What’s next for the state and regional economy?
Washington and its major metro area have enjoyed a rollicking economic ride in recent years. In Crosscut, Paul Roberts examines metro Seattle’s economic future in an article certain to generate serious discussion.
To be clear, the city isn’t anticipating a repeat of 2008, when the financial crisis caused construction to grind to a halt. The new forecast, issued by [Seattle budget director Ben] Noble’s office in late September (and echoed by King County and several private forecasters) predicts a soft landing: a nine percent decline in construction through 2019, coupled with an even more modest cooling in the city’s broader economy.
Still, given that Seattle’s construction sector has grown by an average of 16 percent every year since 2011, even a soft landing may well be jarring.
Roberts reviews the region’s boom-and-bust history, pointing out that people generally forget down-times pretty quickly and revel in the up-times. And, quoting regional economist Dick Conway, he recounts the region’s serious competitive advantages, including a skilled workforce, environmental amenities and export-friendly location. And yet, when things contract here, they contract sharply and swiftly, even as the long-term trend continues to be positive.
It’s a thoughtful analysis. He notes that many local governments are beginning to prepare cautious budgets, mindful of the risks, and that there will be pushback from those who’d like to ride the wave a little longer, boosting public spending. Read the whole thing. We found this compelling:
At the end of the day, observers of Puget Sound’s economy are left with a paradox. On the one hand, the experience of the past few years suggests that we may be living in a truly extraordinary period, when conventional economic rules are, if not suspended, at least partly rewritten. But on the other, one needn’t go back too many years to see how easy it is to mistake the exception for the rule.
Seattle Times business columnist Jon Talton used the Crosscut piece as a launching pad and took up the challenge of sorting out Seattle’s economic vulnerabilities.
Mike Luis, also writing a Crosscut, is bullish on the region’s tech economy.
Think we are in a tech boom right now? Just wait. That boom could get a lot louder as the big San Francisco Bay Area firms grapple with their region’s own unsustainable growth pattern.
He makes a strong case for Seattle being the logical choice for Silicon Valley expansion. Again, worth a read. He also provides a note of caution regarding Seattle’s ability to accept even more rapid population growth.
The articles make for interesting economic speculation, certainly, and also underscore that the state offers abundant opportunities. We’ve already written about the 740,000 job openings coming over the next five years. These are openings that are imminent and which will be most filled by workers with postsecondary credentials or some college.
A Stateline report raises some questions about the degree to which a skills gap accounts for slow hiring. And while the report raises some valid points, it ends up supporting Washington employers’ arguments that the gap is real and that Washington must do a better job of matching training and education with employment opportunities. According to Stateline,
The usual explanation offered by business and education groups is that too few Americans have the right skills for the openings. The way to close this “skills gap,” they say, is to improve job training and more closely align higher education to employment.
…Throwing more public dollars at education and training won’t be enough to connect willing workers to open jobs. In many places, employers are also setting wages too low, defining qualifications too narrowly, or not recruiting widely enough. Many people who are eager to work can’t because they lack transportation, or don’t have anybody to watch their children during the workday.
Consider that list – low wages, specialized demand for qualifications, inadequate recruiting – and then consider the Washington economy and talent requirements. Also from the Stateline article:
“The national skills gap notion is a fallacy, because there’s no national labor market. There are regional labor markets,” said Lesley Hirsch, director of the New York City Labor Market Information Service. Regional labor markets have slightly different dynamics depending on the industry mix and the types of workers there.
We cannot comment on the national skills gap argument, but we agree fully that there are regional labor markets. And in our region, the skills gap represents a significant problem, one that will and must be addressed by more education and training.