Glimmers of Hope?



The Sunday Seattle Times offers a page full of graphs to support a rather grim view of the state's economic future. But that pessimistic view isn't necessarily supported by the graphs on the page. Economics is all about trends, and if you look at the trendlines over the past year, conditions look substantially brighter. We are clearly beginning to emerge from that deep hole in which the financial crisis buried us.

  1. Leading economic indicators for Washington have climbed to 116.3 by September, up solidly from 110.3 a year ago, suggesting we should expect slow but steady economic growth ahead.
  2. There are 4.27 online adds for every 100 workers in our labor force. That's up about 30% from 3.26 jobs per 100 workers a year ago. Maybe not enough to quickly bring down state unemployment which remains stubbornly high at 9 percent. But unemployment in the state is significantly lower than that national rate of 9.6%. And the jobs available are much higher than the 2.79 average for the nation as a whole.
  3. Boeing employment has been on a steady climb since hitting a bottom in May. Recent increases are small, but with the new 787 beginning delivery in the first quarter of 2011 and the 747-8 soon afterward, hiring should start to pick up.  
  4. The purchasing managers' index is 59.2, up solidly from 52.6 a year ago, and substantially higher than 54.4 for the nation as a whole..
  5. Retail sales showed a year-to-year gain of 4.2% compared to a 6% decline the year before.
  6. Cargo volumes at the Port of Seattle were up about 20 percent.

The stubbornly persistent bad news is in housinig, where sales are down and inventories remain high. Housing problems are likely to plague us for a long time. But even here there is a glimmer of hope. Net new drivers licenses granted, which tends to be a good proxy for migration into the state, shot up to 12,100 in September, nearly twice the level of last September. New arrivals in the state help to create new demand for all that excess housing we built during the boom years.

Editor's Note: Rule Weary in Seattle

Editor's Note: Rule Weary in Seattle

City regulations may be well meaning, but small businesses are feeling put upon.
David Lee founded FareStart in Seattle to train chefs because he believed the homeless would benefit from “the dignity of preparing food as a vocation.” He launched Field Roast, a producer of vegan “meats,” because he considers the mass industrialization of animals as “a blight on our culture.” He has nurtured a caring culture at his SoDo production facility, remodeling the space so production workers have plenty of space and natural light.
So when Seattle passed a paid-sick-leave law mandating a set number of paid days for sick leave, Lee accepted it. But the results have been disappointing.
“For the first time,” he says, “I have employees lying to me. A medical appointment becomes a paid day off.”
The city’s $15 minimum-wage mandate was another challenge.
“It hurts businesses like ours that compete on a national level against companies in places like Arkansas that pay $7 [an hour],” says Lee. But, wanting to do the right thing, this summer Lee boosted the wages of his employees to $15 an hour four years before he was required to do so under the law.
Seattle can be proud that its $15 minimum-wage law has led the way in driving up wages across the country. And because it is being implemented over seven years and at a time when the local economy is strong, there have been relatively few negative impacts (page 20). Similarly, while there may be widespread abuse of sick leave, there is evidence that the ability of workers to take the time off helps prevent the spread of the flu and other harmful viruses.
But each new layer of regulation is an added burden on business. Now the city is adding yet more regulations — one set that will require businesses to set schedules for employees two weeks in advance and yet another that requires landlords to choose tenants in the order applications are submitted. What’s next? 
A requirement that companies hire employees in the order that they applied?
While each regulation may have some logic to it, the cumulative effect is to make it harder for businesses to fulfill their important role as job creators. The rules can be particularly hard on small businesses without the resources to hire staff to deal with the complications regulations create.
Regulations also create bureaucracy. The Seattle Times reported that to enforce a law requiring landlords to select tenants in the order in which they replied, the city would hire two employees at a cost of $200,000 and launch sting operations. Really?
Meanwhile, the city isn’t enforcing basic sanitation laws to prevent the homeless from leaving excrement on city sidewalks. The Wing Luke Museum of the Asian Pacific American Experience came close to shutting down because an illegal encampment just a block away included “tents serving as drug galleries” that made it unsafe for the museum’s employees and visitors. The problem contributed to the shutting down of the nearby House of Hong restaurant and resulted in negative reviews for the museum on websites like Trip Advisor during the important summer tourist season.
It will be interesting to see if the city’s new director of homelessness, appointed in August at an annual salary of $137,500, can address this expanding problem.
“Clearly, what is happening is that government is forcing business to take on the social imperative,” Lee says.
The altruistic entrepreneur accepts that, up to a point. But the city needs to spend more time attending to basic services. And it has to stop pretending it can solve the world’s problems on the backs of small businesses.
Executive Editor