Is Downtown dying?

Got your attention?

Relax.

So there are times when you really need to understand your data before jumping to conclusions. Generally speaking a lot of us are loathe to ever use data reported by zip code. Zip code areas are a bit arbitrary and don’t really align to anything else. Data collected by zip code has some issues you really have to think about before overinterpreting. Still, you wind up being forced to look at some data by zip code because there sometimes is just no other data available on small geographic areas.

Which is all a disclaimer before looking at the latest data out from the Census Bureau’s Zip Code Business patterns program. One perpetual question here is what is happening Downtown? The Zip Code data is for jobs by place of work, but that is what you want to look at Downtown.   Most often when you see employment data reported in the news it is a count by place of residence. For places like Downtown, the difference between a count of jobs by place of residence and jobs by place of work are completely different numbers. Soooo….When I add together the job counts for zip codes 15222 and 15219 (the main Zip Codes covering Downtown and some environs into the Hill District and the Strip District) over the last decade the trend looks like this.

Here is the thing. I don’t believe there is any real trend obvious in that data. If you have ever looked at what the raw data looks like you will notice some important things. If you go back a decade or so you will have seen there were a lot of establishments being reported as located Downtown that likely were not really located there. My take is a lot of smaller businesses were winding up being reported in the location of their main branches or even for their accountants on occasion. I believe the data gnomes at the state have worked hard over the last decade to clean up that particular data issue and you see the results early in the last decade. So what appears as a decline in jobs roughly a decade ago is really data cleaning IMHO. Then there has been a general cleaning resulting from establishment reclassifications. If you are not careful a HQ location can have more employment attributed to it than is really ground truth. That has been cleaned up as well. So I think that a number between 90K and 95K has been the consistent number of jobs located in Downtown between the rivers for quite some time even if it appeared higher 10-15 years ago.

If there has been any decline in jobs it likely is mostly attributable to retail sector jobs. One decline in Downtown employment has likely been in retail since there are now significantly fewer large department stores than in the past. The large department stores were significant concentrations of jobs. These job counts mostly will not differentiate between part-time and full-time, or high pay or low paying jobs. Department stores being big concentrations of part time work means they really can add a significant number of jobs.

So yes there are big things going on Downtown as there are in all dynamic places. Some jobs have moved out of the “Golden Triangle” proper yet remained close. Alcoa’s jobs moved over the river. Ongoing dispersal from the old Regional Economic Tower will have an impact. Not that long ago the legacy of Kaufmann’s kept a decent sized back office staff Downtown. All while the banks have all had big expansions Downtown. I think there are more lawyers Downtown than ever and all sorts of other things churning. In jobs or migration, churn isn’t bad. Anyway.

If anyone really thinks jobs located Downtown have shrunk much over the decade… what are parking rates these days? More importantly, has anyone pegged the over/under for what percentage Downtown parking rates will go up as bus routes keep getting cut. I have been thinking about this some. A lot of commuters Downtown will find alternative ways to get to work… but there will not be any real escape for those who pay for parking.

So what do the jobs downtown pay. The same ZBP data also has good data on payrolls. So here is the total payroll at the two Downtown zips going back a few years. So even with a big decline in job counts, the total payroll has generally been pushing up at a rate above that of inflation.

So now put the two together and you get an average payroll $ per job.

This gets more interesting. So the average payroll Downtown peaked at over $66K per job Downtown in 2008.  Finance and law both took disproportionate hits in the recession and are likely the cause of the decline in subsequent years. Again that is just the average which includes the retail that still exists there. So the non-retail average is higher for sure. What was that about parking costs?

Now.. the real question is how competitive Downtown is compared to other areas of the city/county/region. Clearly Downtown has higher paying jobs than most anywhere else, but is it likely to remain so in the future. So I computed the same average payroll per job for the county over the same years. The MSA average is unsurprisingly significantly lower than for Downtown… but here is where the rubber meets the road. How has the ratio of pay been trending. Here is what I get for the average payroll per job Downtown compared to the Pittsburgh MSA as a whole.. Generally a trend up and inthe future we will see if the downdraft between 2008 and 2010 has turned around.

So if anything… the concentration of higher paying jobs in the county, which itself has a disproportionate concentration of the higher paying jobs in the region, is trending up pretty clearly. So the next time you hear anyone even suggest that jobs are fleeing the city or Downtown.. or have ever fled the city in the past… ask to see their data they are basing that conclusion on…

Finally… for the history buffs or those who think all numbers in the past were higher.  On this question of how stable Downtown has employment has been… here is something from p7 of the Mass Transportation Study of Pittsburgh and Allegheny County, Part 2 that the ACCD commissioned in 1951.  Read and compare the reference there for the jobs count in the ‘Golden Triangle’. You might need to click on the image to read the precise number.

Automation and Guaranteed Minimum Income

Here’s a comment Glowing Face Man left on a blog post titled “It’s No Coincidence”:

You (and the supermajority of pundits) labor under the false assumption that everybody needs jobs, that a healthy economy involves 90%+ employment. This simply is not consistent with the reality of automation, it will become less and less consistent in coming decades. Immigration and outsourcing are small factors next to automation. Within a couple generations, almost everything is going to be automated, and a realistically healthy economy would have single-digit EMployment, rather than UNemployment. The proper fix is a completely unconditional universal guaranteed basic income.

I’ll be upfront about my biases as they relate to this subject. First, as a Christian, I believe that man was created by God to work, and therefore it is wholly unnatural for man to not work, and therefore man will always need to have a way of working. I also believe that the unemployment statistics are a useful—though imperfect—barometer of whether people are actually working, as would natural for them. There are obviously some differences between the ideal of work and its reality, but they can be ignored for the time being.
Now, as to the topic at hand, it is entirely true that I assume that a healthy economy is one where everyone works. But it is also true that those who argue for complete automation are making some assumptions of their own. In many ways, the proponents of a guaranteed minimum on the basis of the automation of production (which renders human labor unnecessary) are making several assumptions of their own, some of which may or may not turn out to occur.
The first and most obvious assumption is that the current trend towards automation will actually continue. If the business cycle is any indication, it is not only possible that the trend of automation ceases at some point in the future, it is likely. Just as innovations in papyrus production were superseded by paper production, which was then superseded by the various digital formats, so too is it possible that the current trend towards automation may be superseded by something else altogether.
A second assumption is that advances in technology won’t hit a serious point of diminishing returns. Imagine, for example, the sheer amount of technology that would be necessary to automate, say, apple picking or painting houses. It certainly possible that these activities could be automated (i.e. it is within the realm of technical feasibility). But it is not necessarily possible that it would be worth the R&D costs to automate these things. And there are thousands of more activities similar to these that would have generally high costs of development.
A third assumption is that technology will able to interface with humans in such a way as to handle the vagaries and nuances of human interaction. Which is to say, it is assumed that technology will be able to, say, address customer complaints (or, more broadly, customer emotions).
A fourth assumption, as it relates to the guaranteed minimum income, is that human ingenuity will not spread beyond its current state. By this I mean that it is assumed that humans will not use the eventual automation of production as the foundation for expanding production into new, uncharted territory. Stated another way, the automation of production could enable people to simply open up new frontiers of innovation and production that are not directly based on automation (i.e. open up another level of goods).
A fifth assumption is that the economy will not collapse and undo any of the current technological advances we currently enjoy. Massive economic and cultural collapses usually correlate to technological collapses as well. See the collapse of the Roman Empire for an example. See also Neurodiversity for an in-depth look at the subject.
A sixth assumption is that status-seeking will no longer exist. Quite simply, automation should lead to decreasing prices in what were once luxury goods (see: the costs of silk stockings after the beginning of the Industrial Revolution). Things that were once the province of the wealthy will become available to everyone. As such, wealthy status-seekers will need to find a new way to demonstrate value, which simply turn into direct displays of controlling labor (the current model is an indirect display of controlling labor). Alternatively, the market could invert back to increased demand for direct craftsmanship, like that which was once seen prior to the Industrial Revolution (Etsy seems to be an indication of this trend). This could be easily accomplished with increasingly user-friendly CADs and 3D printers.
A seventh assumption is that human interaction won’t become an economic good. If prostitution is any indication, there is no substitute for another human being. Human nature, generally being a constant, suggests that there might always be demand for other people’s time, and might lead to people getting paid for it, which is simply a higher-order form of employment.
An eighth assumption is that technology will develop to the point where only a few people are needed to manage it. Also, in keeping with this, it is assumed that GUIs won’t be dumbed-down enough to the point where non-engineers can manage them. Given the massive amount of IT support needed to maintain this level of technology, it seems reasonable to conclude that increases in the ubiquity of technology will drive demand for IT, particularly as technology handles increasingly complex tasks. Now, in response, the UIs of technology should dumb down to the point where non-engineers can solve basic problems The cumulative effect of this will be an increase in demand for IT support while simultaneously enabling growth in the pool of potential labor candidates in this field.
As can be seen, there are a myriad of conditions necessary to see the complete automation of production. It is certainly possible that all of them can be met; I will leave it to the reader to determine whether it is likely and whether, by extension, a guaranteed minimum income will be necessary.

The disaster at Maruti

The news from Maruti is disgusting. I have been curiously watching how the stock market takes it in:

That Maruti has serious labour problems has been known for a long time. But the brutality that unfolded in recent days was out of the world. It was news. When I read about it on Thursday, it seemed to me that Maruti was facing a Tata Motors style situation: of suffering the fixed cost of closing down the existing plant and relocating to a state with better governance. The costs faced in this would be substantial. In that case, a 6 per cent decline of the stock price seemed pretty modest. I watched the small recovery on Friday with surprise. Surely, the cost and complexity of moving out of Manesar is worse than 5%.

Today, on Monday, the market has shifted from a less sanguine assessment to a 10% drop in the stock price. I wonder if this is new information or a modified judgment about how this will play out. Were the speculators on late Friday evening just wrong, or did some new information break?

Bad macroeconomic outcomes and social stress

I would conjecture that poor macroeconomic performance — low GDP growth and high inflation — is correlated with greater stress of this nature. With inflation, the logic is straightforward: The worker who had a nominal wage contract finds the need to renegotiate when the value of the rupee changes. This links back to the earlier discussion here on why solving India’s inflation crisis is important. Too often, we in India are cavalier about inflation. But we should see inflation as an acid that corrodes all nominal contracts, whether stated or unstated. Renegotiation is costly.

Turning to GDP growth, most people that I know seem to think that a couple of per cent of real per capita GDP growth is important for keeping the peace. A lot of people become a lot more unhappy when growth slows. Indian democracy does a pretty good job of containing the angst. There will be no revolution here. But life is substantially easier if the engine of GDP growth is purring. When it stalls — as it appears to have done in 2012 — a whole host of social problems erupt.

Law and order as the fundamental foundation of civilisation

This is a reminder to us about how law and order is the fundamental precondition of civilisation. The most important public good of all, the first claim on the resources of the State including the time and attention of the senior leadership, is police, courts and laws. The entire story of the market economy and high GDP growth can only come about when safety of life and property is guaranteed. The events in Maruti are an important reminder to every investor about the weaknesses of governance in Haryana.

In tracking conditions in any state, I find it useful to watch the time-series of the share of the state in the overall all-India investments outstanding, that are `under implementation’, in the CMIE Capex database. Here’s an example, for Bihar:

November 2005 is the date that Nitish Kumar became the new CM of Bihar. He is widely reputed to have made important progress on improving law and order. At first, the share of Bihar (in all-India under implementation investment) continued to drop. I am sure the changes brought about by Nitish took time; Rome wasn’t built in a day. And, after improvements come about, skeptical investors would take some time in making up their minds that conditions are now better. From 2009 onwards, it appears that there is some upward movement. The overall gain seems to be roughly 1 per cent of the all-India total, which is a significant change.

Compare this with Haryana:

There was a big spurt in the share of Haryana in the overall under-implementation investment in India. After that, the numbers have steadily trended down. Is Haryana suffering from a resource curse in terms of proximity to Delhi?

Rethinking labour law

In the early decades about independence, India constructed a remarkable legal framework which was strongly pro-trade-union. Few countries have enshrined trade unions into laws on the scale that India has done. In those years, trade unions were primarily led by socialist/communist parties. While we may disagree with their views, there was a fundamental decency about them. Some of the best human beings in India, in the 1950s and 1960s, were communist. Perhaps this coloured our thinking, and encouraged us to respect and empower trade unions strongly in the legal framework which fell into place over the 1960s and the dark days of the 1970s.

Today, a hyper-empowered trade union is a potent tool for extortion in the hands of local goons. To solve this problem, it is important to rethink the checks and balances embedded in labour law, which have gone too far in the direction of making trade unions strong. Now that we know that the people in trade unions are most likely local goons, do we want to hyper-empower them through labour law?

All time peak employment

Yes it is indeed all time…  as in ever..  peak employment for Pittsburgh employment with the release of June data on total nonfarm jobs in the region.  We will likely see an (I guess I should say another) all time peak employment number for the region for the same period when that data is  released next week.

Yes.. a peak higher than anything before steel declined and now a peak above the somewhat artificial summer of 2001 which had a lot of construction going on.  Take out that itinerant construction employment and the trend has looked a lot more positive over much of the decade than many want to acknowledge.

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Daily ranking: Greene and Westmoreland Counties Ascendant

So first this is a repeat performance as Washington County is showing up again as one of the fastest job gainers in the nation in the 4th quarter of 2011.  #6 among all ‘large’ (top 323) counties in the US. A side note is that that if WashCo had not had that over the top growth last year, it would have dropped off the list for not being among the 323 largest counties in the US.  It is now solidly at #305.

But this this new.. in the same ranking, Westmoreland County ranks even higher in terms of how fast the average weekly wage is going up. #5 across the nation.

One of those funny media things. Nobody noticed the Westmoreland factoid because the press release that went with this data only chose to highlight the counties which had the biggest decreases in wages (those nabobs!). There was no table of the counties with the fastest wage increases as was ranked for employment growth.   Go figure.

Anyway.  Here is a bigger factoid for us.   Below is a table of the latest (4th quarter 2011) data on average weekly wages along with the now complete 2011 annual averages.  For the first time in the annual data, likely ever, Greene County now has the highest average weekly wages of any county in Southwestern Pennsylvania.  So for those who might think geography does not matter any longer, wages of jobs located in Greene county are now more than 50% higher on average than jobs in brodering Fayette County.  The caveat of course that Greene county is the smallest in the region with ~40K folks these days.  Still, someone should send a note to the O-R.

Why is solving India's inflation crisis important?

All of us are aware of India’s inflation crisis. It is very disappointing, how we lost our grip on stable 4-to-5 per cent inflation which was prevailing earlier. From February 2006 onwards, in every single month, the y-o-y CPI-IW inflation has exceeded the upper bound of 5 per cent.

All of us agree that there is something insiduous when 10% inflation effectively steals 10% of the value of my wallet or fixed income investments. In India, however, we often hear the argument “Yes, this is bad, but if high inflation is the way to get to high GDP growth, let’s get on with it”. It is, then, important to ask: Why is low inflation valuable?

Nominal contracting is very important

Complex organisation of economic life involves myriad written and unwritten contracts involving households and firms. The vast majority of these contracts are written in nominal terms, i.e. in rupee values that are not adjusted for inflation.

Every society needs to adjust all the time, in response to changes in tastes and technology. When tastes or technology change, the structure of production needs to change, which involves renegotiation of (written or unwritten) contracts. These adjustments are costly. Contracting is costly, and renegotiating contracts is costly.

It is useful to think of a finite supply of adjustment as being available in the country. We should devote that full power of adjustment to the beneficial adjustments associated with changes in tastes and technology. In a place like India, where GDP doubles every decade, the requirement for adjustment is (in any case) large.

Inflation is an acid that corrodes all nominal contracts. Two people may have agreed on a contract two years ago at Rs.100, but that contract is thrown out of whack because of 10% inflation per annum. That contract has to be renegotiated. Bigger values of inflation corrode personal relationships also, given that there are many financial ties within friends and family.

Contracting is costly. Almost everything that senior managers do is to arrive at complex deals that create and sustain complex structures of production. This work is continually torn down by high inflation which makes the deals of last year break down today. Managers are able to build sophisticated edifices of contractual arrangements under low and stable inflation. These webs of contracting are harder to build and hold up when the acid rain of inflation is continually tearing these down.

Inflation messes up information processing

To continue on the theme of adjustment, the essence of a market economy is adjustments to relative prices, reflecting changes in tastes and technology. Firms learn about the viability of alternative investments by watching relative prices change. Inflation messes up this information processing. It increases the `background noise’ by making a large number of prices change at once. This makes it harder to discern which price change is fundamentally driven, and merits a response in terms of increased or decreased production.

Building a sophisticated market economy is all about making long-term plans. When a firm decides to build an airport or a highway, this involves making NPVs over the next 20-40 years. This requires having a fair idea about future inflation. If inflation will fluctuate in the future, then firms will err on the side of caution when making plans about the future, i.e. investment will be reduced. I will stress that long-term investment, in projects such as infrastructure or heavy industry, relies critically not just on a long-term bond market (which, in turn, critically requires low and stable inflation) but also on the calculations happening in a spreadsheet about the NPV of the investment project, which involves projecting all revenues and all expenses for the next 20-40 years (which also critically requires low and stable inflation).

Impact upon pre-existing nominal savings

For a person at age 60 who expects to live to age 85 or 95, fixed income investments are absolutely crucial in the financial planning of these 25-35 years. These calculations can be destroyed by a short bout of inflation.

A civilised society is one in which people can make plans for the deep future, and trust in financial instruments. It is simply cruel on the elderly to inflate away their nominal assets. The possibility of even one bout of high inflation over the coming 25-35 years forces people to drop back to other mechanisms of protecting themselves in old age. What is needed is not just inflation control right now. What is needed is the environment of mature market economies, where outbursts of inflation are fully ruled out for decades to come.

Impact upon relationship with banks

In India, banks pay very low interest rates. While many interest rates have been deregulated, the interest rates paid by banks are held back by factors such as low competition and financial repression (i.e. forced purchases of government bonds).

When households expect inflation will be 12%, they will see a 4% interest rate paid by the bank as yielding -8%. This has many consequences. On one hand, households and firms expend excessive (wasteful) effort on minimising their holdings of low-yield cash. In addition, households tend to shift away from fixed income contracting with the formal financial system. Both these distortions are caused by inflation, and exacerbated by flaws in the financial system.

If the financial system were regulated sensibly, then with high inflation we would immediately get higher nominal interest rates since buyers of 90 day treasury bills would demand higher interest rates to pay for inflation. This would reduce the damage caused by high inflation. In India, we suffer from bigger negative effects because of a faulty financial system.

These may seem to be small things but they actually are fairly large effects. Towards an understanding of the costs of inflation — II, by Stan Fischer, 1981, argues that perfectly anticipated 10% inflation induces a cost of 0.3% of GDP on account of only one factor : excessive efforts by households and firms to hold less cash.

The rising prominence of gold

Gold is a barbarous relic; it is the investment strategy of choice for uneducated people. It is also a vote of no confidence in fiat money. Our failures in creating a capable central bank, which delivers sound fiat money, are taking Indian households back to their old ways. Many decades of progress in getting households to engage with the modern financial system is being undone in this inflation crisis.

A classic quotation


Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become `profiteers’, who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose.

From Chapter 6 of The Economic Consequences of the Peace, by John Maynard Keynes. Source: Who said “Debauch the Currency”: Keynes or Lenin? by Michael V. White and Kurt Schuler, Journal of Economic Perspectives, Spring 2009.

But is there not a tradeoff between growth and inflation?

For a brief period, the empirical evidence in the US suggested that there was a tradeoff between inflation and unemployment. Here’s the classic picture, for the 1960s in the US:

which shows a nice relationship where higher inflation has gone with lower unemployment. This evidence has led many people, particularly those concerned with the plight of the unemployed, to advocate higher inflation.

A look at the same evidence for the US, over a longer time period, shows no such tradeoff:

The idea that there is a tradeoff between inflation and unemployment is thus an artifact found in the minds of people who studied economics in the 1970s. This proposition was pretty much dead by the late 1970s. One by one, as central banks moved to inflation targeting, aiming and delivering 2% inflation, unemployment went down, not up. Hawkish central banks are the central story about how the stagflation of the 1970s was broken.

In the empirical literature, it is quite clear that by the time we get to double digit inflation, this has a discernable and negative impact on growth. This generally means that at a 95 per cent level of significance, you can reject the null of no effect, in conventional datasets. The conceptual reasoning above gives no reason for believing that there should be a threshold effect, that inflation above 10% should hurt growth but below 10% things should be fine. It could well be the case that when you get to smaller values for inflation (e.g. 9%) this effect size is not detected with conventional datasets at the 95 per cent level of significance.

It is interesting to look at the target inflation rate set in the numerous countries which have setup either de facto or de jure inflation targeting. The median value chosen has been: 2%. If people were convinced that inflation below 10% is not damaging to growth, inflation targets may have been higher. But instead, the typical inflation target in the world is 2%. This underlines the universal consensus in favour of targeting low inflation — more like 2% and far below the 10% that we’ve got stuck with in India.

In the West, some people with a weak grip of economics, and strong sympathy for the unemployed, have argued that high inflation is a good thing because it helps reduce unemployment. In contrast, in India, economists have consistently found that the poor are adversely affected by inflation. There has not been a left-of-centre lobby that is soft on inflation, here.

Conclusion

There is no tradeoff between inflation and growth.

High inflation damages growth.

One element of India’s growth crisis is India’s inflation crisis.

It is important to think carefully about the accountability of the central bank. RBI is not in charge of India’s welfare. RBI is in charge of India’s fiat money. The one thing that RBI should be held accountable for is delivering low and stable inflation, i.e. for holding CPI-IW inflation within the 4 to 5 per cent range.

Low and stable inflation is an essential ingredient of the foundations of high economic growth in India. RBI can lay that platform. They can do no more. If they try to reach into other objectives, they damage this core.

The company we keep

So here is one way to parse some of the labor force data that came out earlier in the week for the region.  While not the top, all I will say is that if this type of benchmarking was done going back in history, for an awfully long time I would bet we placed in the bottom quartile pretty consistently.  When you then factor in that a lot of the places near the top are places that still get a lot of international immigrants coming into their workforce, it is remarkable we are even close.

Don’t ask me what is up with Cleveland.

Uptake of systems like Amazon's `Mechanical Turk' in India

I have long been aware of Amazon’s `Mechanical Turk’, a mechanism through which tasks are farmed out to a large bank of humans. Each human worker has full flexibility on how many hours are worked and when. From the customer’s point of view, Amazon supplies an API and access to a very large pool of humans who can perform small tasks. The median wage is $1.4 or Rs.80 per hour. In effect, Amazon has created a large market through which workers can find work, and firms can find workers to perform well defined tasks.

In a recent issue of The Economist, I was surprised to discover (a) that Amazon’s Mechanical Turk has 0.5 million workers and (b) that roughly a third are from India. That’s roughly 150,000 persons in India who are plugged into Amazon’s Mechanical Turk. We don’t know how many hours/week are spent in doing labour supply, but it’s still a lot.

There are a few other such systems also. Here are links for exploration: oDesk, CrowdFlower, Elance, Amazon’s Mechanical Turk.

These mechanisms add up to a whole new world for the functioning of the labour market. For first world customers who would like to connect up to cheap labour in India, our traditional view was that there had to be a man in the middle – a Datamatics or a TCS or an IBM. What these new systems seem to suggest is that for a certain class of tasks, it is possible to disintermediate the Datamatics or TCS or IBM.

For many individuals in India, the flexibility of working from home without rigidity about how many hours are supplied, and when, these systems could be a big win. At present, many households do not have computers and broadband connections, which is an important impediment. But this is also a constraint that is being rapidly eased through 3G, LTE, etc. These developments, put together, could become a whole new chapter in the story of India’s connecting up to globalisation.

Workers materializing somehow

So the monthly news cycle over the latest dump of labor force data for the Pittsburgh region is pretty muted per the  PGTribPBT.  Not much to say since the numbers are nominally unchanged and any changes you parse out of it are likely well within sample error or other variations that should not be overinterpreted. Yet again, the state is saying the region’s seasonally adjusted unemployment rate was 6.8% in April.   Just fyi the Federal Bureau of Labor Statistics’ calculation is coming in at 6.7% for April.

But here is the bigger  deal again.  The national news is all about how the labor force participation rate is falling as it has been since the ‘Great Recession’.

Yet here is the region’s labor force in April of each year since 1990.

Cleveburgh Steel

Remember when the steel industry rated local news?

The 24 hour news cycle can be brutal.  Just beyond greater Pittsburgh, but near the center mass of Cleveburgh is Trumbull County, Ohio… home to Warren, Ohio and part of the Mahoning Valley were these two stories recently:

24 hours ago the headline was:  Valley employment picture improving

Then a half day later:Over 1,000 RG Steel Workers to be Laid Off.  All of those 1,000 jobs are located in Trumbull County, a county with a total population just over 41K in 2010.

No schadenfreude here…  those headlines were de rigeur here we all know.  Still, the recent news for Pennsylvania is that mass layoffs.

and while some say steel in the greater region is still improving, there are some bigger issues on the horizon.  Steel is ever more an internationally traded commodity.  Just yesterday the US slapped tariffs on steel imports from India.  Whatever the details are in that trade spat, the bigger issue that will only exacerbate the problems of domestic steel producers is the continued appreciation of the US dollar.  Stronger dollar = harder for US producers to sell products elsewhere.  It is a particular issue in the steel industry.