Tuesday, March 28, 2006

Harold Miller Strikes Back

A weird sot of economic optimism coming out from the consulting firm of former Allegheny Conference on Community Development president Harold Miller. Basic summary: if not for the bad parts, the Pittsburgh economy would be good. Here's the take from the Pittsburgh Business Times...

What [Miller] found is that the Pittsburgh's job growth in high paying areas such as science, health care and engineering grew 13 percent between 1999 and 2004, almost double the national rate of seven percent.

In addition, job growth here for health care practitioners and health care technicians also far outpaced the national average, growing by 12 percent between 1999 and 2004, compared to a national average of seven percent.

Pittsburgh lost manufacturing jobs and production jobs during the period, but so did the rest of the country, Miller pointed out. And Pittsburgh actually lost production jobs at a slower rate than the rest of the country during that period, based on data from the U.S. Bureau of Labor Statistics.
Additionally, Miller points out that there has been significant growth nationwide in government employment, while in Pittsburgh the government sector has shrunk. You can see the whole report here, should you be interested, and Lord knows that I am.

As a side note, I'm glad to see that Miller is at least attempting to analyse job creation in a semi-honest manner, by prefering percentages and ratios to absolute number and comparing those to the national percentages and ratios. Very often from non-academic (read: political) actors, you'll see a lot of emphasis on absolute numbers of jobs created. These numbers, while important, do very little to show a true comparison between how the Region/MSA is doing and how the Country as a whole is doing.

For example: if you create 100 jobs in Medicine, that's great, but if other regions have far outpaced you, that may not be so good. Similarly, you may create 1000 jobs in Medicine, but that may only represent a tiny percentage of the total employment in Medicine in the country.

From my brief take on the report, it seems to be fairly cogent although I have two quick critiques:

(1) Miller doesn't show his math or data set, nor does he make them available (except for a brief snippet saying that they are from the Bureau of Labor Statistics, which is the equivalent of pointing to a farm and saying "go make yourself a sandwich.")

(2) Miller doesn't really explain his industrial classifications very well, except to say that they are based on NAICS (North American Industrial Classification System) codes. So, what is he including in these classes and should they be more refined to provide more detail as to what sectors in these particular classes are actually improving?

His strengths, however, are important and should be repeated here:
  • The Pittsburgh Region’s universities and health care systems have been growing consistently and can continue to grow with appropriate funding support from the state and federal governments. These institutions create many high-quality jobs directly, and they also create new ideas that lead to new businesses and new jobs.
  • The universities and medical centers are not the only location for the kinds of scientific occupations that develop new ideas and new products. The continued presence of long- standing corporate R&D Centers for companies like Alcoa, Bayer, PPG, and U.S. Steel, and the recent successes in attracting research centers for Google, Intel, RAND, Seagate, and others, prove that southwestern Pennsylvania is an ideal spot for growing R&D jobs of all kinds. An aggressive marketing effort targeted at R&D jobs could accelerate this trend.
  • There is still a significant base of manufacturing businesses in the Pittsburgh Region, and the higher than average retention of production jobs through the recession suggests that the region remains attractive for high-value-added manufacturing work. By addressing business climate issues affecting established businesses, and by expanding support for entrepreneurs starting new businesses, the region can build on this base and create additional high-wage production jobs in the future.

  • Growth in these kinds of jobs will, over time, lead to population growth in the region, which in turn will lead to higher rates of job creation in the population-dependent sectors of the economy, and move Pittsburgh closer to the national job growth rate.
    Well... that and slots.

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