A view of Pittsburgh’s skyline from Mt. Washington in 1904 (left) and 2012 (right)
now one of the top 10 hospital systems in the country, replaced U.S. Steel as the region’s largest employer. An $8 billion health care conglomerate with 50,000 employees, UPMC is now headquartered in the old U.S. Steel Tower, the city’s tallest building. Lest anyone forget how the times have changed, UPMC’s logo sits on top of it. With the help of grant-funded research, dozens of technology companies were born in the shadows of these universities. Fore Systems, a computer network switching equipment company, was founded by four CMU professors in 1990. A few years after a very successful IPO in 1994, it was acquired by a London-based company for $6.4 billion, adjusted for inflation. Myers called Fore Systems “a grand slam home run for the region.” It was one of many. Freemarkets Inc., a software company, and Respironics Inc., a medical supply company, are similar success stories. More than 30 robotics companies make Pittsburgh one of America’s major centers for robotic innovation. They are the product of CMU’s Robotics Institute, the world’s only Ph.D. program in robotics. With the turn of the century, the pace of progress accelerated. Whole Foods, Home Depot, and Trader Joe’s set up shop in the city. Then Google moved into a converted cookie factory — part of $131 million redevelopment project — just outside of the East Liberty neighborhood. East Liberty’s 6
turnaround is Pittsburgh’s renaissance in a microcosm. This neighborhood of about 6,000 residents is wedged between some of Pittsburgh’s wealthiest and poorest areas. Crumbling office and commercial buildings have been converted into apartments, promising “urban chic” for people working at the nearby hospitals and universities. The 2011 average sale price for homes in East Liberty was about $80,000, daylight robbery by Manhattan standards. This modest sum, attractive for many young professionals, is still up more than 60 percent from a decade earlier. The CEO of Google, Eric Schmidt, explained the search engine’s expansion into the city. “Much of computer science was invented here,” he told an audience at a Pittsburgh Technology Council event in 2009. This was a few days before the city would play host to the world’s wealthiest nations at the G-20 Summit. White House spokesman Robert Gibbs explained the administration’s choice of city: Pittsburgh “has seen its share of economic woes in the past, but because of foresight, investment is now renewed, giving birth to renewed industries that are creating the jobs of the future.” The event was the city’s cherry on top, the irrefutable stamp of approval that Pittsburgh had pulled off an unprecedented Rust Belt recovery. If the 2008 Olympics were China’s coming-out party, then the 2009 G-20 was Pittsburgh’s return to the world stage.
*** Challenges certainly remain. Many of them are not particular to Pittsburgh. Aging infrastructure, bloated public pensions, and underperforming public schools are among its ailments. Other obstacles are unique. “Pittsburgh continues to struggle with maintaining venture capital groups. Major funding comes almost exclusively from Boston and Silicon Valley,” Levine explained. Scott Stern ’15, a Pittsburgh native whose family has lived in the region for seven generations, pointed to the city’s dynastic politics. Luke Ravenstahl, the current 32-year-old mayor, is a third-generation local elected official. “If politicians are winning elections because of their last names and not their ideas, you’re not going to be electing the best people,” Stern said. The population of foreign-born professionals is also very low for a large American city. According to the U.S. Census Bureau’s American Community Survey for 2006 to 2010, only 7 percent of Pittsburgh’s total population is foreign-born. Compare this with New York City: 3 million of its 8.2 million residents are immigrants. The city also struggles to retain its youth demographic. Eric Levine ’14 is moving to New York City next year rather than returning home to Pittsburgh’s Squirrel Hill neighborhood: “There is no question that New York is the best city to be in when you’re
young.” Levine has siblings in New York City, Baltimore, and Washington, D.C. Will he return home one day? “Pittsburgh is a great city. There is a feeling of unity and pride.” But he is unsure, as is Josh Kalla ’14. “Eventually, I’d love to raise a family in Pittsburgh,” Kalla said. “I enjoyed growing up there. For now, though, I want to go to a Ph.D. program in political science, and there aren’t any good options in Pittsburgh.” Malia Spencer, a technology and manufacturing correspondent for the Pittsburgh Business Times, has a message for young people out there. “When I arrived here from Silicon Valley, I was surprised to see everything that’s going on. I had no idea about Pittsburgh — I was born and raised in California. I didn’t know what to expect; I thought it was going to be like Detroit. I got here, and it’s beautiful. There are forests everywhere. People are setting up co-working stations, incubators, startup weekends. It’s a small community, but you can definitely be hooked in pretty quickly.” Spencer captures the moment well. Yale “Yinzers” (slang for Pittsburgher) notwithstanding, according to U.S. Internal Revenue Service data, 1,430 more people moved into the Pittsburgh Metropolitan Statistical Area (MSA) than packed up and left between 2009 and 2010. This is welcome news for a region with one of the largest elderly populations in the nation. Can this success be duplicated?
What can other Rust Belt cities learn from Pittsburgh? “The key is to understand your assets and build on them,” Tim White from the RIDC offered. “It is a matter of leadership and focus. It is about marketing your city to attract capital and talent. If Pittsburgh can escape from the clutches of misery, I am confident Detroit and Cleveland will bounce back.” Success for the former Rust Belt cities also lies in the diversification of their economies. Finance 101: Don’t put all your eggs in one basket. Pittsburgh had too many of its eggs in the steel basket. Detroit remains too dependent on the success of its automobile industry. While Pittsburgh is still heavily invested in manufacturing, steel production has transitioned into an industry of specialty metals and sophisticated alloys. Over 300 metals technology firms in the area provide production equipment, engineering services, parts, and supplies. Pittsburgh has more to offer than just specialized steel, booming technology and healthcare industries. It is working to groom its revitalized film industry (part of “The Dark Knight” was shot in Pittsburgh) and music scene to produce more artists like Wiz Khalifa and Mac Miller, prominent Pittsburgh-based rappers. Corporate money in the area, from firms such as Heinz and PNC, has allowed the arts to flourish.
*** “What is good for General Motors is good for the country, and vice versa” is a slogan as antiquated as the typewriter. American prosperity is no longer identified with its manufacturing. And yet, too many of America’s cities are still struggling to grapple with the new economic realities. Yale students, as residents of New Haven, can appreciate this. A 10-minute walk from campus leads to the abandoned Winchester ammunitions factory, once the employer of thousands. A few miles south on the Metro-North is Bridgeport, “the Detroit of Connecticut,” a Third World city in the richest state in the richest country in the world. The coldhearted consultant would recommend that these cities cut their losses and fold to the change of tides. Cleveland’s loss is Phoenix’s gain. Why not close the chapter on the Rust Belt era to make way for the Sun Belt? Investing in Bridgeport is analogous to investing in Blockbuster. Should mayors and their municipalities choose not to surrender, they need not look to China. Should they choose to reverse their dwindling numbers and invest in new industries that will attract talent and capital, they need not look to Germany. They need only look to the Appalachian. P