Pittsburgh: Economy

Major Industries and Commercial Activity

The southwestern Pennsylvania region, especially the city of Pittsburgh, showed great resiliency and resourcefulness in shifting from an industrial economy to one based on health care, research, hospitality and tourism through the 1990s. Nevertheless, the local economy mirrored the national recession for various reasons following the events of September 11, 2001. U.S. Airways, a major employer, suffered serious losses from decreased travel due to fear or terrorism and the SARS (Severe Acute Respiratory Syndrome) epidemic. Although U.S. Airways came out of bankruptcy in 2003, it cut more than 300 jobs and reduced service by about a third in 2004; Pittsburgh, which had once been the airline's largest hub, was reduced in status and Pittsburgh International Airport lost jobs to U.S. Airway's other hub cities such as Philadelphia and Charlotte. In January 2005, Southwest Airlines, the nation's largest discount carrier and sixth largest airline, announced it would start service at Pittsburgh International Airport in May, helping to fill the gap left by the loss of leases by U.S. Airways. Local officials are also trying to lure JetBlue, Frontier, and Spirit.

Losses in manufacturing jobs were not completely replaced by high tech jobs, as the latter account for only about six percent of jobs in the Pittsburgh MSA. Another reason for loss of jobs and the region's general downward economic trend is that Pittsburgh has one of the highest corporate tax rates in the nation. Not only do high taxes increase the cost of production for companies, they also discourage new businesses from locating in the area and may force established businesses to relocate to places with more favorable tax structures. The City of Pittsburgh was forced to file for financially distressed status under Pennsylvania's Act 47 in December of 2004. In the wake of this alternative to bankruptcy, the state Department of Community and Economic Development appointed a recovery team to compile a five year plan for economic recovery for the city. Financial analysts are cautiously optimistic as the unemployment rate seems to have peaked at 6.8 percent in January of 2003 and has come back down to 4.8 percent in April of 2005.

By far, the largest employment sector for the Pittsburgh area is in health, educational, and social services. Though heavy manufacturing continues to play a part, it employs only 12.3 percent of the work force as of May 2005. Health care, construction, and education all added jobs in 2004. Financial analysts predict continued modest growth in 2005, with finance, business services, and health care again providing key support. Research is now the third largest industry; the Pittsburgh area is home to 150 laboratories and over 7,500 scientists and engineers. Service, hospitality, and tourism jobs are growing fast as well, adding more than 10,000 jobs in these sectors since 1994, and 5,400 jobs in May 2005 alone. Education and state government employment declined slightly during that same month.

Film making is another emerging industry. Major motion pictures made in Pittsburgh include the original Angels in the Outfield, Night of the Living Dead, The Deer Hunter, Flashdance, Gung Ho, The Silence of the Lambs, Lorenzo's Oil, Hoffa, Groundhog Day, The Wonder Boys, and The Mothman Prophecies. Overall, the size of the labor force and the number of jobs, as defined by the Commonwealth of Pennsylvania, have both increased during the first half of 2005 resulting in a slightly lowered unemployment rate.

Items and goods produced: fabricated metal products, primary metals, glass products, machinery, food and related products, medical equipment, chemicals, plastics, electronics, software, robotics

Incentive Programs—New and Existing Companies

In keeping with the style of having many small municipal governments and school districts, Pittsburgh metro area's economic development groups number at least 27 different agencies. Typically, local incentives are used to augment traditional funding sources, federal and state assistance for which companies may be eligible. For example, the Pittsburgh Urban Redevelopment Authority administers the Pittsburgh Business Growth Fund, which is designed to provide "gap financing" for small businesses that create and keep jobs in the City of Pittsburgh, providing loans at competitive rates for leasehold renovations, equipment, and working capital.

Local programs

Among the many programs offering business incentives in the Pittsburgh area are the Community Loan Fund of Southwestern Pennsylvania, Inc., a $16 million fund that offers capital to manufacturing firms and businesses, job training, and early funding to chosen entrepreneurs; Pittsburgh Partnership for Neighborhood Development, which attempts to unite a network of community development corporations with public and private investors; the Port of Pittsburgh Commission, which is concerned with a 10 county, 200 mile network of waterways and the promotion of travel and industrial development along them; the Regional Development Funding Corporation, which acts on behalf of the U.S. Small Business Administration, Pittsburgh District Office in various economic development activities; and the Regional Industrial Development Corporation (RIDC) of Southwestern Pennsylvania, a private, notfor-profit corporation that coordinates local, state and federal funding programs for environmental assessment and renovations, working capital, infrastructure and new building construction and equipment, and administrates the Pennsylvania Industrial Development Authority's funding for land and building acquisition and improvements.

The Allegheny County Department of Economic Develop-ment's Redevelopment Authority of Allegheny County runs four programs: the $50 million Economic Development Fund, which assists local companies; redevelopment assistance; the Tax Increment Financing program; and the Housing Division, which administers the Home Improvement Program of Allegheny County and the Vacant Property Recovery Program.

State programs

The Commonwealth of Pennsylvania has the Department of Community and Economic Development to implement its Economic Stimulus Package, with 18 components or programs that assist in everything from site selection to loans for equipment, Enterprise Zone grants, tax credits, brownfield development financing, and more.

Job training programs

Carnegie Library's Job Training and Workforce Development catalogue lists 22 job training and related services in Pittsburgh, six given by Pennsylvania, and the U.S. Department of Labor's Employment and Training Administration. Several of the regional services are associated with Pittsburgh's colleges and universities. The Greater Pittsburgh Supported Employment Association helps those with severe disabilities get vocational rehabilitation and supported jobs. The Allegheny County Department of Human Services helps determine if individuals are qualified for federal funding. Some programs focus on minority youth, some on military veterans, some on displaced factory workers. Many help dropouts get a GED (high school equivalency diploma). Some agencies of note are Pittsburgh Job Corps, YouthWorks, the Urban League of Pittsburgh, Three Rivers Workforce Investment Board, and Carnegie Mellon University's Infolink.

Development Projects

Of the many development projects of recent years, the largest and those with the biggest economical impact have been the completion of the David L. Lawrence Convention Center downtown; and the two new stadiums on the North Side, the stunningly beautiful PNC Park for MLB's Pittsburgh Pirates, and Heinz Field for NFL legends Pittsburgh Steelers. Then-governor Tom Ridge broke ground for the Convention Center in April 2000, and its 1.5 million square feet was opened in three stages even as construction continued. Phase I was completed in February 2002; May 2002 saw Phase II completed with four exhibition halls and 18 meeting rooms; and in March 2003 the grand opening ceremony was held with all 5 exhibition halls, 51 meeting rooms, and the huge Grand Ballroom. PNC Park opened March 31, 2001 with an exhibition game with the New York Mets. Although it is the next to smallest ballpark in Major League Baseball with 38,127 seats, it is considered to be one of the most beautiful, designed to offer amazing views of the city skyline and intimate views on the field. Heinz Field opened August 25, 2001; it is a 65,000 seat, horseshoe shaped stadium with the open end at the south end zone facing the fountain at Point State Park. New hotels, restaurants and retail outlets have sprung up near the new stadiums and convention center.

Pittsburgh Urban Redevelopment Authority handles many projects but there are six showcase projects of note. South Side Works involved riverside development and brownfield renewal around Carson Street and the Hot Metal Bridge, resulting in a mixed use development with offices, a hotel, retail, and restaurants, a sports medicine complex and practice fields, and housing. Summerset at Frick Park, also known as Nine Mile Run, revived an environmentally ravaged slag heap into a 238 acre, 713 home community. Bedford Hill area housing developments were made possible when the Pittsburgh Housing authority received a $26.6 million HOPE VII grant. The Pittsburgh Technology Center is the result of Carnegie Mellon University and the University of Pittsburgh joining forces with the business community to create an interdisciplinary research center to advance studies in biotechnology, robotics, artificial intelligence, bioengineering, and computer applications. Washington's Landing is a development on a small island in the Allegheny River about two miles upstream from the downtown Golden Triangle. Herr's Island was transformed from garbage heap into an exclusive community with townhouses on the west end, businesses, a rowing center, and tennis courts in the middle, with a portion of the 17 mile Heritage Trail skirting the trees and fields along the perimeter. Crawford Square is an 18 acre residential development on the eastern edge of downtown Pittsburgh, bordering the mostly African American Hill District neighborhood.

In the southern end of Oakland and extending eastward to the Hazelwood neighborhood, an abandoned factory and brownfield area is being recovered as the Pittsburgh Technology Center Office and Research Park takes over the old LTV Coke plant. When complete, the LTV Coke Works Redevelopment Project will result in 700,000 square feet of office and research and development space, accompanied by around 1,000 residential units of various types. The city hopes the project will encourage businesses to locate near the universities in Oakland. Another research center is under construction in south Oakland on the edge of Carnegie Mellon's campus, the Junction Hollow Research and Development Technology Center, which will create 300,000 square feet for high technology companies that spin off from interaction with CMU. Both the Junction Hollow and the LTV Coke Works projects hope to qualify for funding from the Keystone Innovation Zone Program, which funds joint ventures of universities and corporations.

In the heart of Pittsburgh's downtown, the "Golden Triangle," the African-American Cultural Center Project is scheduled to be completed in 2007. A performing arts and exhibition center, the project will include a hotel and parking, and will add a sixth theater to the downtown "Cultural District." The Pittsburgh Riverfront Trail Connections Projects is an ongoing effort to improve, maintain, lengthen, and add connections to the 17-mile Three Rivers Heritage Trail System, which is used both recreationally and for commuting on foot, by bike, or by rollerblade. Pittsburgh's Three Rivers Heritage Trail System is acknowledged to be a national model for urban trail design and economic benefits thereof. North Shore Transportation Improvements Project has evolved with the new stadiums to include a new riverfront park, a 900 space parking garage, and a revamp of the pre-colonial street grid to improve traffic flow. Future developments on the North Shore will be new office buildings for Del Monte Foods and Equitable Gas, an expansion of Carnegie Science Center, a 6,000 seat public amphitheater, more retail and residential developments, another parking garage of 1,000 spaces, and an extension of the light transit rail. In Lawrenceville, another East End neighborhood, St. Francis Hospital has been bought out by University of Pittsburgh Medical Center, which has a new pediatric research center under construction and plans to move its Children's Hospital facility there. It is expected to be completed in 2007, with the current Children's hospital in Oakland remaining open until that time.

Other ongoing projects include Magee-Women's Hospital Research Center, a seven story addition to the hospital of the same name. A much needed upgrade of Schenley Plaza at the juncture of the Oakland neighborhood's University of Pittsburgh and Carnegie Mellon campuses, as well as upgrades to Schenley Park, is underway.

One of the major projects outside Pittsburgh city limits but within the greater metropolitan area is The Waterfront, another renewed brownfield area where the infamous Homestead Steel Works once flourished. It is a $300 million mix of commercial, retail, and residential use that the Allegheny County Department of Economic Development convinced three municipalities to share the financing and tax revenues. The Airside Business Park and Airport Cargo Center are two very important economic developments, the business park being a 273,000 square foot multi-use office space/warehouse facility in Moon Township near Pittsburgh International Airport. The newest completed development in the area is the Pittsburgh Mills mall in east suburb Frazer Township, which held a grand opening in July 2005. The Galleria section of the mall features more than a million square feet of space including a 165,000 square foot Kaufmann's, a 98,000 square foot JCPenney, an entertainment and sports wing with bowling lanes, and a state of the art 16 screen theater.

Finally, a more controversial means of developing revenue in Pittsburgh is coming: gambling. In 2004, Governor Ed Rendell persuaded the state to pass the slots law, which approves 14 casinos to be built around Pennsylvania, 7 at horse racing tracks (one of which is The Meadows in nearby Washington County), 5 "stand-alone" locations, and 2 in resort areas. Pittsburgh is allotted one of the stand-alone casinos, and in mid-2005 several groups were vying for the Pennsylvania Gaming Control Board to grant them the license for their proposed sites. The 23-member Pittsburgh Gaming Task Force was appointed by Mayor Tom Murphy to study the social and economic impact of a casino, provide input on the aesthetic look it should have, and determine how it should interact with its neighbors. The licenses are expected to be given out some time in 2006, with casinos opening in 2007.

Economic Development Information: Allegheny County Department of Economic Development, 425 Sixth Avenue, Eighth Floor, Pittsburgh, PA 15219; telephone (412)350-1010; toll-free (800)766-6888; fax (412)612-2217. Urban Redevelopment Authority of Pittsburgh, 200 Ross Street, Pittsburgh, PA 15219; telephone (412)255-6600; fax (412)255-6617; email info@ura.org. Pennsylvania Department of Community and Economic Development, 400 North Street, Fourth Floor, Commonwealth Keystone Building, Harrisburg, PA 17120-0225; toll-fee (866)466-3972

Commercial Shipping

The Port of Pittsburgh is the country's largest inland port in terms of tonnage originating and passing through it. More than 50 million tons of cargo, primarily coal, are shipped annually on its three-river system. The port offers convenient access to the nation's inland waterway system on 8,000 miles of navigable rivers flowing through 24 states. The port system affects almost a half million water-dependent jobs. There are two Class I railroads and five Class II, with several connecting rails near industrial sites. Pittsburgh is served by more than 100 trucking firms with access to four major interstate highways. Air freight services are available at Pittsburgh International Airport and Allegheny County Airport.

Labor Force and Employment Outlook

Factors such as a low crime rate, high quality public education, and a skilled labor force with a strong work ethic continue to attract new employers to Pittsburgh. However some workers are struggling with the economic shift from heavy industry to more high tech occupations, as many lower-paying service jobs have replaced the higher-paying factory jobs of yesterday. Even in the fall of 2002, a time of recession for the nation and the region, Pittsburgh area employers had a hard time filling positions for more skilled workers, managerial and professional posts. However, overall, the unemployment rate has come down steadily in the past couple years so economic prognosticators are somewhat optimistic.

The following is a summary of data regarding the Pittsburgh metropolitan area labor force, 2004 annual averages.

Size of nonagricultural labor force: 1,134,700

Number of workers employed in . . .

construction and mining: 58,900

manufacturing: 103,300

trade, transportation and utilities: 233,700

information: 24,100

financial activities: 69,600

professional and business services: 138,900

educational and health services: 213,500

leisure and hospitality: 105,100

other services: 59,500

government: 128,100

Average hourly earnings of production workers employed in manufacturing: $16.37

Unemployment rate: 4.8% (April 2005)

Pittsburgh: Economy

Largest county employers Number of employees
UPMC Health Systems 26,700
U.S. Government 20,400
Commonwealth of Pennsylvania 15,900
West Penn Allegheny Health Systems 10,200
University of Pittsburgh 10,100
Mellon Financial Corp. 8,404
PNC Financial Services Group, Inc. 6,959
Allegheny County 6,695
USX Corp. 6,300
Giant Eagle, Inc. 5,700
Highmark Blue Cross Blue Shield 5,600
Eat'n' Park Hospitality Group 4,600
Verizon Communications 4,400
USAirways Group, Inc. 4,000

Cost of Living

Pittsburgh's cost of living is slightly lower than the national average as is the price of housing. The following is a summary of data regarding several key cost of living factors for the Pittsburgh area.

2004 (3rd Quarter) ACCRA Average House Price: $226,663

2004 (3rd Quarter) ACCRA Cost of Living Index: 94.9 (U.S. average = 100.0)

State income tax rate: 2.8%

State sales tax rate: 6%

Local income tax rate: 3%

Local sales tax rate: 1%

Property tax rate: $24.72 per $1,000 assessed value (2005)

Economic Information: Allegheny County Department of Economic Development, 425 Sixth Avenue, Eighth Floor, Pittsburgh, PA 15219; telephone (412)350-1010; toll-free (800)766-6888; fax (412)612-2217. Pittsburgh Regional Alliance, Regional Enterprise Tower, 425 Sixth Avenue, Suite 1100, Pittsburgh PA 15219