Wage growth continues to be a bright spot in the southwestern Pennsylvania economy, the latest U.S. Bureau of Labor Statistics data suggest.
The average weekly wage in the seven-county Pittsburgh Metropolitan Statistical Area grew 4.1 percent from the second quarter of 2016 to the second quarter of 2017 – the fourth highest growth rate among the 15 Pittsburgh Today benchmark regions and above the benchmark average increase of 3.5 percent.
The Pittsburgh MSA’s average weekly wage reached $1,004 in the second quarter of 2017, which is in line with regional counterparts such as Detroit, Cleveland and Cincinnati, but well below below big coastal cities like Boston and Seattle. The average wage among benchmark regions is $1,073 a week.
Wage growth is emerging as a consistent strength of the southwestern Pennsylvania economy, which has struggled to add jobs and sustain the local labor force at pre-recession levels. “It is making Pittsburgh more competitive,” said Kurt Rankin, an economist and vice president for PNC Financial Services.
Second-quarter wages in the region have grown more than 9 percent over the past five years.
Pushing wages upward
Competition for workers, weak job growth and a labor force that defies meaningful expansion are among the factors that contribute to the rise in local wages.
“If you want more workers, you pay more wages,” said Chris Briem, regional economist at the University of Pittsburgh University Center for Social and Urban Research. “I think the overall wages reflect the job growth and the pressures in the labor market. Up until the past few years, there hasn’t been much pressure that would push these wages up.”
Even when the Pittsburgh region has had sustained job growth, other factors have eased the pressure on employers to raise wages, he said. While many regions for decades have had to compete for workers in the national labor market, employers in the Pittsburgh MSA could look to fill positions locally with women – who were historically underepresented in the Pittsburgh labor force – and older workers, many of whom have delayed retirement to stay on the job.
The region’s tight labor market also encourages companies to pay higher wages to retain employees and attract others to fill open positions. The labor force contracted more than one percent from October 2016 to October 2017.
Pittsburgh and St. Louis were the only Pittsburgh Today benchmark regions to report labor force declines in October. And, at 1.2 million workers, the southwestern Pennsylvania labor force has now slipped to a level slightly below the number of people who were in the workforce 10 years ago.
Weak job growth that has dogged the region for longer than a decade deserves much of the blame for tamping down labor force expansion, Rankin said. Meanwhile, the Pittsburgh MSA has experienced three consecutive years of negative domestic migration, during which more people moved out of the region than moved in.
“If you are not creating jobs, then you’re not going to bring in labor force and you are going to lose labor force to places where jobs are being created.”
Continuing the trend of rising wages in the region could help stimulate both job growth and labor force expansion. “With strong wage growth, workers are able to buy more, and spending locally helps to sustain the local economy,” Rankin said.
Pittsburgh Today senior editor Jeffery Fraser contributed to this article.