A 'dismal decade,' with more to come

The state's unemployment rate is still rising and jobs are still disappearing, though not as fast as in the past year. Here's a survey of Washington state's economy, which has shed 166,500 jobs since the peak in 2008.
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The state's unemployment rate is still rising and jobs are still disappearing, though not as fast as in the past year. Here's a survey of Washington state's economy, which has shed 166,500 jobs since the peak in 2008.

The state's latest employment report, released Wednesday (Jan. 20), puts a fitting cap on a stressful year. The Great Recession may be largely over on a statistical level, but it rolls on for many in the state who either cannot find jobs or are in temporary or part-time situations.

That'ꀙs what the numbers said. The seasonally adjusted unemployment rate rose again in December to 9.5 percent and the state continues to lose jobs, according to the state Employment Security Department. In the Seattle-Bellevue-Everett area, the unemployment rate shot upward to 9.2 percent from 8.4 percent in November, another sign that the Puget Sound region remains in the recession'ꀙs strong grip.

And the region continues to shed jobs, especially in construction and goods-producing sectors. That'ꀙs important because those are primary jobs, often creating other jobs in the service sector.

It'ꀙs not just the Seattle area that'ꀙs troubled. The figures show 21 of 39 counties with double-digit unemployment rates and nine more between 9 percent and 10 percent. The Southwest part of the state is in a deep recession with a high concentration of double-digit counties — Grays Harbor (13.4 percent), Pacific (12 percent), Wahkiakum (14.2 percent), Lewis (14 percent), Cowlitz (13 percent), and Skamania (12.8 percent). Clark County, which includes the Vancouver area, has the highest rate in the state, 14.3 percent.

The Employment Security Department put the best face possible on the numbers, pointing out that monthly job losses are continuing to decline. The state lost an estimated 23,700 jobs in the last six months of 2009, compared to more than 80,000 jobs lost in the first six months of the year, the department said.

'ꀜEmployment is a lagging economic indicator, so coming out of a recession, it is typical for jobs to be the last thing to return,'ꀝ said Employment Security'ꀙs chief economist, Dave Wallace. 'ꀜBut over all, job losses are clearly trending downward, and that'ꀙs a positive sign.'ꀝ

The unemployment figures for December end what Dick Conway, a regional economist, called the 'ꀜdismal decade.'ꀝ At the mid-January annual economic forecast meeting sponsored by Enterprise Seattle, Conway noted that because of job losses at the end of the decade, the Puget Sound region gained only 35,100 jobs for the entire decade, a growth of 0.2 percent a year. The previous decade showed employment growth of nearly 354,000 jobs, Conway noted.

The state enters this decade having lost 166,500 jobs since the peak of employment in February 2008. Still, bad as that is, other places are faring even worse. Michigan is often cited as one of the hardest-hit states (based on its unemployment rate), but Arizona actually has lost more jobs than Michigan, more than 300,000. Washington and Arizona are almost the same size in population at 6.5 million, but that state has lost nearly twice as many jobs.

Almost as if following a script adapted from historical patterns, Washington, especially the Puget Sound area, was one of the last regions in the nation to slide into this steep recession. The usual pattern of also being among the last areas to emerge may not hold true, though. Some regional powerhouses continue to cushion the economy here — Microsoft had layoffs but not at the major-surgery level of other companies. Amazon.com has emerged as a world leader in online retailing, with a growing workforce here.

Boeing cut workers in 2009, but not nearly as many as it has in similar steep recessions. The 787 Dreamliner may be two years behind delivery schedule, but without that new aircraft in production, Boeing employment would have been at least 20,000 fewer jobs than exist now. The Great Recession could have been much worse here.

Boeing doesn'ꀙt dominate employment as it has in the past. In the Boeing recession of the early 1970s, Boeing employment fell from a peak of more than 100,000 in the late 1960s to 32,800 in 1971. It is interesting to note that a Seattle Times writer at that time called that period "the longest and deepest recession since the Great Depression."

But Boeing can still affect the direction of the region'ꀙs economy. Generally, when the company is hiring it means the economy is pointing up and when it isn'ꀙt the economy is usually either flat or declining. Boeing announced recently that it expects to trim some jobs this year but not as many as the 4,800 it cut in 2009. That'ꀙs a pretty good forecast for the regional economy over the next six months or so: little growth in jobs but not much more in the way of actual job losses.

It is sometimes hard to believe how fast and how far the region fell. In the spring of 2008, less than 18 months ago, the unemployment rate in the Seattle-Bellevue-Everett area was only 4.4 percent. It is now more than double that. The Department of Employment Security chronicled some other key figures:

  • About 475,000 residents will have received unemployment benefits in 2009, compared to 290,000 in 2008. That makes 2009 a record year.
  • The state will pay out nearly $4 billion in unemployment benefits in 2009 compared with $725 million in 2007.
  • The unemployment rate, at 9.5 percent in December, is the highest since the recession in the early 1980s. Washington'ꀙs peak unemployment rate was 12.2 percent in November 1982. Is this the current peak? Don'ꀙt count on it.
  • The total number of unemployed workers in Washington reached an all-time high in March, at 344,000, and only those actively seeking work were counted. Anyone who wanted to work but had quit looking was not included.
  • This is new territory for many. The state found that 58 percent of the people on unemployment have been first-time claimants, compared to 48 percent during the two years preceding the recession.

The fallout from this Great Recession may last for some time. Take personal income. It is a key economic measure of the economy — think of it as fuel for the economy. It includes salaries, earnings by small businesses, rents, dividends, interest, transfer payments from the government, almost every source of income. The government tracks personal income with a lag but estimates it on a quarterly basis at the state level.

Personal income began slipping in the fourth quarter of 2008 and fell sharply in the first quarter of 2009, according to the Bureau of Economic Statistics. Figures for the third quarter of 2009, released in December, showed personal income at $279 billion, still below the third quarter in 2008 when it stood at $283.2 billion.

Washington'ꀙs total personal income growth is likely to be negative in 2009 for the first time since 1949, according to the state Economic and Revenue Forecast Council. Conway put the decline in personal income for the year at 1.8 percent. He forecast only modest growth of 3.3 percent for this year.

Inflation will not be a worry in 2010. Local inflation tends to grow faster than the national level when the local economy is strong and slower when it is weak. That'ꀙs what happened here with strong inflation in 2006, 2007 and 2008. In July 2008, Seattle had the highest inflation rate in the country, tied with Dallas at 5.8 percent.

It slowed in 2009 as the weak economy and flat housing costs held down increases. The Bureau of Labor Statistics reported that consumer prices in the Seattle-Tacoma-Bremerton area decreased 0.4 percent for the two months ending October 2009 due to lower prices for housing and food and beverages. From October 2008 to October 2009, overall prices barely increased, inching up 0.2 percent.

So what'ꀙs ahead for the Puget Sound region? The region likely will not begin to show positive growth until the second half of the year and even then the growth will be slow at best. Most see another year of job losses: Conway sees a drop of 0.8 percent, and the Blue Chip Economic Forecast at Arizona State University put the loss at 0.2 percent.

Several factors continue to be a drag on the economy. A Seattle Times story on Tuesday about soaring downtown office vacancies shows the commercial real estate market is a long way from health. Home prices are down and expected to continue to drop in 2010. The national unemployment rate will remain at or near double digits; more than 7 million workers lost their jobs in the recession and it will take a while for them to find new work.

Still several factors are positive for the region. It is home to several strong companies, including Microsoft and Amazon, as mentioned earlier. It is a port city that looks to Asia — and Asia is coming back stronger than many parts of the world. It has a concentration of high-tech workers, the so-called knowledge workers so coveted by other regions. It'ꀙs also a great place to live with all the outdoor advantages nearby.

But the saying goes: Quality of life begins with a good job. If history is any guide, eventually there will be a rebound here. But the coming year might be hard: There likely won'ꀙt be real sustained growth until 2011.


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About the Authors & Contributors

Stephen H. Dunphy

Stephen H. Dunphy

Stephen H. Dunphy writes on business and economic issues for Crosscut. He was a business editor and columnist for a number of years at The Seattle Times.