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.

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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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    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.