state economy « Washington Policy Watch

February 3, 2012 • 2:24 pm 0

Public sector cuts are holding back economic recovery in Washington

The latest economic forecast for Washington state, issued by Washington’s soon-to-be-former Chief Economist Arun Raha, shows we may be beginning to dig out from the recession – but public sector cuts are holding back the recovery:

The bright spots:

The aerospace industry added 11,500 jobs since May 2010, double the 6,000 lost during the recession.
Jobs are beginning to return to the software industry, which added 1,800 jobs since December 2009 – but still shy of making up for the 2,500 software jobs lost during the recession.

The downside:

The construction industry remains weak, and employment is flat.
State and local government shed 1,300 jobs in November and December, adding to the 17,000 state and local government employee jobs lost between Feb 2010 and Sept 2011.

So overall, signs in the private sector seem to be trending positive – but it’s also clear public sector cuts are holding back the state’s recovery.

public sector vs private sector job change

This point is not lost on Ezra Klein, who points out in the Washington Post that government layoffs are acting as a drag on our national economic recovery:

As Isaac Shapiro and Josh Bivens of the Economic Policy Institute have found, the rate of private-sector job growth during this recovery has actually been comparable to that after the 1990 and 2001 recessions. What makes the current recovery different is that, unlike after past recessions, the unemployment rate is getting battered by government layoffs this time around.

To rebound quickly and rebuild our state economy, Washington legislators need to stop the bleeding by making robust investments in our state infrastructure. Ending corporate tax breaks and maintaining investments of $2 billion in education, health care, and services would help do just that, and result in 9,000 to 17,000 additional private and public sector jobs.

Learn more: A Jobs and Economic Recovery Plan for Washington »

Filed under: state economy, Arun Raha, economic growth, Employment, Ezra Klein, Private sector, public policy, Public sector, tax exemption, Washington, Washington Post, washington state

January 31, 2012 • 2:04 pm 0

Credit agencies go negative on Washington’s debt outlook – can we buy enough pants to boost our economy?

Either we ask the rich to pay a bit more in taxes to support opportunity and middle class prosperity, or billionaires like Nick Hanauer are going to have to start buying a hell of a lot more pants, say Moody’s and Fitch, the credit rating agencies that recently revised Washington’s debt rating outlook from “stable” to “negative”.

Okay, that’s not exactly how they put it, but that’s the takeaway. While affirming the state’s nearly top-notch credit ratings of Aa1 and AA+, the analysts cited a steeper-than-expected housing downturn, one-time budget fixes, and cyclical trends in our aerospace industry as negatively affecting the state’s outlook. This come as no surprise – we’ve been hearing this since the start of the Recession.

But Moody’s and Fitch also specifically cite the state’s structural deficit as one of the principle drivers of the downward revision. What’s a structural deficit? From Fitch:

The state, with no income tax, relies on consumption-based revenues. This makes Washington particularly vulnerable to reductions in consumer spending and limits the prospects for quick revenue recovery.

In other words, Wall Street’s recovery and corresponding salary increases and bonuses for high-income individuals don’t translate into significant consumer activity in Washington – so sales tax collections have remained flat. An income tax would help that, by diversifying Washington’s revenue collection, and ensuring revenue collections matches overall economic activity.

As wealthy venture capitalist Nick Hanauer wrote in a recent article, the economy will not recover until consumer spending rebounds – which cannot happen if all the wealth is concentrated at the top:

The annual earnings of people like me are hundreds, if not thousands, of times greater than those of the average American, but we don’t buy hundreds or thousands of times more stuff. My family owns three cars, not 3,000. I buy a few pairs of pants and a few shirts a year, just like most American men. Like everyone else, I go out to eat with friends and family only occasionally.

So goes the myth of trickle-down economics. Either we ask the rich to pay a bit more in taxes to support opportunity and middle class prosperity, or Nick Hanauer is going to have to start buying a hell of a lot more pants.

Filed under: state economy, tax and budget, income tax, nick hanauer, sales atx, structural deficit

January 30, 2012 • 12:28 pm 0

Small business owners shun lobbyists, call for “high-road” workplace standards

Jamie Vaughn, owner of Revival Lighting in Spokane

Business experience, academic research and political muscle are backing calls by small business owners for “high road” business and economic development policies – and policymakers are listening.

The recent campaign for paid sick days in Seattle featured local business leaders like Dave Meinert, Makini Howell and Jody Hall. And they didn’t just support the idea – they helped craft the proposal that eventually became law. As Howell put it in an open letter to business owners:

“Not only can paid sick days work for my business, I believe it is exactly the type of public policy that makes our community stronger. Ultimately, strong businesses need strong communities to thrive.”

Before you write that off as the “Seattle liberal establishment” at work, take a look at this article from the Spokane Inlander about Revival Lighting owner Janine Vaughn, who:

showed up as a simple small business owner in Inlander stories about income-tax Initiative 1098 (arguing it would save her small business money) and workers-comp insurance-privatization Initiative 1082 (arguing it would cost her small business money).

Vaughn is a member of the small business lobbying group Main Street Alliance, which initially formed to support the small-business friendly aspects of proposed national health care reform legislation.

The Main Street Alliance, Vaughn explains, is made up of mostly smaller businesses. That’s why they tend to stand in such stark contrast to traditional business lobbying groups – and the Republican agenda.

That kind of contrast gets noticed. The White House has been in touch to get the Alliance’s views on public policy issues that affect small businesses and their employees:

“It’s actually very surprising,” Vaughn says about her sudden ubiquity in the press. “They’re actually listening to the small business voice. It’s exciting.”

Academic research backs up these business owners’ experience with “high road” economic development policies like a strong minimum wage, paid sick days, and paid family leave.

The latest research by economists comparing counties that share borders across state lines has found that increasing the minimum wage not only increases the incomes of low wage workers, it does so without decreasing the number of jobs. And it benefits employers by decreasing costly turnover.

Since New Jersey’s paid family leave policy was implemented in 2009, and researchers at Rutgers have found paid leave is not only good for families, it’s better for businesses and leads to reduced use of public assistance.

A study in the American Journal of Public Health demonstrates how a lack of workplace policies such as paid sick leave contributes significantly to illness among Hispanics — and thus the general population.

This is a welcome and exciting trend – one that bodes well for Washington’s (and America’s) businesses, families and communities as we strive to restore the promise of the middle class and build an economy that works for everyone in the years to come.

Filed under: minimum wage, paid family leave, paid sick days, state economy, work and family, American Journal of Public Health, business, paid family leave, paid sick days, Research, Seattle, Sick leave, small business

January 25, 2012 • 8:02 am 0

Unemployed Face Fewer Jobs, Fewer Hours, and Smaller Safety Net

Unemployment remains persistently high, despite the “official” end of the recession in June of 2009. But recent improvements in the overall unemployment rate don’t tell the whole story. The “shadow” unemployment rate, which includes unemployed, underemployed, underutilized and discouraged workers, is a more accurate representation, including workers who have given up looking for jobs, and those who have exhausted UI benefits.

Part-time employment shot up during the recession, both for men and women. In 2010, men’s part-time employment rates declined, probably because many of them returned to full-time work. Yet women’s rate of part-time employment remained high, peaking at almost 38%. More men than women worked part-time due to economic reasons, meaning they wanted full-time work but could not find it. Even so, the percentage of women working part-time for economic reasons nearly doubled from 2007 to 2010. Read the rest of this entry »

Filed under: state economy, economy, jobs, shadow unemployment, unemployment rate, Washington, women in the workforce

Washington Policy Watch

Public sector cuts are holding back economic recovery in Washington

Credit agencies go negative on Washington’s debt outlook – can we buy enough pants to boost our economy?

Small business owners shun lobbyists, call for “high-road” workplace standards

Unemployed Face Fewer Jobs, Fewer Hours, and Smaller Safety Net

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