August 8, 2014 in Business

Spokane recovery lagging behind

Experts believe evaluation of development efforts, economic base key to future
By The Spokesman-Review
 
Jesse Tinsley photoBuy this photo

Altek’s Todd Baker, right, talks with Rick Sparrow about a machined part beside a digital measuring machine that checks such parts. Baker is an example of a manufacturing or tech worker who took on new job duties as his company, like many others, merged jobs to be more efficient after the Great Recession.
(Full-size photo)

More than 8 million jobs were eliminated across the country by the Great Recession; as the economy contracted, businesses failed or they endured by cutting workers.

Spokane County felt its share of that pain with the loss of 14,200 payroll jobs between mid-2008 and mid-2010. Kootenai County was hit hard as well, losing 8,600 payroll jobs, according to federal data.

The two Inland Northwest counties are rebounding, but Spokane’s recovery is slower than Kootenai’s and slower than many other similar-sized counties.

At its peak in the second quarter of 2008, Spokane County had 219,400 payroll jobs. In the second quarter of 2014, the job total was 212,000 – 7,400 jobs below the high-water mark.

Kootenai County bounced back faster, coming within about 1,200 jobs of its high mark of 60,400 jobs in August 2008, said Alivia Metts, Idaho Labor Department economist.

The recession’s impact seems to affirm the long-repeated axiom that Spokane gets the economic flu later than other cities, but then it takes longer to recover. And it has rekindled talk of whether more-focused strategies are needed to produce a stronger local economy.

Previous level expected in 2016

In a study of U.S. metro economies done by global information tracker IHS Global Insight, Spokane lands in the bottom third of 363 U.S. metropolitan areas ranked by expected date of recovery to pre-recession job levels.

The IHS research predicts Spokane County will regain its pre-recession job total in the second quarter of 2016. The company also predicts Kootenai County will regain its job peak in the third quarter of 2015.

IHS based the ranking on population growth and how Spokane’s job sectors are performing compared with the region and nationally. The forecasts use numbers collected by the Bureau of Labor Statistics and the Bureau of Economic Analysis.

Spokane is one of 205 metro areas still below pre-recession job levels, the IHS data said. Of those, about 180 metro areas will recover pre-recession job peaks before Spokane, according to projections from the IHS report “U.S. Metro Economies 2014.”

Not all the news for Spokane is discouraging, however. Spokane’s total payroll at the end of 2013 was $8.43 billion, compared with $7.72 billion in 2008, according to the Bureau of Labor Statistics’ Quarterly Census of Employment and Wages.

Some of that is explained by companies that trimmed their headcount but added more duties to existing jobs and raised the remaining salaries.

One example is Todd Baker, who before the recession was a quality manager at Liberty Lake manufacturing company Altek. He was given a new job in 2010, director of quality and automation, which has him working more hours than before, but with a slight pay raise.

“Mostly I’m very glad to have this job,” he said.

Doug Tweedy, Washington’s Employment Security Department labor economist for Spokane, said companies everywhere have merged jobs for efficiency.

“That change increased the skill level for jobs that remained, and because of that, it led to increased wages for those jobs,” he said.

Another factor in the rise in payroll, Tweedy said, has been growth in industries paying more than Spokane County’s average wage of $40,733 per year. The growth occurred within advanced manufacturing, health services, finance-insurance, professional, scientific and technical, and education sectors, Tweedy said. Tweedy also said many of the jobs lost during the recession, primarily in construction, leisure-hospitality and retail were the result of a housing-inflated job bubble. Many of those were unsustainable jobs that Spokane – like many other cities – lost once the housing boom took a nosedive.

“To compare us with that (2007) job level is a hard thing,” Tweedy said. “The area economy has changed from a bubble economy to a more solid economy.”

Since 2011, Spokane County has regained around 7,00 jobs, Tweedy said. The largest gains have been in health services, private education and the big segment called professional, business and technical services. Since 2008, Spokane has seen a net gain of 2,500 health services jobs, 400 private education jobs and 400 professional scientific and technical jobs, Tweedy said.

Jobs rebound picked up in 2011

Shaun O’L. Higgins is more bullish on Spokane’s job prospects than IHS Global Insight.

The former director of sales and marketing at The Spokesman-Review, who has tracked the region’s economic performance for more than 30 years, said he expects Spokane’s job total will reach its pre-recession level in the second half of 2015. He said his numbers reflect more optimistic gains in some job sectors, including light manufacturing and the accommodations and food service sectors.  

Much larger Seattle regained its pre-recession job peak last winter, but Higgins and others note that there’s little point in comparing Spokane with the state’s largest, most economically diversified metropolitan area.

Boise recovered in June of this year, while Portland bounced back in spring 2014.

Steven Frable, the IHS economist who tracks Washington state, identified Spokane’s issue as having too few fast-growth industries.

“You face the problem of slow demographic growth,” Frable said, “and you don’t have an ‘anchor’ company to capitalize on, the way Boise still has Micron,” he said.

Spokane’s population growth is below average compared to other midsized metros, he added. From 2010 to 2013, Kootenai County’s population grew 4.7 percent, while Spokane County’s grew 1.7 percent.

Higgins added: “Figures just released by the Census Bureau suggest that compared to the rest of Washington state, Spokane’s population is growing at about one-half the state rate and only about two-thirds the national rate. Clearly, that puts a damper on our ability to keep up with other markets in terms of retail sales growth and housing growth.”

Grant Forsyth, Avista Corp. chief economist, said he’s less concerned about when Spokane gets back to its previous job total than he is about the overall economic growth rate.

Forsyth, who taught economics at Eastern Washington University before joining Avista, said he looks at Spokane and Kootenai counties as a single entity. Their combined performance over the past two years has been about 2 percent annual growth in total jobs.

But it hasn’t continued at that pace. “It seems to have fallen below that. We’re now probably in the 1.5 percent growth range,” Forsyth said.

Development strategizing

Forsyth and others say community leaders need to review whether current development strategies are effective following the recession.

Forsyth said he hears from managers in the manufacturing sector that many of their applicants lack key skills.

“They say too often it’s a struggle to get new hires up to speed,” Forsyth said.

He advocates rethinking the emphasis placed on earning a four-year college degree, if the goal is to train more workers who can fill the jobs this economy is likely to produce.

  Employers in the skilled manufacturing sector, for example, are looking for people with technical skills to manage computers and production controllers. 

Robin Toth, vice president for business development with Greater Spokane Incorporated, believes the community needs to address its “perception” problem.

“We still have a lot of work to do enhancing the perception of our region, Toth said. “This takes advertising and outreach funding, which has decreased significantly during and after the recession.”

She’s convinced the community has plenty of assets to offer.

“It’s just that the competition is fierce in economic development just as it is in any business activity,” she said.

Toth added, “We aren’t a Tier One location – more of a Tier Two-Three ranking. Just like Avis, we have to work harder to get the Spokane brand name in front of our targeted prospects.”

Higgins also wondered if economic development leaders ought to revise the community’s development dashboard and learn from what similar metros are doing well.

“While it is interesting to see how we perform against Seattle, Boise and Salt Lake City, it might be more relevant to see how we are doing compared to cities with a similar mix of existing employment sectors,” Higgins said. “Our benchmarking lists should probably exclude comparison to state capitals, cities that are home to major main-campuses of research universities, to coastal port cities, and to Top 50 U.S. markets,” he said.

Once that list is set, Spokane leaders could see who is doing better than our economy, study what those cities are doing and what they’re spending time on. “Then we can start benchmarking ourselves against the winners,” Higgins said.

A good deal of past economic development effort has aimed to build jobs within research or biotechnology sectors, but Higgins believes Spokane’s not geared for that kind of growth.

“Establishing beachheads in hot new fields will be an uphill slog for us,” Higgins said. “We have too little track record and not enough ‘top of mind awareness’… while we – and most other communities in the nation – look to the industries of the future for their salvation, those industries aren’t necessarily looking at us. That means we must foster sectors and skills we already have in place.”


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