Pittsburgh’s unemployment rate has dropped to its lowest level since the 1970s — extending a positive trend for workers but spelling trouble for the region’s economic growth.
In November, the unemployment rate fell to 4.0% in the seven-county Pittsburgh metropolitan area, according to the latest data from the Pennsylvania Department of Labor and Industry. That figure is the lowest since 1976, when the department began to record the statistic. It represents a decrease of 0.1 percentage points since October and mirrors the statewide picture: Pennsylvania posted its lowest rate on record, 4.0%, in both October and November, the department said.
Job seekers have been in short supply since the economy began to reopen from COVID-19 shutdowns in mid-2020, and the unemployment numbers show that phenomenon continues. But while the labor market remains tight nationally too, Pittsburgh could be losing out to other parts of the country in the competition for workers.
“The unemployment rate is low everywhere, so hiring is difficult everywhere,” said Chris Briem, a regional economist at the University of Pittsburgh’s Center for Social and Urban Research.
“It makes it even more challenging for employers here locally to find workers and to keep workers because those workers are finding opportunities around the country, not just here.”
A year ago, southwestern Pennsylvania’s labor force, which includes people who work or are looking for work, shrunk to its smallest size in three decades. While it grew steadily most of this year, with a slight dip last month, it lags the national pace of growth. The U.S. has recovered 101% of its workforce since late 2019, the Pennsylvania Economy League of Greater Pittsburgh reported in November. The Pittsburgh region, by contrast, has made up for 96% of pandemic losses.
Briem doubts that local workers are more likely than their national counterparts to have dropped out of the labor force.
“There are a lot of other things going on here, and I don't think there's any reason to believe it's coming from this mass of people who are out there … not working,” he said. “It could very easily be that … we might have a slowdown in the rates at which workers are moving into the region. We might have an outmigration of workers.”
Remote work has likely accelerated those shifts, Duquesne University economics professor Risa Kumazawa said.
“Pittsburgh has traditionally had problems trying to attract younger workers,” she said. “People may not necessarily want to move to Pittsburgh if there [are] alternatives.”
Population growth in the region could therefore continue to stall, hampering economic growth.
“When there are increases in population, there are more jobs that come about,” Kumazawa said. “More people are spending money. But we don't really see that if the population is not increasing.”
She predicted that a recession will soon cool the labor market.
“The [Federal Reserve] has been raising rates to fight inflation, and by doing that, it actually has the effect of slowing down an economy,” she said. “There's going to be more joblessness as a result of the economy shrinking.”
But economists continue to debate whether a recession is imminent. Although the national gross domestic product fell in the first half of the year, it rose during the summer, and there are no signs of a slowdown in hiring.
“That tells me [employers] are out there actively looking to hire more workers, which will only eat into the number of folks who are out there looking for work,” Briem said. “So I certainly would think that the unemployment rate will tick down, barring some indication that there's a macroeconomic downturn.”
The rate won’t fall below about 2%, however, because some unemployment is inevitable as people move between jobs, Briem said. His analysis of historical datasets that predate the state’s records shows that the lowest unemployment rate ever recorded locally was 2.4% in December 1967. The U.S. had enjoyed a long period of economic expansion, and manufacturing had peaked. Briem noted that researchers at the time defined the Pittsburgh region differently. He said they began only in 1946 to consistently track metropolitan-level labor force statistics for the area.
