Pittsburgh and Detroit: A Tale of Two Cities

Aug 1, 2013

Did the federal government's bailouts of the auto industry worsen the city's predicament?
Credit Dave Rezendes/Flickr

Since the beginning of the great recession, Pittsburgh has often been touted as a shining symbol of economic recovery in the rust belt, while Detroit has become the poster-child of nearly apocalyptic economic strife. So what has allowed the Steel City to thrive while the Motor City has stalled? According to Antony Davies, an Associate Professor of Economics at Duquesne University, the answer lies in the two city’s differing approaches to the collapse of their largest industries.

He notes that while Pittsburgh weathered the painful collapse of the steel industry without support, “when Detroit fell on hard times, it turned to the federal government.”

The result, Davies contends, was that one city gave entrepreneurs an opening to fill the needs of the region, the other maintained a large and dying industry that forced out new businesses which would be critical to the sort of diverse economy capable of recovery.

While she doesn’t disagree with Davies’ take on the federal bailouts of the auto industry, Barbara Ernsberger former Commissioner of the City of Pittsburgh Department of Planning says that another key difference is the way that the two cities handled their pension obligations. Detroit has become locked in a downward spiral where a diminishing population shrinks the tax base and makes the city’s pension obligations even more burdensome. Meanwhile, Pittsburgh has been able to make massive cuts to its pension obligations, thus freeing up revenue and keeping the city afloat.

Ernsberger also emphasized, however, that Pittsburgh “has to be proactive” in continuing to grow and improve in the new economy. By using its advantageous position to entice companies from around the world to invest in the city, the Steel City can continue to avoid the Motor City’s fate.