Unemployment Continues to Drop

Photo by Rich McPeek


Unemployment fell slightly in southwestern Pennsylvania during the first month of 2018, but expanding the regional labor force continues to be a problem.

The seasonally adjusted unemployment rate in the seven-county Pittsburgh Metropolitan Statistical Area decreased from 5.3 percent in January 2017 to 4.9 percent in January 2018, according to data from the U.S. Bureau of Labor Statistics.

“The unemployment rate inspires optimism,” said Kurt Rankin, an economist and vice president for PNC Financial Services. “We’ve had a couple of periods in time with unemployment rates lower than that, but they were brief periods during national bubbles that eventually burst. There are no bubbles across the country that threaten to push Pittsburgh’s unemployment rate up.”

Within the region, Allegheny County had the lowest unemployment rate at 4.5 percent, while Fayette County had the highest at 6.8 percent for the most recent year-over-year period.

The region still lags the national unemployment rate, which is 4.1 percent.

“It’s not significant that Pittsburgh’s unemployment rate is higher than the national unemployment rate,” Rankin said. “Pittsburgh’s unemployment rate is still only slightly above the lowest it’s ever been.”

Labor force woes

Continued declines in the labor force, however, could be more problematic long term. From January 2017 to January 2018 year-over-year, the number of people in the Pittsburgh MSA’s labor force decreased by 6,500 and the number of people employed decreased by 1,600.

A tight economy with a low unemployment rate coupled and declines in the labor force concern Rankin. Even with modest job growth last year, the regional economy continued to struggle to attract workers to the region. It is a trend Rankin expects to see continue.

He said expansion of the region’s labor market is likely to continue to be an issue, at least in the short term. Developments that could improve the outlook include a resurgence of the local natural gas industry and hiring in that sector.

New industry could also spur labor force expansion, depending on the types of jobs created. Jobs on the lower end of the wage scale, for example, typically don’t attract large numbers of workers.

“It’ll take more than the ongoing economic activity to drive job growth more strongly and, in turn, draw more people into the labor force,” he said. “Right now, there are no industries that are growing rapidly and have wages that are commensurate with other parts of the country.”