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Pittsburgh area jobless rate falls; reflects shrinking labor force

| Tuesday, April 1, 2014, 1:09 p.m.

The Pittsburgh area's unemployment rate declined in February, but the number paints a misleading picture about the strength of the region's job market.

The seven-county seasonally adjusted jobless rate fell two-tenths of a percentage point from January to 5.8 percent, according to preliminary figures released on Tuesday by the state Department of Labor & Industry.

But the drop in the unemployment rate during the past year is largely because of the shrinking pool of workers. People who have stopped looking for work, perhaps because they are frustrated, are not counted as unemployed.

The regional economy added 5,800 jobs in February, according to a survey of employers, but the totals still lagged from what they were at the same time last year. January's number was revised downward by 2,800 — a more dismal employment picture than previously believed.

“January was worse than they had originally anticipated, and February's picking up where that left off,” said Frank Gamrat, an economist at Allegheny Institute for Public Policy, a Castle Shannon think tank. “So we're hitting a period of softness in the economy.”

Particularly concerning is a stalled market for educational and health services, areas that had been bright spots in the regional economy during the past decade, Gamrat said.

The job report showed some growth in that sector from January to February, attributable to the start of the spring college semester. The numbers were unchanged from a year ago, however.

“That's where we had been seeing strength in the economy for the better part of 10 years, in health and education,” Gamrat said. “And now with zero … where we once saw growth we're not seeing growth, and that's sort of concerning.”

The unemployment report was released as the Hospital Council of Western Pennsylvania, a trade group, said hospitals on this side of the state eliminated more than 2,000 full-time positions during the past year.

Those job losses are in response to cuts in Medicare reimbursements and as hospitals provide more care to people who cannot afford to pay, according to the industry group. The trend among employers to offer high-deductible plans is shifting the cost burden on patients who don't have the money to cover their portion, said Denis Lukes, the council's vice president of financial services.

The 57 Western Pennsylvania hospitals included in the report provided $563 million in care for which they were not paid through the first half of fiscal year 2014, an increase of nearly 14 percent from the same time the year before.

So, many hospitals are cutting jobs.

“The economics of health care are such now that hospitals are looking for ways to balance their bottom lines,” Lukes said. “And more than half of hospitals' costs are people costs.”

Most sectors of the Pittsburgh-area economy ended up reporting declines from the past year, according to the state's employer survey. Mining and logging was an exception, with an increase of 500 jobs in the past year, driven by Marcellus Shale gas drilling.

Still, providing just 10,700 jobs out of more than 1 million, mining and logging remains a tiny part of the economy.

“Mining and logging is up 500 and that's nice, but it's only a 10,000 job sector,” Gamrut said. “People always tell me Marcellus shale, but it's not a big part of our economy.”

Chris Fleisher is a staff writer for Trib Total Media. He can be reached at 412-320-7854 or cfleisher@tribweb.com.

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