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State recovery slowed by public sector job losses

The cutting mantra is slowing Washington state's recovering, according to the state economist.

Arun Raha, interviewed in 2011 on "KCTS Connects."

Arun Raha, interviewed in 2011 on "KCTS Connects." KCTS 9/Flickr


Trimming public sector jobs is a common mantra in dealing with today's state and and local government budget woes.

Washington's state agencies alone cut 4,700 jobs during the past three years. Public sector jobs, from school teachers to road crews, have shrunk by 14,800 in the same period, according to the U.S. Bureau of Labor Statistics.

The problem is the loss of those jobs is slowing the state's economic recovery, the state's chief economist Arun Raha told the State Senate's Economic Development Committee last week.

Public sector jobs pump their paychecks into the economy. Less state and local government jobs translate to less paychecks circulating to boost private businesses and to provide tax income, said Raha, who recently announced he will leave for private-sector position.

That was one of numerous economic observations made to the Senate Economic Development Committee in two briefings last week.

Among numerous economic indicators unveiled for the state, some showed improvement and ome showed deterioration. The bottom line, according to the economic experts, is that the state's economy is slowly improving, but that future growth is not a sure thing. "It's growing. But is it sustainable?" Raha said.

"Our motto should be: We suck, but we don't suck as much you do (referring to other states' economies)," Raha said.

Other economists briefing the Senate committee were Lance Carey from the state Economic and Revenue Forecast Council and Egils Milbergs, executive director of the Washington Economic Development Commission.

The latest Washington Economic Climate Study by the revenue forecast council says that economic growth and competitiveness — when compared with other states — are among Washington's weakest economic indicators.

Some highlights of the three economists' briefings include:

  • Washingtonians are paying less of their annual incomes in state and local taxes. In 2009, a Washington taxpayer paid $93.24 in taxes per $1,000 of income, compared to the United States' average $102.10. That translates 16th lowest among the 50 states, compared to 21st lowest in 2008. That tax burden has steadily decreased since 2006.
  • Washington's high-wage jobs have dropped at a slower rate than the rest of the nation. Drops of high-wage jobs ends in 2007 and then improved to a rate of 0.6 percent in both the nation and state in 2008. In 2010, the nation's  growth rate in high-wage jobs was zero, while Washington growth rate was 0.2 percent -- eighth best in the country.
  • Washington's and the United States' average earnings per job have steadily grown from 1990 to 2010, with Washington within spitting distance of 10th best during that time. The average Washington job earned $54,866 in 2010, compared to the U.S. average of $51,739.
  • Washington's consumer spending was 5 percent less than 2005's levels overall, but by November was 2 percent above the comparable month in 2005. "Consumer confidence is growing, but it's still weak," Raha said.
  • Construction is hurting. Washington had 45,000 new houses built in 2006, compared to 15,000 new houses in 2011.
  • In 2010, 6 percent of Washington's mortages were seriously delinquent, meaning at least six months upaid —compared to a national average of almost 10 percent. But Washington's serious delinquent percentage stayed at 6 percent in 2011, while the national rate had come down to about 8 percent.
  • Washington's electricity prices have remained stable since 2001 while the nation's average prices have grown. Washington had the lowest electricity prices in the nation in 2009 and 2010.
  • Washington's unemployment insurance costs have been among the highest in the nation through the 21st century so far, posting at the fifth highest in 2010.

Milbergs said the state needs to help people make career transitions. Also, start-ups and imported manufacturing businesses should be encouraged, he added. He also recommended that Washington improve its infrastructure and global presence.

"We need to expand our presence across the world. ... and deliver more airplanes and more hay," he said. 

John Stang is a longtime Inland Northwest newspaper reporter who earned a Masters of Communications in Digital Media degree at the University of Washington. He can be reached by writing editor@crosscut.com.


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Comments:

Posted Fri, Jan 20, 8:09 a.m. Inappropriate

While Dr. Raha is a brilliant guy, more private sector paychecks will have a similar effect, without the sucking of money into more gub'mint jobs.

So, tell me, with this "devistation" of gub'mint jobs, how has it directly affected your life?

I have absolutely none, no longer hold times, no longer lines, no inability to obtain services, none.

Please, bring forward someone who was impacted in a significant way by the state job cuts.

The Geezer has spaketh

Geezer

Posted Fri, Jan 20, 8:11 a.m. Inappropriate

On the housing numbers, does that refer to "houses" or housing starts? Seattle had a big jump in apartment building in 2011, but single family detached homes in the region seem to be in less demand.

Posted Fri, Jan 20, 8:32 a.m. Inappropriate

Government jobs do not drive prosperity. Suppose everyone worked for the government. Could we maintain an economy selling each other permits?

dbreneman

Posted Fri, Jan 20, 9:26 a.m. Inappropriate

No, but we can't survive without teachers, public safety, good roads, libraries, and other public goods. Government jobs don't drive prosperity, but government layoffs take money out of the economy just as company layoffs do.

msolga

Posted Fri, Jan 20, 9:45 a.m. Inappropriate

Many more government jobs can and should be 'reduced in force'. School lunch contracts should be totally privatized; UW and all community colleges should be performance audited; liquor store privatization is the example for getting government out of many more areas. Seattle has too many parking enforcement officers and staff overhead and the libraries are adequate but non-essential. Times are tough; combining governing styles of Scott Walker, Chris Christie, John Kaisich, etc. should be followed so as to reduce the overall percentage of government to total GDP spending.

animalal

Posted Fri, Jan 20, 1:45 p.m. Inappropriate

"Washington's consumer spending was 5 percent less than 2005's levels overall,..." It seems to me that lower consumer spending is going to have a much greater impact on our economy than the loss of the government jobs. I think the headline may be ignoring the more important story.

kieth

Posted Fri, Jan 20, 8:15 p.m. Inappropriate

Government employment is UP around here – this piece is misleading in that it describes the trend nationwide (a decrease in public sector jobs) and implies that’s what’s going on here.

The fact of the matter is that government sector employment in the 2000-2010 period increased by 4 percent in downtown Seattle, 2 percent city-wide, 7 percent in King County and 16 percent for the Puget Sound Region. Those are BIG increases.

In contrast, private sector employment in downtown Seattle saw a 15 percent loss in jobs in the 2000-2010 period. I’ll bet the outgoing state economist didn’t highlight that fact in his presentation. The private sector job loss figure last decade was 9 percent city-wide, 4 percent for King County and 2 percent for the Puget Sound region.

This piece tries to make a big deal about the loss of government jobs when those have increased around here. What’s hurting the local economy is the large loss of private sector jobs. There was a loss of 4% of private sector jobs in the 2009 – 2010 period alone in downtown Seattle, traditionally the economic engine of this region. That is the recent, bad news.

These data come from here:

http://downtownseattle.com/pdf_files/resources/Workforce_7.11.11.pdf

crossrip

Posted Sun, Jan 22, 6:20 a.m. Inappropriate

So where is the support for the authors contention that if we only would spend more on Government employees and Government Employment as a percentage per thousand of our incomes we would somehow be better off economicially?

Cameron

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