Pittsburgh Dark and Light

Depending where you look, you can get two different views of Pittsburgh’s economy. On the gloomy side of the street, Pittsburgh dramatically underperformed its 15 benchmark regions last year. We had virtually zero job growth. We had the highest unemployment rate. And our average weekly wages rose just .8 percent—only a third of the benchmark average. And if that wasn’t enough, 2017 started with the news that Heinz Kraft’s CEO is moving to Chicago, effectively taking the headquarters of one of Pittsburgh’s oldest and most famous companies with him.

Pretty grim, all in all, right? Well, actually, no. Let’s take a walk down the sunny side of the street and see what Pittsburgh looks like from there.

As it turns out, the region’s economic malaise last year largely can be boiled down to the collapse of oil and gas prices and the freeze in the Marcellus industry. Companies shed jobs and slashed payouts. Local governments and landowners saw D their impact fees and royalty checks shrink. It all rippled across the economy, all the way to the hospitality sector. In the wake of last year, the importance of oil and gas to this region’s prospects couldn’t be clearer. It turns out that the biggest reason that Pittsburgh has looked so strong economically since the depths of the Great Recession is the oil and gas boom. While other regions faltered, we sailed ahead. Yes, we’re diversified, but the secret, differentiating engine was the Marcellus. Without it, we’re back to the somnambulant numbers of the past. The good news is that industry is still here, prices are rising again, and the Shell cracker plant is poised to deliver a huge shot in the arm.

Regarding Heinz, it may hurt to think of the company being headquartered elsewhere, but former CEO Bill Johnson effectively cast the die for the headquarters move when he sold the company four years ago to 3G Capital. And Kraft Heinz is expected to remain an important regional employer, (though spokesman Michael Mullen declined to say how many jobs are still here).

History is important, but it’s nothing compared with the spark of future vitality. And since 2017 began, Pittsburgh has been throwing off sparks galore.

The biggest is the infusion of some $250 million ($80 million from the Department of Defense) to create the nation’s leading robotics center in Hazelwood. The Advanced Robotics Manufacturing Innovation Hub involves a collaboration of 125 companies, more than 60 government agencies and nonprofits, and 40 academic institutions. And it’s expected to become a major generator of practical research, jobs, and innovation.

In the same neighborhood, Uber is about to open its research and test facility for self-driving cars, complete with temporary roadways. Along with the national attention Uber has already brought to Pittsburgh, that facility is expected to create dozens of jobs. And just across the river at the SouthSide Works, Amazon is the latest major tech company to open shop in Pittsburgh, announcing 50 new high-end jobs that will augment the hundreds of fulfillment jobs already in the region. Like Google, Uber and Intel before them, Amazon wants to be near the brainpower at Carnegie Mellon University.

And what brainpower it is. January saw CMU computer science professor Toumas Sandholm do his own rendition (albeit mild-mannered) of Muhammad Ali’s “I shook up the world!” The computer program Sandholm created—“Libratus”— soundly drubbed an array of the world’s best human poker players in a Pittsburgh exhibition of No-Limit Texas Hold’em. In so doing, it reached a new landmark for artificial intelligence. The program wasn’t built to play poker, of course; it was created to make the best decisions in conditions of imperfect information— circumstances that sum up most of life’s situations. No surprise that there’s widespread interest in Sandholm’s creation in the private and public sectors.

The same can be said of Pittsburgh’s prospects. The road to the future will have potholes, but you can now see it, stretching off into the distance.