State outpaces nation in job growth
OLYMPIA — Washington’s economy is rebounding faster than the rest of the nation, with 32,000 new jobs created this year so far, a top state government economist said Thursday.
“This is the first time in my memory that the state economy is improving faster than the U.S. as a whole,” said Chang Mook Sohn, who predicts how much tax and other revenue state budget writers can expect.
In the last five months, he said, the nation’s economy has grown about 2 percent. Washington’s has grown 3 percent.
In fact, by the end of this year, Sohn said, the state should have the same number of jobs it had at its peak in late 2000.
“The job-creating process has begun in the state of Washington,” said Sohn. “We were not able to say that in February.”
Still, Sohn said his optimism is tempered by the uncertainty of a presidential election year and potential future problems with terrorism or in Iraq.
The rebound in local jobs has been a bit faster, according to Randy Barcus, chief economist for Avista Corp.
“We turned the corner about a year ago in terms of year-over-year job growth,” he said. Barcus said he expected 2,000 new jobs in the Spokane area this year; it now looks like that number will be at least 3,000.
“That’s not stellar, but it’s a nice breakout year,” he said.
Washington was one of the states hardest hit by the recession, at one point having the highest unemployment rate in America. And Seattle was the worst-hit area of the state, Sohn said. After the employment peak in late 2000, the Seattle metropolitan region lost 95,000 jobs, many of them well-paying jobs with Boeing or high-tech companies. While Seattle was losing those jobs, Sohn said, the rest of the state actually gained 10,000.
Since then, about 25,000 new jobs have been created in Seattle, and the rest of Washington gained another 40,000.
The bad news: Many of the new jobs are service-sector jobs that don’t pay as well as the aerospace or dot-com jobs did. Personal income in the manufacturing and aerospace sectors is now nearly $30 billion less than it was four years ago. That’s because many of those jobs no longer exist and because many of the high-tech stock options that inflated incomes in the late 1990s are worth much less – or nothing – now.
Still, Washington has several advantages as the nation recovers, Sohn said.
• The state’s population is growing faster than the national average, fanning the flames of an already hot housing market and spawning jobs in finance and construction.
• Washington, which remains a high-tech hub, also seems to be attracting more venture capital than the national average.
• And the state’s exports are helped by the weak dollar.
On the other hand, Sohn said:
• Gas prices in Washington are the fourth highest in America. Fortunately, he said, oil prices seem to have peaked and begun falling.
• And Washington cannot rely on Boeing or Microsoft to lead the state out of a recovery. Aerospace employment has dwindled to less than 3 percent of the jobs, and although software jobs continue to increase, they still account for less than 2 percent of Washington jobs.
On Thursday, some state lawmakers saw the good economic news as validation for recent tax breaks, stopping new taxes, and state government spending cuts.
“We created stability out there in the marketplace when there was very little going on,” said Sen. Joe Zarelli, R-Vancouver. As the economy recovers, he said, it would be a mistake for lawmakers to “think we have all kinds of money to spend on new and interesting things.”
Sen. Lisa Brown, D-Spokane, countered that the state has for several years delayed planned increases in teacher pay, money to shrink class sizes, and cost-of-living increases for state employees. Washington will also soon face a surge in college students, without the room for them.
“We need to figure out how we can fund those,” said Brown. Businesses looking to move to the state, she said, consider things like quality of life and a well-educated workforce.