- Prices in the Northeast have risen faster than hourly earnings in the Pittsburgh area.
- Weekly hours have dropped, reducing workers' spending power further.
- Manufacturing and retail trade have been hardest hit so far, but a drawdown of inventories throughout the supply chain could soon turn the situation around.
Historically, the Pittsburgh metropolitan area has been a critical link in the nation's supply chains, through its involvement in the steel industry, manufacturing, and more recently as a technology hub. More recently, health care, scientific research, and education have come to dominate the area's economy. But roughly a quarter of its workers are still involved in the production and movement of goods. For them, these are tough times.
The northeastern region of the United States has experienced more rapid inflation than much of the country, especially in metropolitan areas. If workers' incomes were going to keep up with prices, at least one of two things had to occur: hourly pay had to rise, or hours worked had to rise. For many workers in Pittsburgh, neither of these has happened.
Spending power shrinks
The Bureau of Labor Statistics stopped publishing inflation data for the Pittsburgh area after 2017, but we can still compare hourly earnings to the overall path of prices in the Northeast:
Pay has risen in the Pittsburgh area by about 10% since the Covid-19 pandemic began, but prices have risen by roughly 15%. This means Pittsburgh's workers have essentially taken a 5% pay cut, assuming their hours have kept steady. Yet that hasn't been the case:
Average weekly hours have been stuck below 34 for the past several months after peaking in the spring of 2022. So we can probably knock another percentage point off of Pittsburgh workers' incomes relative to their levels before the pandemic.
Tight budgets get tighter
The situation is likely to be worse for workers on the supply chain. Again, we don't have data just for the Pittsburgh area. But here are the trends in hours at the national level in industries that cover roughly 300,000 workers in the metro:
All of these industries have lower hours than they did before the pandemic began, and manufacturing and retail trade are down by more than 2%.
So what does it feel like to be missing 7% or more of your weekly income? If you're used to taking home $700 a week, then it'll be closer to $650. That's about $2.50 less to spend on every meal, or maybe passing up a nice lunch for two, or a couple of pieces of clothing for kids.
These aren't just hypotheticals. We know from our surveys that most Pros are doing flexible work to pay for essentials, and many of them qualify for various forms of public assistance. That's why we expect that there will be a strong supply of flexible labor as we expand our presence in the Pittsburgh area.
So far, hours per flexible worker in Pittsburgh are lower than our national average, despite close to 90% of shifts being filled. In part, that's because demand in the supply chain has yet to pick up after the huge build-up of inventories last year. When that turns around, though, we expect that flexible workers – and the businesses who use them – will be among the first to see the benefits.
These links offer more information:
These metrics, derived from data aggregated across the Instawork platform, compare the two weeks starting 5/18/2023 to the previous two weeks. To control for the overall growth of the Instawork marketplace, only shifts involving businesses that booked shifts in both periods are included:
- $0.14 drop in hourly pay
- 1.1% point drop in share of short-notice shifts
- 2.1 hours drop in hours per existing worker