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State recovery slowed by public sector job losses

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. 

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