If There's Life After Steel in Pittsburgh, There's Still 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.

In the Big Three bailout discussions, there was a lot of hysteria about the significantly negative impact of a GM or Ford (F) 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.

Comments

[John D:]

One should also see that buying from Detoit that it is a great way to make your investment as a taxpayer prosper returning a larger profit on the loans to the big 3 and help the ailing economy by providing a proven 30% more jobs to the local economy than the imports and help out greatly in these desperate times for all. When Detroit's doing GOOD the economy is usually doing GREAT!!

Jan 09 07:46 AM

[Paul Killinger:]

Mark,

Agreed. What typifies such post-industrial communities is their first-rate colleges and universities. I suspect Michigan ranks highly in this regard.

What happens is this "knowledge base" attracts business start-ups dependent on a well educated, eager workforce. Almost all the NET new jobs in the U.S. have been created this way over the past 40 years.

Dr. David Birch at MIT was the individual who discovered this trend. People who care about the future of Michigan should read his ground breaking work pinpointing where jobs actually come from.

It would also be helpful if political leaders in Michigan and Washington would figure this out, as well.

Jan 09 09:25 AM

[Paul Killinger:]

Here's another shocking fact. The U.S. is no longer even the technological leader in the automotive world, having ceded this title to the Japanese and the Koreans. Talk about a new economic opportunity for Michigan!

Jan 09 09:44 AM

[slowdown:]

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-intensiv... one-company town to a service sector economy. If a transition can happen in Pittsburgh and Flint, it could realistically happen anywhere.
++++++++++++++++++++++...

I’m not sure what you thought you documented…but there has not been a shift of anything in Flint or surrounding areas – I know – I live there and work in the Detroit area…. every day I hop in my car and drive 54 miles to work…because there wasn’t a transition from one industry to another. This week the unemployment numbers for the Flint area were rolled out and they have hit 12%. I love how everyone thinks that the only thing that is being outsourced is manufacturing and the “service sector” will pick up the slack….bad news – it’s been outsourced too.

I would like to take this opportunity to personally thank Mitch Albom for the article he wrote that appeared on SI.com last week - sportsillustrated.cnn..... It is the reminder for those of us who live and breath automotive of who we are, how we got here and what we do. I am a Senior Buyer and I work for General Motors. I love my job, working with my cross-functional teammates (including my UAW co-workers) and I am passionate about automotive manufacturing. We all are. We are a tenacious group of hard workers and we are not overpaid (I don’t make anywhere near the six figures that my counterparts in the Financial Sector earn). Our entire supply chain is very focused and diligent about removing excessive cost from our processes as we have been for several years. We were making great progress towards aligning ourselves to be competitive globally in every aspect of the business from technology to compensation. And now we find ourselves in this place – and as Mr. Albom points out, enough is enough! This is me….screaming - WE WILL NO LONGER TAKE THE BLAME FOR THIS MESS!! We will however, help you clean it up…. because it’s what we do. The unemployment rate is approaching 10%….that means that 90% of us are still working. Let’s start there.

Jan 11 02:01 AM

[working at ...:]

I love how the numbers do not lie.. The problem is that liars(mr I have a phd and don,t have a real job). use numbers. First I would like to know how bad housing got before it started to get better. Second if the unemployment benefits have expired for the layed off workers then they cannot be counted as unemployed. Third, how many have move away to other cities and states looking for a good job. I have read that up to 80% of the autoworkers employed by the transplants were previously employed by the steel and auto companies in the mid-west. and last If the US based auto do fail how long will the revamped pittsburgh steel industry last without there biggest customers.

Jan 12 11:47 AM