Waiting for Godot
Regional economy: Better get used to it
seattletimes.nwsource.com
By Stephen H. Dunphy
Seattle Times business columnist
In the famous Samuel Beckett play "Waiting for Godot," the central story line involves two characters who continuously wait for the arrival of someone — or something — named Godot. He never comes.
Anyone waiting for a return to the boom of the late 1990s and early 2000s is waiting for an economic Godot. That's the lesson to be learned from the news last week that the unemployment rate for the state rose again, returning to 7.3 percent.
While that seems high compared with the past five years, in reality it is very near the average unemployment rate for the state for the past 25 years: 7.2 percent. The lesson: These are not hard times. These are average times. And they are more likely to continue into the future than a return to bubble years.
For many, like Seattle software engineer Gary Rambo, who has been unemployed for nine months, these are far from average times. They don't have jobs. They can't find jobs. They've been out of work for many months.
He is "beginning to suspect that the job category 'software engineer' has been redefined down to a $15/hour contract-programming gig."
He is among the 2.5 million people nationally and the 96,000 locally who have lost work since the bubble burst.
The burst bubble
You've heard that often: It was a bubble economy, and it burst. But what you don't often hear is the economic history of bubble economies. A bubble is an unusual event. It's like the "big one" earthquake. It's a 500-year flood. It can happen, but economic history adds this footnote: Once it's gone, it's unlikely to return.
What we saw in the bubble economy — job growth, low unemployment, a tight labor market, option incomes, a stock market that made and unmade billionaires, the "new economy" where old rules no longer applied — is gone, poof, probably forever.
It doesn't mean the economy won't grow again. But it will be closer to the long-term average than the extraordinary period of the bubble. Some back-of-the-envelope numbers can help.
• About 1.28 million people were employed in the Seattle area in April, based on figures from the Employment Security Department. That's down 90,000-plus from the peak in 1999-2000 of about 1.37 million jobs.
• Picking a modest annual job-growth figure of 1.5 percent a year, the Seattle economy adds about 20,000 jobs a year. At that rate, the region hits the peak in employment again around 2007. The economy grows — much slower than the go-go years, but at about the long-term average.
• If job growth were 5 percent — as it was in one of the bubble years — the economy would add about 64,400 jobs a year. That's a long way from 20,000 a year, which helps explain why Rambo is having trouble finding a job.
• In addition, an unemployment rate of 7.3 percent understates the problem — it measures people looking for work. Thousands have become so discouraged they no longer actively seek work, so they are not counted as unemployed.
Seattle hard hit
How we got here is well-known.
Seattle had a high concentration of the industries hardest hit in the recession — aerospace, dot-coms, telecommunications and software. Microsoft continued to hire, but other software companies did not, resulting last year in the first decline of software jobs ever in the state. All of that was worsened by the Sept. 11 attacks.
What's ahead?
Here's what usually happens in the Northwest: We hit a downturn because of Boeing, a national recession and usually some other unexpected factor. The terrorist attacks were the outside factor this time around.
After a recession has run its course, however, we usually have two things going for us. Boeing rebounds, and consumers — who have had to watch spending, especially for housing — start spending again. Housing usually takes off, helping to spark the economy.
This time, Boeing is likely to continue to cut workers rather than add them as the airlines industry reels from Iraq, the SARS outbreak and orange-level alerts. Low interest rates have kept the housing market perking along throughout this period. So the two big engines that usually pull the economy ahead are derailed.
Jobless recovery
If you mark the end of the national recession as late 2001, it has been about 16 months. This far past a recession, the economy here is usually doing well, with fairly robust job growth. But from December 2001 to April, job growth totaled 0.1 percent — a good definition of a jobless recovery. How do we get out of this mess?
It's a tough message to hear, but the only way out is time. Nothing is on the horizon that would provide any huge stimulus to growth. Boeing is still laying off. Microsoft is hiring, but cautiously. There is still too much overcapacity in telecommunications. The state's budget crisis removes the public sector from any growth scenario.
Biotech? Possibly, but even if it blossomed here, it would provide some well-paying jobs but relatively few in number.
The Air Force tanker contract for Boeing will help. But watch the hyperbole — the contract provides a good, steady source of jobs for workers and profits for Boeing, but it is not a huge generator of either.
Back to Godot. The very first line of the play has one of the two main characters, Estragon, saying this: "Nothing to be done."
Stephen H. Dunphy. Phone: 206-464-2365. Fax: 206-382-8879. E-mail: sdunphy@seattletimes.com |
