Published: October 31, 2009 11:17 pm      

BILL FINDLEY | Strength in diversity

The Johnstown region is no stranger to economic hard times.

We need only to look back to the early 1990s, or to the memorable downturn in 1983, when the unemployment rate rose to nearly 25 percent.

But things are different now.

In what has been labeled the nation’s worst economic downturn since the Great Depression, the Johnstown Metropolitan Statistical Area (MSA) has fared comparatively well.

During the past couple of decades, this area has experienced significant industry diversification, which has been a key factor in improving the resiliency of this labor market during the current recession.

Most notably, the emergence of defense related and high-tech industries – along with sustained growth in health care – have had a very positive and stabilizing impact on the local economy.

Unlike before, overall economic conditions are presently more favorable to withstand a downturn in the economy.

In the past, these events had occurred in a labor market where double-digit unemployment already existed, a few key industries sustained major losses and an extended recovery period was inevitable.

In addition, skill transferability of the existing labor force and retraining options to overcome obsolete skills of displaced workers were extremely limited in the past. Many of these problems have been addressed.

Recessionary trends are evident in changes in employment, unemployment and jobs.

Therefore, the analysis of the impact of this recession on the Johnstown MSA must focus on these key factors spanning a 21-month time period from December 2007 through August 2009.

Each month, hundreds of individuals move between employment and unemployment while others enter or leave the labor market.

Typically during labor market downturns, the labor force declines. However, both monthly gains and losses created an inconsistent pattern during this period.

This may be explained in part by a combination of factors that include workers becoming discouraged and dropping out along with workers losing their jobs. Seasonal movements that provide temporary gains have also come into play.

The total labor force peaked at 69,800 in mid-2009, while the low point of 68,100 occurred in April 2008.

With few exceptions, month-to-month changes through this period averaged less than 1 percent.

Of particular interest is that the jobless rates locally are very closely aligned with both the state and nation. In the past, this comparison was not even close – with unemployment always higher here.

Unemployment statistics have proven to be a reliable indicator of overall labor market conditions. However, the rate locally did not begin to accelerate until January of this year before exceeding 9 percent in July and August.

The increase was primarily due to lost jobs to include both full- and part-time workers.

In addition, the labor-force numbers have remained comparatively high, which exerted upward pressure on the unemployment rate.

While to some observers this substantial rise would be alarming, it pales in comparison to previous economic downturns – when double-digit jobless rates were the norm.

The final component of this report examines the impact of the recession on the jobs in this labor market, which perhaps represents the best overall indicator of economic performance.

In keeping with the state and nation, the area continues to move toward a service-producing economy.

Presently, the service-producing industries account for just less than 90 percent of the area’s total jobs. Leading industries include trade, government, professional and business services, and health and education. The goods-producing group, dominated by manufacturing, makes up the balance of jobs in the area.

An analysis of month-to-month job changes from December 2007 through August 2009 revealed both job gains and losses throughout this period. However, all major industry segments reported fewer jobs at the end of this 21-month interval. Manufacturing jobs have dropped by 400, while consumer-driven industries – including trade, leisure and hospitality – fell by 1,200 or 8.0 percent. Professional and business services reported 900 fewer jobs while education and health services moved downward by 900, or 6.0 percent.

The total job level declined by about 7 percent.

The strongest industries among the service providers through this period continue to be education and health services, followed by trade and professional and business services.

Interestingly, in previous economic downturns, area manufacturers were by far the hardest-hit group and accounted for very substantial losses. This time, that trend is reversed.

This report examines how changes have improved the resiliency of the Johnstown labor market during recessionary periods.

In reviewing labor force, unemployment and job changes, we can readily see the value of economic restructuring and other steps taken through the years to improve the economy and better position this area to withstand local economic downturns.

Industry diversification, better communication between employers and training providers, efforts to retain young workers and the constant efforts to attract new industry all have made a very substantial difference – not only now, but well into the future.



For 40 years, Bill Findley was employed by the state Department of Labor and Industry Center for Workforce Information and Analysis as a workforce information specialist, monitoring and reporting on labor market developments in this area and across the region. He is a graduate of Pitt with a bachelor’s degree in business administration.