Pittsburgh’s post-steel economy is a success – and a warning for other cities

Few regions pose as much of an economic conundrum as Pittsburgh.

Is the city and region – once the center of American steelmaking – a paragon of postindustrial transformation, or a left-behind region still struggling to move beyond its industrial past?

I’m an economist at the University of Pittsburgh and author of the new book “Beyond Steel: Pittsburgh and the Economics of Transformation.” In it, I attempt to reconcile the economic paths that have shaped modern Pittsburgh as the city tries to redefine itself.

One core question is not why the steel industry in Pittsburgh collapsed, but why steel production remained so concentrated in the region for so long.

Past researchers foretold with uncanny accuracy the problems the region would face if it did not move away from its monolithic dependence on the steel industry. One prognostication, made by two University of Pittsburgh economists in the 1960s, stands out more than others.

Pittsburgh’s rebrand gets a global stage

When, in May 2009, White House Press Secretary Robert Gibbs announced that Pittsburgh would host the G20 Summit of world leaders that fall, the assembled journalists of the White House press corps presumed it was a lighthearted joke before Gibbs jumped into the substance of the day’s briefing.

Yet Gibbs was not joking. At the height of the Great Recession between 2007 and 2009, Pittsburgh was purposely chosen because of its history of overcoming past economic trauma and building new prosperity.

It would be a vision of Pittsburgh repeatedly highlighted by foreign media upon their arrival in Pittsburgh that fall for the summit. More than one major publication described Pittsburgh as “no longer hell with the lid off,” a play on a historical description of the city dating to the 1860s.

That idealized story is based on real change in a region that suffered extraordinary structural decline when a century of dependence on heavy industry imploded in the 1970s. Yet it is a story that needs to be tempered by the chronic poverty and lack of development in many former mill towns of southwestern Pennsylvania, which have not shared in the greater region’s redevelopment. Some communities, including Braddock – ironically, where Andrew Carnegie began his steelmaking empire in the 1870s – remain among the poorest in the nation.

How Pittsburgh reinvented itself

University of Pittsburgh economists Edgar M. Hoover and Ben Chinitz led a multiyear study of Pittsburgh’s regional economy funded by the Ford Foundation, a private foundation that works to advance human welfare, at the beginning of the 1960s. They described the economic study as an “immersion in regional economics.” Their four-volume distillation of all aspects of the Pittsburgh economy foretold the decline the region would face due to the shifting economic geography of the steel industry and Pittsburgh’s extreme lack of industrial diversification – things local leaders commonly saw as strengths.

Their comprehensive work left little doubt about Pittsburgh’s fate if the city stayed its course. But moving away from steel proved far too difficult for regional civic and business leaders, as the region was almost entirely dependent on steel production and related industries. By putting off real economic change, the collapse of the 1980s was even more painful when it finally arrived.

Hoover and Chinitz’s message applied far beyond Pittsburgh. Pittsburgh may have been an extreme case, but they knew that all U.S. regions needed to learn to adapt in the face of accelerating and inexorable change. At the core of their thesis was the idea that many of the geographic linkages that had long bound certain industries to certain regions – like automotive in Michigan and meatpacking in the Midwest – were weakening. Just as the Pacific Northwest no longer relies on the timber industry, or as coal has failed to sustain prosperity in West Virginia, no region can rely on past dominance in any industry to ensure future prosperity.

Among other shifts they projected, Hoover and Chinitz foresaw that future competition between regions would not rest upon the ability to attract and retain specific industries. Instead, the success of regions would rest on their ability to attract and retain workers, something many regions long took for granted.

Workers and their families value regional amenities, affordability and many other factors that historically had little impact on corporate site selection. Today, the factors that make a region a place where workers want to live and work, like a strong job market, access to a quality education and affordable housing, shape the pattern of growth and decline among and within regions.

For Pittsburghers, whose city had for so long been singularly defined by the production of steel, the idea that industrial competitiveness was not paramount bordered on apostasy.

What other cities can learn from Pittsburgh

Pittsburgh’s transformation is incomplete, and ongoing. Looking ahead, history teaches us that all regions in the U.S. need to consider any current economic successes as temporary, eventually to be eviscerated by changing circumstances. Envisioning a future without steel was once an inconceivable scenario for Pittsburgh.

One of the key challenges Pittsburgh faced after the decline of steel was the significant loss of workers fleeing deindustrialization. At its economic rock bottom in the 1980s, Pittsburgh saw an exodus of young workers who saw their economic futures elsewhere. Those workers took with them their families and their future families, compounding and extending the repercussions of past job destruction. Rebuilding a competitive workforce took a career-span length of time, but is in many ways the core of Pittsburgh’s rebound.

Slow and steady growth in higher education and health care, and enviable success at research investment in tech, has built new competitive advantages. National firms including Google, Apple, Amazon and others have set up significant local operations to take advantage of the region’s current concentration of skilled workers.

Again, success is not spread evenly across the region. Where Pittsburgh’s new workers want to live, long-depressed communities, like Lawrenceville and East Liberty, have turned around, but where local amenities are lacking, depressed communities are finding it ever harder to abate decline. Many workers no longer need to live close to their jobs. Location of a major firm or factory is rarely enough to catalyze sustainable and prosperous communities.

It appears we are living in the future foretold by Ben Chinitz and Edgar M. Hoover. The message that workforce is crucial to economic development is now accepted in a way that was once difficult to accept. But workforce advantages, like most competitive advantages that regions have today, are fleeting.