For the first time since the Great Recession, Seattle’s jobless rate has dropped below 5 percent — a major milestone if you agree with economists that we’re now at full employment.
Joblessness in the Seattle metro area, which includes Bellevue and Everett, fell to 4.7 percent in May, down from 5.1 percent a month earlier, the Washington State Employment Security Department reported Wednesday.
Only a year ago, Seattle’s jobless rate stood at 7.3 percent. A drop of nearly 3 percentage points since then suggests key local business sectors are loosening their tight grip on hiring.
State labor economist Paul Turek credits the “Boeing factor” for much of the improvement.
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“They’ve helped lead the way in hiring,” he said. “Software development is beginning to catch up, but still probably hasn’t hit its peak. And related to that is a decent amount of construction.”
Seattle’s jobless rate is at its lowest level since August 2008, when it also was 4.7 percent.
Maria Ramirez, president of global economic-consulting firm MFR in New York, said that for years “full employment” has been defined as joblessness of 5 percent or less.
But the latest numbers, while encouraging, are merely one snapshot of the economy and do little to ease concerns about the quality of jobs created, especially for workers outside Seattle’s lucrative technology sector, Ramirez said.
“Right now, wage growth is nominal and the jobs being added are lower paying,” she said.
Statewide, Washington’s unemployment rate declined to a seasonally adjusted 6.8 percent, down from 7.0 percent in April. That puts Washington ahead of the U.S. average of 7.6 percent in May.
A year ago, the state had 8.4 percent unemployment.
In another positive sign, Washington has recovered about 79 percent of jobs lost to the recession, compared with 70 percent for the nation as a whole, the department said.
Washington’s nonfarm employment increased by 4,100 jobs during the month, building on a gain of 1,700 in April. (Job growth data for Seattle will be released next week.)
The government sector posted the largest gain statewide, up 3,200 on a seasonally adjusted basis. Turek attributed the increase to the special legislative sessions, which keep staff members employed longer.
The education and health-services sector had the second-largest monthly increase, up 2,500, followed by leisure and hospitality, 1,500; transportation, warehousing and utilities, 600; and retail trade, 300.
Eight sectors reported fewer jobs in May, including manufacturing, down 600; professional and business services, down 500; and a broad category called “other services,” such as auto repair and beauty salons, which shed 1,400 jobs.
“All in all, we’re continuing to see job creation,” Turek said.
“The pessimist view is that the pace of job creation could be faster. We’re adding jobs at a modest rate.”
In 2007, before the Great Recession, Washington gained an average 6,200 jobs a month.
May also marked the fourth straight monthly gain in the state labor force, which includes people who are both working and looking for work.
That suggests people who once were too discouraged about the job market to even look are restarting their searches and, in some cases, finding work.
But job prospects remain tough for young people in particular, Ramirez said. Many are delaying their entry into the labor force and focusing on their education, a trend not fully captured by the monthly jobless numbers.
“A large percentage of college graduates are staying in school longer and earning an additional degree,” Ramirez said. “As a result, they’re incurring more student loan debt.”
Indeed, a new report from Congress shows student-loan debt has nearly doubled in the past five years, rising from $550 billion in late 2007 to almost $1 trillion in early 2013.
Two-thirds of recent graduates have student loans, with an average balance exceeding $27,000, according to the Joint Economic Committee.
“It’s a hard time to find a job,” said Kellie Welch, 22, who graduated in March from the University of Washington with a bachelor’s degree in public health.
Her goal is to work full-time in public outreach and education for a nonprofit.
Welch secured an unpaid internship at the Muscular Dystrophy Association and soon will begin part-time work coaching children’s soccer for the Seattle Sounders.
Meanwhile, Welch receives financial support from her parents and shares a house with several roommates.
“Next summer, I’ll have to pay for everything on my own,” Welch said. “I’m nervous, but in a year, hopefully I will have things figured out.”
Seattle Times reporter Marissa Evans contributed to this story.