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Pittsburgh taxes are pretty bad, its not so much that they a dramatically higher when you look at total tax vs total income or some similar metric. They are bad in that they tax the poor and middle-class heavily and tax the rich very little.
I agree: because both Pittsburgh and Pennsylvania have flat income taxes, they are regressive. I'd like to see this changed.
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If the family owned a house worth 210k they would own $2,100 property tax in California with a raise of at most 1% a year. In Pittsburgh they would owe around $5,500 and the city can...almost randomly raise the rate at any point.
But what sort of house will $210,000 get you in a major California city, as compared to Pittsburgh? What ends up happening in Pittsburgh is that people pay less for houses, and so the property taxes as a function of income end up being around the same. And of course the mortgage is also a lot lower in Pittsburgh, which means lower income people can actually afford decent houses in decent neighborhoods with reasonable commutes.
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But what sort of young people? I can only guess from my observation. It seems Pittsburgh is trying to be like Portland a bit. Portland is seeing a lot of growth with 20 somethings, but they aren't the sort of 20 somethings that are creating business etc. They are the sort of 20 somethings that work at target and smoke pot with their free time. But maybe Pittsburgh is doing better and attracting people with the "right stuff", but is anybody measuring it? Not all young folks are economically equivalent.
Yes, actually, people are studying things like income rates in Pittsburgh. It turns out that if you isolate the younger people and newer residents, they tend to have quite high incomes relative to national averages. So, Pittsburgh is indeed attracting and retaining high-value young people.
Yes, actually, people are studying things like income rates in Pittsburgh. It turns out that if you isolate the younger people and newer residents, they tend to have quite high incomes relative to national averages. So, Pittsburgh is indeed attracting and retaining high-value young people.
Do you have any sources for that? There are a lot of retirees there on fixed incomes, for sure, but are the rest of them making all that much more than they would make in say, California (to use the present example) or Denver, or Chicago or wherever? During DH's job hunts, we have found engineering/IT salaries to be pretty comparable everywhere, though we never looked at Cali. Nursing salaries do vary quite a bit by region, and I have no idea where Pgh fits in.
Yes, actually, people are studying things like income rates in Pittsburgh. It turns out that if you isolate the younger people and newer residents, they tend to have quite high incomes relative to national averages. So, Pittsburgh is indeed attracting and retaining high-value young people.
This is very true. I actually did see a write-up about it in the last couple months, not that a write-up is necessarily a source, but I'll try to find it.
On a completely other note, Pittsburgh has actually been seeing a lot of good news recently. Here is a link to some write-ups. Pittsburgh's Future In fact, you may be interested in reading the blogs since January of this year of which have mostly been extremely positive. Topics include:
"Good News: Progress in Our Entrepreneurial Economy"
"Misleading Headlines on Air Quality, Yet Again"
"Pittsburgh's Economy Is Doing Better Than Many Other Regions"
"Who's Moving to Pittsburgh? And How Can We Keep More of Them Here?" (btw, this article is one that goes through demographics and shows that despite the fact Pittsburgh has a low international in-migration, those that do move here are much more educated than other regions, etc)
"The Pittsburgh Region's Real Comparative Economic Strengths"
"More on Pittsburgh's Improved Job Growth"
"Good News! Regional Job Growth Much Higher Than Previously Thought"
"Plenty of Job Opportunities, Despite Slow Growth"
"One of the Hidden Strengths of the Pittsburgh Region"
The articles contain graphs, charts, sources, citations, links, and commentary. Despite a few people on this forum who are negative ad nauseum, I stopped arguing because it is plain as day that the Pittsburgh region is recovering. Many things are on the up-swing, we are largely unaffected by the housing crisis, even the job market and economy are decisively stronger than projected. I've SEEN the differences in and around the city and that's that.
One fact that ASTOUNDED me that I've mentioned before was that in 2006 there were over SIX HUNDRED THOUSAND jobs for which new people were hired in the Pittsburgh region. Despite the Pittsburgh region creating NEW jobs at a pace lower than the national average, there are still MANY thousands of positions available right now. This article also describes that many of the jobs are of higher wages and many are being filled by YOUNG professionals, ect.
But what sort of house will $210,000 get you in a major California city
If you ignore the current bubble in prices (they are declining fast), then you can get a decent house for that price in a major area. But housing in Pittsburgh isn't really cheaper than CA, because people make less on average in Pittsburgh. Although some may get lucky and find jobs in their field pay roughly the same in Pittsburgh vs other more high priced areas. But that is not the norm. Despite the prices being higher in California, people still pay dramatically less property tax. Not only that future tax is very predictable (1% increase on your current total tax).
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It turns out that if you isolate the younger people and newer residents, they tend to have quite high incomes relative to national averages. So, Pittsburgh is indeed attracting and retaining high-value young people.
Look, anybody can say anything. Do you have a reference to a study that shows this? How did they measure "value" in incoming residents? Income is not a particularly good measure, after all most of the major companies started in the last 50 were started by people with no money (HP, Apple, Google were essentially started in garages). So how does one measure value in income residents and how is data on incoming residents being collected? For example, I would hope they are excluding universities students!
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because it is plain as day that the Pittsburgh region is recovering.
Ha ha. Not its not plain as day. Is Pittsburgh seeing growth in some areas? Sure. Is it growth faster than other areas? No, in fact the opposite, even you state "...creating new jobs at a pace lower than the national average". Now...lets think a little about growth rates okay? Economic growth is exponential, now lets say we have two regions Z and Pittsburgh. Now lets say that Pittsburgh is growing at 2% and region Z is growing at 4% and further assume that the economy of Z is already better than Pittsburgh. So if things stay the same what is the result? The result is that although Pittsburgh will improve year-to-year it will look like a 3rd world country in comparison to region Z after 20 years. Implicit in the idea that Pittsburgh has to recovery or "is recovering" is that its behind other areas, therefore Pittsburgh most grow FASTER than other areas to even catch up. Not only that since grow is exponential its rate of grow needs to be significantly faster.
Pittsburgh needs MAJOR changes if its going to catch up. It not only has to deal with other areas of the US that are better managed but other areas of the world. Honestly, there is little hope for the area. Its too bad because Pittsburgh does have some nice qualities.
Do you have any sources for that? There are a lot of retirees there on fixed incomes, for sure, but are the rest of them making all that much more than they would make in say, California (to use the present example) or Denver, or Chicago or wherever? During DH's job hunts, we have found engineering/IT salaries to be pretty comparable everywhere, though we never looked at Cali. Nursing salaries do vary quite a bit by region, and I have no idea where Pgh fits in.
I'm looking for the sources I have seen in the past and I will get back to you when (or perhaps if--I couldn't find them in a quick search) I can find them again.
But I believe it isn't the case that, say, a person in a comparable job is making more in Pittsburgh than in other cities. Rather, the statistics in question are being produced by the kinds of jobs Pittsburgh is producing, which are increasingly weighted toward higher-income jobs relative to the average. In other words, it isn't that engineers or nurses are necessarily paid more in Pittsburgh, but rather that Pittsburgh is generating a higher percentage of engineering and nursing jobs (and other higher-paying jobs) than average.
By the way, I also believe a not inconsiderable part of the explanation for that difference is that Pittsburgh did not participate nearly as much in the housing boom as other places. The housing boom fueled job growth, but they were not particularly high-income jobs for the most part, and with the housing bust a lot of those jobs are being lost.
But housing in Pittsburgh isn't really cheaper than CA, because people make less on average in Pittsburgh.
Based on the statistics I have seen, the differences are not proportional, meaning while an equivalent job in Pittsburgh may pay a bit less, the housing is much less expensive than in major cities in California. As a result, on average people in Pittsburgh have been paying a much lower multiples of their salary for a house than people in those Californian cities. Of course maybe housing prices will eventually crash enough in California to make this no longer the case, but as of the end of 2007 that hadn't happened yet.
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Despite the prices being higher in California, people still pay dramatically less property tax. Not only that future tax is very predictable (1% increase on your current total tax).
Again, the statistics I have seen suggests it ends up being about the same when you look at actual property taxes paid instead of property tax rates (meaning the higher tax rates are more or less balanced out by the lower house prices). And also again, taxes are just one component of home ownership, so the lower house prices have other financial benefits.
Note that in the graph for property taxes as a percentage of income, Pittsburgh was sandwiched between San Diego and Los Angeles (just below) and San Francisco and San Jose (just above). The article goes in more detail as to why that is the case, but as I noted it is because while the median house in Pittsburgh is about twice the median income, the national average is four times, and in places like LA and SF recently it has been over seven times.
End of edit.
But I agree more predictable property taxes would be good for the Pittsburgh region. In fact, I would prefer to shift most property taxes over to income taxes, mostly on a statewide and progressive basis ... but that is a whole different topic.
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Do you have a reference to a study that shows this?
I'm looking, and as I noted to Katiana, I will post it here when (or if) I can find the material I have seen.
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How did they measure "value" in incoming residents? Income is not a particularly good measure, after all most of the major companies started in the last 50 were started by people with no money (HP, Apple, Google were essentially started in garages). So how does one measure value in income residents and how is data on incoming residents being collected?
I think it is true that some of this is inherently unmeasurable--basically, no one can one predict the economic future of people with much precision, so I agree current income is at best a rough proxy. As an aside, though, Pittsburgh has quite the growing entreprenurial community. Indeed, Pittsburgh was recently ranked #2 in a study of venture capital growth:
Implicit in the idea that Pittsburgh has to recovery or "is recovering" is that its behind other areas, therefore Pittsburgh most grow FASTER than other areas to even catch up.
Not necessarily. A lot of the statistics still reflect the aging remnant of the steel town era. In the meantime, though, the non-steel-based economy has actually been building all along (indeed, I believe Katiana has pointed out that Pittsburgh being a medical, university, and business services center is not new--that was all true in the steel town era as well). So, much of the "recovery" is really just people becoming aware of this "new" Pittsburgh which is actually not so new, in that it has been there and progressing all along.
Indeed, I think that explains a lot of the clash around here, and in general between people who have such dramatically different views of whether Pittsburgh is doing well or poorly. Specifically, there is no doubt Pittsburgh went through a terrible time as the manufacturing sector contracted dramatically, and that the ripples of that period are still being seen in current statistics. And to be blunt, if the question is whether all those developments will somehow be undone, the answer is almost certainly no. So, there will be no such "recovery" if it is defined in those terms, meaning rebuilding the city on the old model.
But conversely, there is a different Pittsburgh emerging, one which is much smaller than the old Pittburgh, but also in many ways more prosperous and pleasant, and certainly more economically diverse. So, if one is not particularly concerned about rebuilding Pittsburgh on the old model, and instead is interested in the future of Pittsburgh based on this new model, then the trends are indeed quite positive.
but as I noted it is because while the median house in Pittsburgh is about twice the median income, the national average is four times, and in places like LA and SF recently it has been over seven times
The historic average for Southern California is around 3.4x, the current prices are dropping fast and will end around that value. Looking at the current ratio is a bit dishonest, but of course that won't stop people using it to try to justify their taxes. Another problem is that the median house in the LA area is nothing like the median house in Pittsburgh. You aren't comparing apples-to-apples really. After the housing bubble completely crashes the property taxes in Pittsburgh will appear ridiculous again (in comparison to other areas).
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Indeed, Pittsburgh was recently ranked #2 in a study of venture capital growth:
The article suggests that VC grew 512% in Pittsburgh! Funny this is used to make people feel good about the area, but its actually a REALLY odd figure. Was the majority of new funding to one company? With only 200 million in funding that could easily be the case. Regardless, the percentage of growth is only so high due to the fact that it was only 32 million a decade again. Of course that won't stop people from spinning it.
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But conversely, there is a different Pittsburgh emerging, one which is much smaller than the old Pittburgh
This really has little to do with what I'm saying. My point was that citing that Pittsburgh is seeing growth in some areas is not particularly interesting unless you know what the growth is outside of Pittsburgh. If Pittsburgh continues to grow less than other areas then it WILL be a wasteland compared to those areas in the future. This is simple mathematics. Of course to residents of Pittsburgh that never leave, the city will appear to be getting better. But in comparison to other areas (both in the US and out) it will be getting worse. This is the problem Pittsburgh faces, it not only has to grow but it has to grow faster than other areas. If it doesn't it will decline relative to other areas more and more. Pittsburgh is fighting a moving target, Pittsburgh's real growth is still negative in most areas even though nominal growth is reported as positive. Just like current rates on CDs are positive only if you ignore inflation, once you factor in inflation the rates are negative.
The historic average for Southern California is around 3.4x, the current prices are dropping fast and will end around that value.
Maybe so, but that hasn't happened yet, so we can revisit the issue if it does in fact happen. By the way, the bottomline for the purposes of a tax discussion is not the house prices, but the property taxes paid as a percentage of income. If it were actually to come to pass that California property tax receipts crashed along with housing prices, I'm not sure the current property tax scheme in California would survive.
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Another problem is that the median house in the LA area is nothing like the median house in Pittsburgh. You aren't comparing apples-to-apples really.
Well, that is why the baseline is median incomes. And again, for the purposes of a tax discussion, the house prices are just an intermediary step. The important part is the actual result, namely taxes paid as a percentage of income being roughly equivalent.
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Regardless, the percentage of growth is only so high due to the fact that it was only 32 million a decade again. Of course that won't stop people from spinning it.
Well, but I thought that was the nature of the discussion we were having, namely about recent trends in Pittsburgh in comparison to other places. The upshot is that Pittsburgh is experiencing a higher growth rate in venture capital than most places (except the state of New Mexico, which was #1).
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My point was that citing that Pittsburgh is seeing growth in some areas is not particularly interesting unless you know what the growth is outside of Pittsburgh. If Pittsburgh continues to grow less than other areas then it WILL be a wasteland compared to those areas in the future.
But Pittsburgh is in fact experiencing real growth (relative to the average) in a variety of areas. And again, the overall picture is quite a bit more complicated than you suggest. As Pittsburgh continues to make a transformation from one sort of city to a different sort of city, it is inevitable that by some measures it will be lagging, because there will be some measures that capture the old city continuing its long slide to oblivion. But it is a mistake to conclude that means the "new" city is also heading toward oblivion, and it is these other measures which demonstrate that this "new" emerging Pittsburgh is indeed doing relatively well.
So, again, I think this confusion explains a lot of the clash around here. To put it bluntly, part of what Pittsburgh once was is indeed dying, and probably isn't going to come back. But another part of Pittsburgh is thriving. The confusion arises when you assume the dying parts are representative of the thriving parts (or, for that matter, vice-versa).
I'm not sure the current property tax scheme in California would survive.
Its worked just fine before, the prices are just going to go back to historic norms.
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but the property taxes paid as a percentage of income.
This is not too important, different people make different choices on housing. If people in region X tend to spend more of their income on housing (because they like to show off with bigger houses etc) then region Y then its not an important metric. Using medians to compare CA with PA is pretty dangerous, it would only make sense if the distributions were similar and they aren't.
Regardless, my general point is simply that taxes in Pittsburgh are bad. They are heavy on the middle-class and small business. Many areas of the country do much better and this is a problem for the area.
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But Pittsburgh is in fact experiencing real growth (relative to the average) in a variety of areas.
By areas do you mean areas of industry? If so who cares? That isn't what I'm talking about. Or do you mean areas as in a particular economic measure? I'm talking about economic measures, not particular industries. You can't ignore the fact that industry X is dying and only focus on industry Y. If industry Y just replaces industry X the net effect is the same, the area will still have a crappy economy. So what city level data indicates growth beyond national averages?
It also seems you suggesting that once the "old Pittsburgh" finally dies the "new Pittsburgh" will start some real growth. This has as much to do with reality as flying pigs. What makes the city's economy is much more than what industries are in the area, its also the laws of the land and the environment. New Pittsburgh looks a lot like old Pittsburgh, its poorly managed and dominated by very few industries.
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