Fiscal future
OLYMPIA – Four years ago, Hank Raymond packed up his life in Hawaii and returned to Eastern Washington to care for his ailing mother.
He’d been away for 20 years. He’d seen Honolulu grow to become one of the most populous cities in America, with a billion-dollar city budget. He’d seen 10-year-old hotels torn down to make bigger ones, and housing developments springing up as far as the eye could see.
Then he came back to Brewster, the small Columbia River town where he’d grown up, and he was stunned.
“I found the economy virtually where it was 20 years ago,” he said. “Nothing had changed. Where’s the progress?”
The tribal community center, new when he left, still had a dirt parking lot. Brewster’s little main street had withered away. Nearby Grand Coulee, an anthill of round-the-clock activity when the third dam powerhouse was built in the 1970s, was a shadow of what he remembered.
“Everything’s become kind of a ghost town,” he said.
This campaign season, as political candidates make their chicken-in-every-pot promises to reinvigorate the economy, the stakes are high for people like Raymond. Rural communities in North Idaho and Eastern Washington are slowly starting to recover, after spending the past few years struggling with unemployment rates that in some cases have been on a par with rural Mississippi. Small-business owners say they’re still struggling, and it’s been hard to find work, even at local wages that continue to lag far behind state and national averages.
“The problem is that companies that are out there now, they need a quick fix. They don’t need something that’s going to take eight years of somebody’s administration,” said Dan Allison, owner of Allison’s Fabrication, an architectural sheet-metal company in Veradale.
“I wish I could think of something to say to the politicians, but I’m so disgusted with all of them,” said Betsy Rosenberg, who’s barely scraping by as a substitute teacher in Spokane and Kootenai counties. “I’m doing what everybody else is trying to do now. I’m existing.”
Sliding pay
Washington was badly battered by the recession, and in an unusual twist, the Puget Sound area was hit worse than places like Spokane. Boeing laid off tens of thousands of Seattle-area workers. Seattle’s large dot-com sector collapsed, leaving a wake of gleaming empty office space and a surplus of cheap, barely used office furniture.
By 2001, Washington’s 6.4 percent unemployment rate was the worst in America. A year later, it was 7.5 percent. In the Spokane region, unemployment peaked in 2002 at 6.9 percent, and by August of this year had dropped to 5.1 percent.
“The employment situation didn’t look as bad as it did in the Seattle area, but it still didn’t look that great,” said Grant Forsyth, assistant professor of economics at Eastern Washington University.
Things were particularly bleak in rural areas. According to the federal Bureau of Labor Statistics, Ferry County last year had a 16.6 percent unemployment rate, among the worst in the country.
In Idaho, Shoshone County had 12.7 percent unemployment in 2001. Benewah County had nearly 12 percent unemployment in 2002. Even in comparatively urban Kootenai County, unemployment peaked at 8.2 percent in 2002.
Making things worse, personal income in both Eastern Washington and North Idaho has lagged behind state averages for years, and the gap is getting bigger. From 1999 to 2002, Spokane County wages hovered at just 80 percent to 82 percent of the state average – the worst percentage in at least 45 years. Per capita income is even lower in Idaho, particularly in the Panhandle.
“I’ve never lived in a place where it was so difficult just to get a decent-paying job,” said Rosenberg, who earns $60 a day as a substitute teacher in Idaho. She substitute teaches in Spokane, too, earning $9.43 an hour. Neither job includes insurance or retirement benefits.
This wasn’t what she’d planned. A Chicago native, she was a heating and ventilation system repairwoman for years, until she went back to college at age 40 to become a newspaper reporter. After graduating from Eastern Washington University, she began looking for a job in 2001. After six months, she found work at a small paper in Alaska. She struggled to learn on the job, but was fired after three months. She sent out dozens of resumes, but the few papers that bothered to answer just sent rejection letters.
“My husband was always saying, ‘This is the one! You have to be an optimist,’ ” she said. “But I gave up being an optimist a long time ago.”
When her husband, a construction worker, needed surgery on a biceps injury, the couple used up their savings and a small inheritance from her grandfather. Sure, Kootenai County is growing, she said, but she and her husband are still barely able to pay their bills each month.
“I think this place is going to end up being a big retirement community for transplanted Californians. Once they’re done building, all it’s going to be is service work around here,” she said. “When people talk about jobs, they’re talking about $7-an-hour jobs.”
‘Moving to Post Falls’
So what can government do?
In the short term, economists say, government can spur the economy by cutting taxes and interest rates. It can create jobs by building more roads, classrooms and utility lines. It can attract business with free job training, construction work and tax breaks. In the longer term, it can improve education and transportation systems.
Allison, the owner of the sheet-metal company, said he just wants government to get out of his way. Washington has higher taxes and far more workplace regulations than Idaho, he said. Washington’s business tax is a national oddity, taxing companies on their gross business, rather than on their profit. Diesel fuel, unemployment benefits, sales tax and liability insurance are all more expensive in Washington than in Idaho, Allison said.
He also bristles at the state’s prevailing-wage requirement, which forces employers to pay state-set wages to workers on school and other government projects. He normally pays his workers $15 an hour, he said. On a government building, he must pay them more than $33 an hour. Idaho, he notes, has no such law.
“In the spring, there’s a good chance that I’ll be moving to Post Falls,” he said. Spokane’s his home – he’s lived in the same house for 31 years – but he feels he’s being driven out of business by the costs and regulations in Washington.
“It’s so big and cumbersome that it’s never going to change, ever,” he said.
Raymond, who works in the Colville Tribes’ planning office, said that government has to improve education to spawn the sort of entrepreneurs who can rebuild the banks and stores in rural areas.
“I know there’s enough room on our reservation for anybody’s ideas,” he said. “We’ve got the room, but we need the brainpower.”
Money now flows to a few national chain stores in the area, Raymond said, instead of staying on Main Street.
“You can’t even buy a pair of pants, shoes or socks in Grand Coulee,” he said. “You’ve got to drive all the way to Omak or Ephrata just to get to a clothing store.”
The Colvilles are trying to help, Raymond said, building two new clinics, an $18 million school, a day care, a Head Start building and a longhouse in Omak. But the state must provide more business incentives in rural areas, he said, so that young adults don’t have to move away to find good-paying jobs. And it should improve state parks, drawing tourists. Even something as simple as power-washing the dingy-looking Grand Coulee Dam would help, he said.
“Eastern Washington needs a stronger voice,” he said. “The governor needs to pay more attention to Eastern Washington and find more creative ways to spur our development.”
Economists say there is reason for optimism. Spokane’s unemployment rate has now dropped to 5.1 percent, and North Idaho’s rate, while higher, is also dropping.
‘Long overdue’
In Spokane, health care is emerging as a dominant employer, second only to government, according to Forsyth. Spokane’s housing market continues to be hot, he said, fueling financial and construction jobs. Metropolitan Mortgage’s bankruptcy has hurt, because it paid good wages and people had invested millions, but Forsyth said the money is only a small percentage of the wealth in the region. “We’re still into a recovery period,” he said. “Things look pretty good, certainly better than they looked in 2001 and 2002.”
In Idaho, the economy is shifting to tourism and service jobs, like telephone call centers. Benewah and Boundary counties have benefited from a strong plywood and lumber market, according to Kathryn Tacke, a regional labor economist for Idaho’s Department of Commerce and Labor.
And jobs are coming, she said. Buck Knives will open a manufacturing plant in Post Falls early next year. Food distributor Sysco is planning a distribution center; U.S. Bank is opening a call center in Coeur d’Alene. Construction remains strong. The Coeur d’Alene Tribe has expanded its casino complex, adding a new golf course and creating badly needed jobs for nearby Benewah County.
“For the first time since 1997, all five counties (in North Idaho) are adding jobs,” Tacke said. She said wages still remain low – Panhandle per capita income in 2002 was $23,035, versus the national average of $30,906 – but are improving.
“Times are really good economically for North Idaho right now,” said Georgia Smith, a spokeswoman for the department. “They’re long overdue for positive economic news.”