; in 1980, according to Miller, about one-third of all wages paid in the region came from manufacturing jobs.)

Health care is close behind, at 12.5 percent, he said.

Those statistics don't count technical and financial jobs supported by manufacturing, Miller said --- for instance, workers at U.S. Steel's research and development center in Munhall are not included.

"Manufacturing is a critical component of the region's economy," said Miller, an adjunct professor of public policy and management at CMU's Heinz College. "We can't ride health care and higher education alone."

Besides direct employment, manufacturing jobs also support many other businesses. The closure of the Sony Technology Center in New Stanton is going to hurt many suppliers --- some of which relocated to Western Pennsylvania or opened facilities here specifically to do contract work for Sony, Miller said.

The region must continue "to provide a competitive environment" for existing manufacturers and potential start-up companies, he said.

Despite the widespread belief that Western Pennsylvania has too many government agencies paying too many employees, the 10-county region actually has a lower percentage of government jobs than most metropolitan areas of its size, Miller said. Some regions of the country that have added more jobs than the Pittsburgh region saw their highest growth in government sectors, according to Miller.

But Western Pennsylvania still lags the national average in the number of start-up companies. "Our rate of entrepreneurship is lower than most other regions," Miller said.

One way the region could nurture start-ups is by encouraging existing employers to support locally owned businesses instead of buying from out-of-town vendors, he said.

More details can be found at Miller's blog, Pittsburgh's Future.

Other presenters included Luis von Ahn, who created the reCAPTCHA project that helps block spam and digitize lost texts; José Moura, who is developing programs that automatically write computer code; Lorrie Faith Cranor, a computer security and online privacy expert; and Marek Michalowski, who is helping commercialize the Keepon robots now being used for autism therapy.

. . .

Disclaimer: The author is an employee of Carnegie Mellon University. However, opinions expressed at are not those of Carnegie Mellon University, its staff, faculty or affiliates, and no influence was extended upon the author nor any remuneration received for writing this story.

Your Comments are Welcome!

There is a certain “new” highway project that’s not only conceptually missing from Harold Miller’s vision, it’s been virtually declared dead by PA Department of Transportation Secretary Allen Biehler. Quoting Mr. Biehler in Brian O’Neill’s recent column in the Post-Gazette:

“I don’t know where $5 billion comes from” to complete the Mon-Fayette. There had been talk of innovative public-private partnerships, but those proposals were made in the hallucinogenic easy-credit days of the recent past. Mr. Biehler doesn’t foresee enough volume on this road to provide the toll money to pay for itself.

Do we need Cyril Wecht to proclaim a cause of death on Larry King Live for the region to move on and create a coherent regional economic plan for the 21st century?

Were there any governmental decision makers at the Project Olympus event?
Strisi (URL) - January 23, 2009

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