Thursday, January 08, 2009

If There's Life After Steel in Pittsburgh, There's Hope for Detroit

PITTSBURGH (NY TIMES)This is what life in one American city looks like after an industrial collapse: Unemployment is 5.5%, far below the national average (see chart above). 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 below). 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: In the Big Three bailout discussions, there was a lot of hysteria about the significantly negative impact of a GM or Ford bankruptcy on the Michigan and national economies, almost as if Michigan could never fully recover from its 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 Ford, and illustrates that there would be life in Michigan after the Big Three.

In a previous CD post, I documented the shift of Flint, Michigan (once the epicenter of both the UAW and GM) from a undiversified manufacturing-intensive, one-company town to a service sector economy. If a transition can happen in Pittsburgh and Flint, it could realistically happen anywhere.


At 1/08/2009 4:01 PM, Anonymous Anonymous said...

I don't know what the author saw in Flint but all I see is strip clubs, gas stations convenance stores,and bars. I guess Pittsburg's employment may have improved but it is service industry and minimun wage or below. A $2.00 shirt at Wal-Mart is cheap but the consumer only has a dollar to spend.

At 1/08/2009 4:27 PM, Anonymous Anonymous said...

Just some thoughts . . .

Is "having a job" the same as earning a "living wage"? Are there not "working poor"? I'd like to see a comparison (e.g. 1990 vs 2008)of average household income, corrected for inflation, in these cities - Pittsburgh and Flint.

Doesn't "service industry" include hamburger flippers and governmental social service agencies?

The NY Times article, of July 18, mentions that unemployment in Flint at the time was 11.1%. One would expect it to be higher now.
That hardly seems like a successful transition, notwithstanding the many who have moved out of the area to find work elsewhere.

At 1/08/2009 5:13 PM, Anonymous Anonymous said...

Good point I don't know if most relize that Government employees more people than the Manufacturing industry.

At 1/09/2009 9:03 AM, Anonymous Anonymous said...

Professor Perry - do you actually LIVE in Flint? If you do, you should know that there is really no comparison between the geography and economy of scale difference between the situation with the US auto industry and the Pittsburgh auto industry when it went south.

You, of all people, should know that the US auto industry involves the whole of the midwest, with suppliers cast across the nation and world, and not just one city's economy - as was the case with Pittsburgh. The difference in the end products is hugely different. The number of people employed in engineering and design of the end products is hugely different. There is no comparison. This is not just about Detroit, or even Michigan for that matter.

Shame on you for the propogation of the myth that they are similar situations. It's almost as shameful as Senator Kyl's comparison of the US auto industry with the US-based airlines. Complete red herrings.

As the other commenters have pointed out, Flint is now an armpit; where the flame of it's past glory established on the footing of the blossoming auto industry is now completely and wholly extinguished.

Shame. The University of Michigan can do much better than this.

At 1/09/2009 9:04 AM, Anonymous Anonymous said...

Correction to previous post - realizing that Pittsburgh's steel industry was intended in the post rather than 'auto' industry as originally posted.

At 1/09/2009 12:20 PM, Blogger sethstorm said...

Well, go figure that Pittsburgh has tons of union-busting law firms. Some of them even attack non-union causes such as immigration law to unduly penalize citizens.

Michigan does not have that problem of anti-Americanism. Not only has it messed with unions, it has created firms like Grigsby & Cohen that decide to make it possible to double-standard on hiring. Citizens see the impossible requirement, Third Worlders see the real offer.

Just because Pittsburgh decides go one direction doesn't mean Detroit goes that direction.

Anon 9:03:
Thought that kind of information was on the front page of the blog.

At 1/10/2009 12:35 PM, Blogger OBloodyHell said...

> Good point

Yeah, on his/her head.

> Is "having a job" the same as earning a "living wage"? Are there not "working poor"?

Is "learning a useful skill" an idea that never actually got taught in whatever elementary school you went to?

> Doesn't "service industry" include hamburger flippers and governmental social service agencies?

If you can't do anything more useful than flip hamburgers, that's not my fault.
And most civil service jobs...? They pay *quite* adequate wages.

> The NY Times article,

Hint: NY Times isn't a reliable source. They will demonstrably pervert statistics to sell whatever message they want to. They do things like claiming "More people on welfare than ever before!!" while ignoring that the population is higher than ever before, and the actual statistic doesn't represent an atypically high percentage of the population, being about the exact same percentage that it's been throughout the Bush and Clinton administrations. THAT was something they did a year or so ago, IIRC.

At 1/10/2009 12:53 PM, Blogger OBloodyHell said...

> As the other commenters have pointed out, Flint is now an armpit;

LOL. We can't tell that, "anonymous". The other posters are "anonymous", "anonymous", and "mika".

Pick a friggin' name. If that's too creative a requirement for you, I can see why you're worried about the pay at hamburger flipping jobs.

> the flame of it's past glory

"ITS". Def. a qualified hamburger flipper.

> Michigan does not have that problem of anti-Americanism.

No, it has a different problem of anti-Americanism. It doesn't want to play by the rules that the rest of us do. And yeah, I'm not a fan of bailouts for Wall Street, either.

"Hey, if Waaaall Street gets a bailout, then Geeee Emmmmm should get one, tooooooo!"


I either want less corruption, or more chance to participate in it.
- Ashleigh Brilliant -

The fact that there are some companies out there ripping people off does not justify anyone [everyone] else doing it, too.

At 1/10/2009 11:00 PM, Blogger sethstorm said...

"Hey, if Wall Street gets a bailout, then GM should get one, too!"

When Paulson decided to reward his friends, it only was fitting to bailout Main Street.

When the imports start making things that even the proverbial Mr. Kowalski would buy, then we can talk. Otherwise, they're pushing Europe onto an unwilling America.


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