Forget the jokes: Pittsburgh's now a model of new economy

McClatchy NewspapersSeptember 24, 2009 

PITTSBURGH — At a 1983 Iron City conference here on training laid-off steelworkers for high-tech jobs, President Ronald Reagan acknowledged their despair, joking darkly that he was there not just as a speaker, but as "a possible victim."

The Pittsburgh where President Barack Obama hosts the Group of 20 summit Thursday night and Friday is not the decaying steel-industry center of old, however.

After a long, deliberate transformation, this city is hopeful, though smaller, with a forward-looking economy and a rising "green" reputation. The logo atop the U.S. Steel Tower downtown now says UPMC; it's headquarters for the University of Pittsburgh Medical Center, the region's largest employer, with 50,000 jobs. U.S. Steel's headquarters remain in Pittsburgh, but most of its plants are in other states or countries.

To be sure, there are lingering concerns. Many young people leave. Some steel jobs gave way to ones that pay less. The unemployment rate here topped 17 percent in the early '80s, but it was below 8 percent this summer, lower than the national average.

Still, many Pittsburghers see their hometown, still working-class and Midwestern, as a sensible site for a conference that's aimed at guiding the global recovery from recession. It may serve as a model for other places — Cleveland, Detroit or old European cities _that are looking for a post-manufacturing road map.

"Pittsburgh stands as a bold example of how to create new jobs and industries while transitioning to a 21st-century economy," Obama said.

On Tuesday, Microsoft's Bill Gates dedicated a major computer-science complex at Pittsburgh's Carnegie Mellon University. Two other Pittsburgh-region successes that Obama cited recently are East Penn Manufacturing, which makes batteries for hybrid vehicles, and Serious Materials, which rehired workers at a once-shuttered plant to make energy-efficient windows.

The Thomas E. Starzl Transplantation Institute at UPMC has long been a leading liver transplant center. The McGowan Institute for Regenerative Medicine is researching tissue engineering to aid those with injuries, including wounded soldiers.

Pittsburgh-based PNC Financial Services Group Inc. has built all its new facilities since 2000 to Leadership in Energy and Environmental Design standards, recognized "green" building standards on energy, water and pollution. PNC claims more newly constructed LEED-certified green buildings — 68 — than any other company in the world.

The David L. Lawrence Convention Center, where the G-20 is meeting, claims it's the world's first "green" convention center, with a reflective roof, water recycling and food composting initiatives.

While the city's population has shrunk to 311,000 — half its size in the mid-20th century — about 2.3 million people live in the metropolitan area. Of 1.15 million nonagricultural jobs last year, a little more than 1 percent were in primary metal industries, and fewer than 9 percent were in manufacturing of any kind, according to the Bureau of Labor Statistics and the Allegheny Conference on Community Development.

About 20 percent of the region's jobs last year were in health or educational services, and another 20 percent were in finance, insurance or business and professional services.

Lester Lave, an economics professor at Carnegie Mellon University's Tepper School of Business and the director of the university's Green Design Institute, compared those numbers to the old steel industry days.

"If you go back to World War II, 60 percent of the employment in the area was primary metals, steel and aluminum, and the place was so heavily polluted in terms of air and water pollution, it could not persist," Lave said.

An old joke went that "if you had a white-collar job you had to bring two shirts to work because by noon your shirt would be filthy."

In 1948, an air pollution emergency in Donora, 20 miles south of Pittsburgh, killed 20 people and sent more than 7, 000 to the hospital.

By the early 1980s, however, the steel industry was collapsing.

"It was absolutely devastating," Lave recalled. "The steelworkers and the political establishment kept trying to bring back the steel industry, even though it was clear it wasn't going to work."

Change was gradual, and painful. Some steelworkers retrained and found new work; many didn't. Some retired. Many left town.

"There are a lot of people who were left behind in this. You could be very prosperous in the steel industry with a high school education or less. That doesn't cut it now," Lave said. Blacks who worked in the industry were hit especially hard, he said.

As civic leaders looked to regroup, "there were three things we had in place," he continued. "One was the financial companies, Mellon bank, PNC. The second was the universities, Carnegie Mellon and the University of Pittsburgh. And the third was medical care. The Pittsburgh renaissance was really built on those three.

"Clearly, there's something vibrant here, something economically successful here that people are proud of," Lave said. "I think much of the world is going through this. Much of Europe is in this circumstance of finding what it was their economy was built on in the past is not going to be there in the future. You can either face up to that or make believe it is going to come back. You're clearly better off by recognizing that something isn't viable."

People in Pittsburgh's streets reflect the city's changing character.

Tara Wurdeman, 28, a registered nurse who moved to Pittsburgh a decade ago, said that "Older people talk about how they used to be in the steel industry, but I don't know much about it." Wurdeman's boyfriend, who works in construction, recently helped build a "green" house in town and wants to specialize in environmentally friendly projects.

Michael Altieri, 51, a Pittsburgh native who installs custom residential audio and video systems, said the rise of high-tech business had helped his line of work. "We're dealing with the upper-income, so as the economics improve, our business improves."

Sheila Milton, a Pittsburgh native in her 50s who works on the cleaning staff of a major local employer, said of the changes, "I think they're more for the upper class.

"I know the city itself has come up, from the smoky city." In her own life, however, "I don't see no great difference. I think we've got a lot of work to do."

Terry Madonna, a political science professor and the director of the Center for Politics and Public Affairs at Franklin and Marshall College in Lancaster, Pa., said the Pittsburgh area "is still suffering from the brain drain. A lot of young people graduate from high school and go somewhere else. I wouldn't make the case that Pittsburgh is Silicon Valley."

Nevertheless, he said, its successes are worth holding up as an example. "It certainly does show how the economy of a region in 30 years can go through a transformation."

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