The Great Recession may linger longer than you think
Benefits paid to unemployed workers in Washington set a record in 2010. And one broad measure of unemployment puts the true jobless rate here at over 18 percent.
The impact of the Great Recession, the Great Reset, or whatever you want to call the economy over the past two years is more profound than many realize. While economic reports continue to show a kind of statistical recovery, the economy remains fragile and uncertain.
Earlier this month, the State Employment Security Department issued a monthly report that capped 2010 as yet another year of stagnant economic performance for most of the state and the Seattle region. The agency cited a state unemployment rate of 9.3 percent in December, up from 9.2 percent in November and higher than it was in December 2009.
That means the unemployment rate for the year averaged more than 9 percent on both a seasonally adjusted level and without seasonal adjustments.
Nationally, Washington was one of 20 states that recorded increases in December, according to a report issued Tuesday (Jan. 25) by the Bureau of Labor Statistics. Fifteen states and the District of Columbia registered rate decreases, and 15 states had no rate change, the BLS reported.
Among regions of the country, the West reported the highest unemployment rate in December, 10.9 percent, while the Northeast recorded the lowest, 8.4 percent. And among nine more specific geographic divisions, the Pacific continued to report the highest jobless rate, 11.6 percent.
The Washington state report did contain some good news, including an increase of 2,300 private-sector jobs for the month, led mostly by an increase of 1,400 jobs in the aerospace manufacturing sector (i.e. Boeing and its suppliers). Retail trade also added jobs. But six sectors showed job losses, led by declines in construction and financial activities.
The Employment Security Department said an estimated 324,270 people in Washington were unemployed and looking for work, and 245,225 people received unemployment benefits in December.
In the Seattle-Bellevue-Everett area, the unemployment rate was 9.1 percent for December, unchanged from November but up from 8.9 percent in December 2009. This underscores the difficulties with economic recovery here. The Seattle metropolitan area is home, of course, to Boeing and Microsoft, two companies that have done fairly well in the recession; for the unemployment rate to continue at such a high level here despite two strong centers of employment is disheartening.
Over the course of the year, Washington added 11,800 private-sector jobs. Factoring in a substantial loss of government jobs, there was an estimated net gain of 8,000 jobs during the past 12 months, according to the department. But with a work force of about 3.5 million statewide, that’s an increase of about 0.2 percent. No wonder the recovery is such an anemic one.
Still, as The Seattle Times reported, December is the first time in 25 months that Washington saw a net gain in jobs over the same period 12 months earlier. The worst was in August 2009, when the net loss year-over-year was nearly 166,000 jobs.
Another measure of unemployment, called the U-6 rate, is even higher. In the third quarter of 2010 — the most recent available — it was 18.1 percent for Washington state. The U-6 rate covers a lot of situations including the total unemployed, plus all marginally attached workers, plus those employed part-time for economic reasons and workers who have given up looking for jobs. The U-6 rate is determined from a moving average by quarter so a new rate covering the fourth quarter should be coming out in the next month or so.
Yet another part of the economic equation here is inflation. The Bureau of Labor Statistics said in mid-January that prices in the Seattle-Tacoma-Bremerton area, as measured by the Consumer Price Index for All Urban Consumers, decreased 0.2 percent from October to December, mostly due to lower prices for apparel and household furnishings and operations. The BLS also noted, however, that the declines were partly offset by higher prices for gasoline and shelter. For the year, inflation in Seattle was up 0.6 percent.
Many economists look at what is called core inflation — prices not counting volatile energy and food prices — and conclude that inflation is not a problem. That index for the Seattle area decreased by 0.4 percent in 2010. But we all must eat, and most use automobiles for everything from commuting to getting to the grocery store for that increasingly expensive food. So trying to say inflation is not a problem except for food and energy is like saying the Seahawks would be in the Super Bowl except for that loss to Chicago.
Another way of measuring the impact of the recession is to look at unemployment benefits.
More than a half-million Washington workers collected nearly $4.7 billion in unemployment benefits in 2010 — eclipsing a record set in 2009, according to Employment Security.
“This has been another demanding year for Employment Security, but even more challenging for those who still can’t find a job after months and months of looking,” Deputy Commissioner Joel Sacks said in a statement.
Here are some figures highlighting the recession’s effects in Washington this year — and the Employment Security Department’s efforts to respond:
- More than 500,000 people will have received unemployment benefits in 2010, up from 475,000 in 2009 and 290,000 in 2008.
- The nearly $4.7 billion in benefits paid out in 2010 compares to $4 billion in 2009 and $1.2 billion in 2008. The federal government, through emergency and extended benefits available in Washington state, paid about 60 percent of that because the unemployment rate here has remained high.
- Unemployed workers had remained jobless for an average of 41 weeks by the end of 2010, compared with 28 weeks at the end of 2009.
- The unemployment rate peaked at 9.5 percent in March, the highest since the recession of the 1980s.
- More than 375,000 job seekers will have received employment counseling and assistance through local WorkSource centers in 2010, down from about 385,000 in 2009. WorkSource is a statewide partnership of Employment Security and other government and nonprofit agencies that provide employment and training services to job seekers and employers.
Meanwhile, Gov. Chris Gregoire is watching her two major proposals to support economic growth work their way through the Legislature. Gregoire wants to save businesses $300 million on their 2011 unemployment taxes and more than $700 million in the state workers’ compensation system over the next four years.
“Jobs are the only way out of this recession and the state must do everything possible to be partners in the economic success of small and large businesses,” Gregoire said in a statement.
Gregoire’s ideas have received some favorable reviews, but face opposition from unions, among others. There is a clock ticking: Feb. 8 is the due date for first-quarter unemployment insurance payments by employers. Any change after that becomes an administrative nightmare, according to state officials.
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Comments:
Posted Wed, Jan 26, 9:11 a.m. Inappropriate
If anyone thinks we are in a "Recovery" you have only to do the numbers, For instance if we have 340,000+ people out of work, and we add 2,300 jobs per month (note December often has seasonal hires who last 1 month) it will take 140 months, or 12 years to put them all to work. Never mind that the kids born 10 years ago will becoming of age and looking for work.
With a state wanting to save $300 million from businesses, yet with a shortfall of $1.4Billion between 2011 and 2013, this money will have to be made up from somewhere else.
http://www.governor.wa.gov/priorities/budget/faq.asp
Or State employees will be laid off, adding to that 340,000 workers now looking for work.
Then of course there's the Federal debt problem:
http://market-ticker.org/akcs-www?get_gallerynr=961
It's not likely that we'll be able to borrow forever to keep this debt floating.
Hence either some of this debt is going to be repudiated, or we are going to have a massive cut in the budgets. That the Federal Government also spends huge amounts of money in WA might also be at risk, further weakening the WA economy.
So far the best debt fixing legislation I've seen is the State Bank bills. That would at least let the WA tax payers borrow money from the Fed at 0% and loan it to ourselves to build infrastructure, rather than going to the bond markets.
Posted Wed, Jan 26, 9:39 a.m. Inappropriate
Speaking of a state bank, our treasurer says this would be unconstitutional without an amendment: http://www.tre.wa.gov/documents/blog/blogPost_012511.shtml
Posted Wed, Jan 26, 10:12 a.m. Inappropriate
The Hawks lost to da Bears. As to the unemployment numbers, simply repeating government reported numbers merely confirms its positive bias. Break it down by the numbers, and a different picture emerges:
Labor Force: 238.889 million
Employed: 139.206 million
Unemployed: 14.485 million
Part time employed for economic reasons: 8.931 million
Not In Labor Force: 85.2 million
That is 108 million underemployed, unemployed, and discouraged people, or 45% of the labor force. Include the Part time employed for non-economic reasons--18.184 million--and its 126 million plus, or 53% of the labor force. In other words, only 47% of the labor force is employed FULL TIME.
To fully appreciate the employment picture, one must abandon 20th century thinking and metrics. Boeing and Microsoft are international conglomerates. Even "Social Services" end up creating jobs overseas. For example, the food stamp program was sub-contracted to JP Morgan Chase, who out-sourced the customer service to India. Obama appointed a man to chair a national committee on job creation whose primary accomplishments to date were creating jobs overseas and hollowing out the U.S. economy. A man who has lead GE to financially bet against the U.S. economy.
Read it yourself: http://www.financialpost.com/China+replace+economic+power/4139979/story.html
Posted Wed, Jan 26, 11:15 a.m. Inappropriate
I just read that piece of drivel from the state treasurer. What he neglected to say is that the state is using Bank of America, refereed to in the article as the "concentration bank" which should be in default because it's liabilities greatly it's assents. When this BOA's house of cards falls, while holding the state's tax payer money it could be catastrophic for WA tax payers.
Posted Wed, Jan 26, 1:52 p.m. Inappropriate
Not to worry, folks; it's only capitalism in action: infinite greed as maximum virtue, limitless selfishness as ultimate good.
Abetted, of course, by government at every level that now unabashedly serves only the narrowest of capitalist purposes: absolute power and unlimited profit for the Ruling Class, total subjugation and (deliberately) genocidal poverty for all the rest of us.
Posted Wed, Jan 26, 2:43 p.m. Inappropriate
Maybe lorenbliss will enlighten us all by citing examples of socialism and communism where things are so much better for all.
Posted Wed, Jan 26, 3:02 p.m. Inappropriate
Examples of places where Communism is working fine:
Vietnam
Cuba (compare it to it's neighbors, Haiti, Dominican Republic, Jamaica )
Examples of places where Socialism is working fine:
Sweden, Norway, Finland, Denmark, Germany ...
America, after all we have socialized retirement (Social Security)
socialized fire, police, libraries, heathcare for the old (Medicaid & Medicare)
Animalal you ought to get out a bit more and turn off Fox not the news TV.
Posted Wed, Jan 26, 9:50 p.m. Inappropriate
Wilbur,
Oh please, none of those countries are debating the fundamental structure (and benefits!) of their social democracies - and right-of-center there means something entirely different than you are trying to imply it does.
Posted Thu, Jan 27, 8:47 a.m. Inappropriate
Wilbur, keep in mind that "center right" in Europe is generally far to the left of "center right" in the US. We're skewed so far to the right it's hard to get perspective.
Posted Thu, Jan 27, 12:28 p.m. Inappropriate
Wilbur, you might want to ask yourself why Norway has enormous oil wealth and the USA does not? And I can tell you it isn't because we didn't have oil.
As for Germany, they have quite a socialist network. They have health insurance which while both state and privately run, are extremely regulated to avoid the whole denial of benefits deal we have. They have 6 weeks paid vacation, something most workers in the USA only dream of. Women get 8 weeks paid maternity leave. Both parents can get up to 3 years unpaid but job guaranteed leave to raise children.
http://www.wilmerhale.com/publications/whPubsDetail.aspx?publication=159
Thing is, as you point out, their quality of work is still very high even with all these "socialist" benefits.
Posted Thu, Jan 27, 1:10 p.m. Inappropriate
What GaryP said.
Posted Thu, Jan 27, 7:22 p.m. Inappropriate
Thanks, MotleyCoopt, for pointing out the Seahawk error. Wishful thinking on our part. It's now been fixed.
Posted Fri, Jan 28, 8:59 a.m. Inappropriate
Wilbur,
In Germany attending University is nearly free if you qualify. http://en.wikipedia.org/wiki/Education_in_Germany Another mark of a socialist country. I have yet to see a 100% by wikipedia run socialistic country, but the basic tenets of socialism, that we are all in this together, and that we need to care for the less fortunate among us would in the long run make the USA a richer nation.
Norway also retains the profits from it's oil, while the USA sells oil and gas leases to private companies. So even though we have 300+million people if we had kept that money earned from the sale of the refined oil to run our government, build our schools it's still not pocket change. Same for our other mining interests, coal, copper, gold, silver. I'm just suggesting that as owners of these resources (the citizens) we have sold them for far less than they were worth.
Posted Wed, Feb 2, 8:24 p.m. Inappropriate
GaryP,
Are people in capitalist countries greedier than people in socialist countries? My thought is that people are the same the world over. Human nature is human nature.
Capitalism pulled 500 million Chinese people out of poverty in the last few years. After several millennia of socialism. That ain't so bad.
Entrepreneurs get rich by serving people. I know you don't like hearing that but it is the truth. Entrepreneurs figure out what products or services consumers need and then deliver them. Good example is the iPhone. If an entrepreneur gets rich from such activity, then good for them. We all benefit.
Here is interesting fact. Everyone touts Sweden as a great example of socialism. The middle class in Sweden have half the discretionary income as the middle class in the USA, after paying for education, health care and other things that the Swedish government pays for.
Plus, we have much more freedom in America. I would prefer freedom over equality any day.
Posted Fri, Feb 4, 10:47 p.m. Inappropriate
Human nature is indeed human nature, but cultures are different and they have effect on what humans expect. "Discretionary income" is quite good in Sweden compared to the US, taupe, when you consider what they don't have to pay for out of pocket. And they can depend on those things, whereas we can't.
Posted Sat, Feb 5, 10:56 a.m. Inappropriate
Sarah90. No, you are wrong about that. Discretionary income among the middle class in America is DOUBLE that of Sweden. This after considering that everything is paid for, such as medical, education, etc.
Sweden has one of the world’s highest top income tax rates (57 percent) and the value added tax is 25%. Taxes in Sweden consume more than 50 percent of GDP It is also a is a slow-growth economy. (Source: http://www.freedomandprosperity.org/Papers/sweden/sweden.shtml)
Unemployment is a significant problem in Sweden. The official jobless rate is about 8 percent, but independent estimates show the rate is closer to 20 percent. These figures are from 2006...which is before the recession.
In 2010 unemployment was shooting through the roof. The country’s entrepreneurs were moving offshore – and taking their companies with them. (http://www.csmonitor.com/Commentary/Opinion/2010/0318/IKEA-Sweden-and-the-inheritance-tax-lessons-for-the-US)
The reason for this, in my opinion, is that Americans have an incentive to work harder and longer because they get to keep a much greater portion of their income. This again is human nature.
Posted Tue, Jul 12, 10:16 p.m. Inappropriate
Recession is the main reason why unemployment rate is increasing. Times are rough nowadays so holding on to an investment or business firmly is quite impossible. But there are some sectors who are booming in this time where in every business seems to be in defeat, good for them. As these businesses boost in worth, so does their stock. Pawn brokers, personal loan companies, collectors and discount outlets are more profitable than ever. Brokers are recommending many over usually higher-end investments. Here is the proof: Recession makes stocks rise in some industries.
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