Pittsburgh Shows the Way to a Rust Belt Rebound
(Bloomberg View) -- I vividly remember a time back in 2007 when some people I knew were marveling at an online ad for a house in Pittsburgh selling for $1. Of course, the true cost of houses being auctioned for almost nothing is much higher, since you have to rebuild and maintain them. But it just served to illustrate Pittsburgh’s battered reputation as a post-industrial sob story, a tumbledown slum where no one would want to live.
A decade later, how things have changed. Pittsburgh is hot. A growing mecca for millennials, Pittsburgh regularly earns a place on the list of “best cities to live” and “coolest neighborhoods in America.” It’s being hailed as the next tech industry hotspot, and even old-line manufacturers like Alcoa Corp. are moving back to the city. How did things change so quickly?
It helps to put Pittsburgh’s boom in perspective. As urban success stories go, Pittsburgh’s is a humble one. Despite all the buzz, the city hasn’t dug itself all the way out of the deep hole it fell into after the collapse of its signature steel industry. Allegheny County, in which Pittsburgh is located, still only has three-quarters of the population it had in the 1970s:
But for a Rust Belt city whose basic reason for existence had seemed to vanish, Pittsburgh has done a decent job of getting back on its feet. One way to see this is to compare Pittsburgh to similarly sized former manufacturing centers in the Midwest, like Cleveland and Milwaukee. Here, Pittsburgh stands out as a modest success. Its population and its economy have grown more since the Great Recession:
And its wages are a bit higher:
So while Pittsburgh hasn’t exactly become a boomtown, it’s still an example that other cities in the region should try to emulate.
The common story is that Pittsburgh revived itself by becoming a university-centered technology hub, like Austin, Texas; Raleigh, North Carolina; or San Diego -- the industries of tomorrow replacing those of yesterday. Carnegie Mellon University, ranked 25th in the nation, has cooperated closely with industry and government to help revive the town. The school’s Robotics Institute, founded in 1979, and its National Robotics Engineering Center, which helps commercialize technologies invented on campus, have given the former Steel City a new reputation as Robot Town. The self-driving car industry has flocked to Pittsburgh, which now boasts a large Google campus and was the site of an Uber Technologies Inc. autonomous vehicle pilot program. Pittsburgh also has a growing startup scene, with incubators like AlphaLab that help shepherd university graduates into the business world.
Tech hubs can’t be built without smart workers, and universities alone aren’t sufficient to attract them. This typically involves creating things that smart young people like, such as an art scene, fashionable neighborhoods and a lively downtown. The Pittsburgh Cultural Trust, funded by foundations created by the industrial titans of yesteryear, has been helpful for creating these.
So all the typical ingredients of the modern American urban success story are there -- an educated and diverse workforce, a great university, and close cooperation between the public, private, nonprofit and academic sectors. Another factor may be financial -- after a crisis in 2003, the city cut costs dramatically. Although painful in the short run, that probably eased the looming burden of tax hikes, making businesses and workers more comfortable moving to the region.
Which other cities can emulate Pittsburgh’s turnaround? The obvious candidate is Cleveland, a city to which Pittsburgh is often compared. Cleveland has languished economically, especially since the recession, and is still losing population. But it does have a key asset in the form of Case Western Reserve University, which has about two-thirds as many students as Carnegie Mellon does and is ranked only slightly lower.
Cleveland might seem an unlikely site for a technology cluster -- but then again, so was Pittsburgh. Already, the school does a good job of commercializing research, though that’s not always the same thing as building businesses. One strategy would be for Case Western to create a large, prestigious, well-funded research institute that established it as a leader in one particular area of technology, as Carnegie Mellon did with robotics. One idea might be nanotechnology, given Case Western’s prowess in chemical engineering. Other than Silicon Valley, the U.S. doesn’t have a Nanotech City; perhaps that could be Cleveland.
Beyond the core of university research, Cleveland should make sure to either establish or enhance the sort of deep, fluid, regular cooperation between elites in business, city government, academia and nonprofits that are the hallmark of Pittsburgh and of Sun Belt success stories like Austin and Raleigh. Downtown redevelopment, funding for arts and culture, transit, and the creation of a few trendy neighborhoods that appeal to educated young people are all good goals. Nor should Cleveland forget the importance of immigrants and diversity -- a city with few immigrants that is still mostly white and black, Cleveland could benefit from an influx of newcomers.
The road back from the economic devastation of the Rust Belt won't be easy. Even Pittsburgh hasn’t fully made it out. But its success should inspire hope -- and good ideas -- in other Midwestern cities like Cleveland.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Noah Smith is a Bloomberg View columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.
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