Detroit vs. Pittsburgh: Hockey and Economics
NY TIMES (Jan. 7, 2009) -- This is what life in one American city looks like after an industrial collapse: Unemployment is far below the national average (see chart above, data through April 2009). While housing prices sank nearly everywhere in the last year, they rose here. Wages are also up. Foreclosures are comparatively uncommon.
A generation ago, the steel industry that built Pittsburgh and still dominated its economy entered its death throes. In the early 1980s, the city was being talked about the way Detroit is now. Its very survival was in question. Deindustrialization in Pittsburgh was a protracted and painful experience. Yet it set the stage for an economy that is the envy of many recession-plagued communities, particularly those where the automobile industry is struggling for its life.
“If people are looking for hope, it’s here,” said Sabina Deitrick, an urban studies expert at the University of Pittsburgh. “You can have a decent economy over a long period of restructuring.”
Yet the semisweet spot that Pittsburgh finds itself in was never inevitable. As recently as 2000, it had a higher unemployment rate than Detroit or Cleveland (see chart above). Just as Michigan has traditionally put all its chips on the auto industry, it took Pittsburgh a long time to come to terms with the end of the steel era.
MP: As Detroit faces Pittsburgh for the Stanley Cup, it reminded me of a previous CD post and NY Times article contrasting the two cities in terms of economic development.
There has been a lot of hysteria about the significantly negative impact of a GM bankruptcy on the Michigan and national economies, almost as if Detroit and Michigan could never fully recover from their long dependence on the auto industry. Pittsburgh's comeback from the decline of the domestic steel industry shows that Detroit and Michigan could survive even the unlikely demise of GM, and illustrates that there could be non-automotive life and jobs in Detroit and Michigan even without GM and Chrysler.
As the chart above shows, Pittsburgh had a jobless rate above Detroit's as recently as 2000, and now has an unemployment rate of 6.9% (seasonally adjusted), almost 6.5 percentage points below Detroit's 13.3%, and more than 1.5% below the national average of 8.5% in April.