Detroit, Michigan is teetering on the brink of collapse but it might be able to save itself by taking a good look at Pittsburgh, Pennsylvania.
Back in the '70s and '80s, Pittsburgh’s steel industry collapsed and hundreds of thousands of people left town. This is similar to what we’re seeing now in Detroit with the auto industry.
Pittsburgh, in effect, died. It had to find a way to reinvent itself after it had been relying on just one industry for economic growth for so long. So Pittsburgh turned to what residents and local economists might call "recession-resistant" industries, like health care and education.
Many locals call it the "Meds and Eds” economic approach. It seems to be working.
The University of Pittsburgh Medical Center is now the biggest employer in town with 26,000 people. Carnegie Mellon University is well known for an innovative Robotics program, and biotech is hot here.
Even the first office tower in downtown in 20 years is under construction. Guess who’s building it? PNC Financial Services ... a bank! Call it luck, but PNC pretty much got out of the mortgage business before the whole subprime mess and never wrote bad loans so they are actually growing without any stimulus money! Their conservative style paid off.
These reasons are why experts say Pittsburgh might make a good model for Detroit. Both cities long relied on one industry, have strong research universities and have seen their populations shrink.
And it’s not just that Pittsburgh is surviving, it’s thriving. Foreclosures are down, while in the rest of the country they’re up. Unemployment has crept up to 6.5 percent, but it’s still well below the national unemployment rate of 8.1 percent.
Home prices in the Pittsburgh region increased, on average, by nearly 1 percent in 2008, while nationally, home prices declined 8.2 percent, the steepest annual amount on record. Moody’s says Pittsburgh will be the only city out of the top 100 U.S. metropolitan regions to post a gain in housing prices one year from now.
Detroit should take notice. There may be a life-saving lesson here. Sure, Pittsburgh isn’t perfect. It will lose jobs this year and condo sales downtown have slowed, but TIME Magazine calls Pittsburgh, “One of the Bright Spots on Main Street.” That’s a pretty big compliment when the economy is in the tank, don’t you think?
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