Even with some key engines of local employment sputtering, the region’s prospects for job growth remain as strong as last year, economists say. Among small business owners, the mood is optimistic but not exuberant.
It’s happy hour at Island Soul Restaurant in Columbia City, and the place is bustling.
The bar stools and tables in Theo Martin’s Caribbean/soul-food eatery are crowded with folks downing fish tacos and jerk chicken wings, beers and rum drinks, even though it’s still early evening on a weeknight.
That’s a far cry from a few years ago, when the Great Recession cut sales by 50 percent, and Martin laid off half the staff and barely avoided foreclosure on his restaurant building.
Now, with the economic recovery under way and an influx of young, high-tech workers into the neighborhood, Martin’s sales have bounced back above pre-recession levels, he’s rebuilt his staff, and he’s planning to remodel and expand the restaurant’s bar.
Most Read Business Stories
- Protecting your Internet accounts keeps getting easier. Here’s how to do it.
- Renter boom: Apartments filling up faster in Seattle area than anywhere in the U.S.
- Mom jeans made women love denim again
- 'Delete' doesn't really delete your data in most programs | Patrick Marshall Q&A
- Flawed analysis, failed oversight: How Boeing, FAA certified the suspect 737 MAX flight control system | Times Watchdog
“There’s confidence now,” he said. “When the economy was bad, even if you weren’t unemployed, you felt unemployed — you felt that something was going to happen. Now there’s confidence in people’s being stable at work.”
Washington’s economy had a strong 2014, finally replacing all the jobs lost in the recession — though not necessarily with equally well-paid work.
This year is shaping up to be equally solid for statewide job growth, at 2.9 percent.
But the Seattle area’s rate may slow, hampered by continuing cuts at Boeing and a Microsoft that seems unlikely to add a significant number of jobs after a year of dramatic cutbacks.
“If Boeing and Microsoft are shedding jobs while, at the same time, Amazon is adding jobs, and those neutralize one another, then one would expect that our economy would slow down and eventually converge to the national growth rate,” said local economist Dick Conway.
Conway predicts a slowdown from 2014’s 3 percent jobs-growth rate to 2.6 percent this year and 1.9 percent in 2016. That would still be better than the estimated national rates of 1.8 percent last year, and Conway’s forecasts for 2 percent and 1.7 percent this year and next.
That said, any slowdown would be gradual and “even if we do converge to the national growth rate, say, in 2017 or so, that’s still not bad,” Conway said. “The national economy is continuing to recover and is expected to have a pretty good sustained growth rate.”
Local economist Matthew Gardner concurs with Conway’s forecast of 2.6 percent for the Seattle area this year. (He’s more optimistic than Conway about 2016, projecting a 2.4 percent jobs-growth rate for that year.)
While 2015’s projected growth rate is slower than last year, it’s nothing to sniff at, he said.
“Any time you’re growing above 2, 2½ percent, it’s still pretty good,” said Gardner, who sees Microsoft as having a neutral effect on the region’s economy in 2015, while Boeing will be a drag. “We’ll be growing jobs faster than the country will.”
That kind of cautious optimism marks Kent-based State Farm agent Deborah Nelons’ approach to her business this year.
She started noticing more people insuring new cars and homes starting about nine months ago, and “I can’t tell you how many people are buying 2015 autos,” she said. “It’s astounding.”
Still, she’s waiting to see how things play out before adding to her current two employees.
“If 2015 continues to grow, I’m going to add a third person for 2016,” she said.
At Island Soul Restaurant, Martin is far more upbeat, reaping the ripple effects of the booming tech industry.
During the recession, some neighborhood residents and longtime customers lost their homes or had to move to where housing was more affordable.
The people who’ve moved in as the economy rebounded are generally younger, with higher incomes.
“They can afford to go out and eat with their friends several times a week,” Martin said. “I get a lot of people who work at Google. They come in six to 10 deep, order tons of food, rounds of drinks. Everybody pulls out their smartphones and texts or tweets their food.”
Martin anticipates that all the construction around him — including a six-story, 193-unit apartment-and-retail building anchored by a PCC at Rainier Avenue South and South Edmunds Street, and a 244-unit apartment complex at South Alaska Street and 32nd Avenue South — will translate into even more customers. So he’s remodeling to make his place a rum bar, and changing his menu to offer more small plates.
Indeed, construction boomed in the Puget Sound region last year and, in King County, construction jobs are expected to increase an average of 5.3 percent annually from 2012 to 2017, according to the state Employment Security Department.
Also expected to expand in King County are the professional and business services sector (3.7 percent), education and health services (2.4 percent), and leisure and hospitality (2.4 percent).
Growth in manufacturing is expected to slow to 0.4 percent average annual growth until 2017. Within that sector, aerospace manufacturing is expected to decline 1.2 percent annually.
“Manufacturing was one of the leading sectors — specifically aerospace — in the early recovery, and is partially responsible for Washington’s relatively strong recovery,” said Anneliese Vance-Sherman, a regional labor economist with the state Employment Security Department. “But manufacturing jobs reached a peak in late 2011 and has, more or less, leveled off over the past couple years.”
Bellevue-based maintenance company Marty K is among those in the business and professional-services sector that saw their fortunes improve last year.
This year, co-owner Consuelo Gomez has set an aggressive goal of increasing revenue by 22 percent, meaning more work hours for her employees who want it.
While businesses cut back on hiring outside companies for janitorial, groundskeeping and other such services during the recession, Gomez said that now, “slowly but surely, they’re wanting to bring someone in to do that.”
Nationally, the unemployment rate dropped to 5.5 percent in February, marking the 12th straight month in which businesses added more than 200,000 jobs, the Department of Labor said Friday.
The state will release its January employment figures Tuesday, and its February numbers later this month.
Meanwhile, Washington’s Economic and Revenue Forecast Council recently revised its forecast for the year upward, from 2.2 to 2.9 percent after seeing stronger than expected jobs growth over the past few months.
But that increase hinges in large part on continuing strength in the housing and construction markets.
“Household formation has a big impact on the economy — think of all the things you have to buy when you first move into a new place,” said Steve Lerch, chief economist and executive director of the council. “As the economy continues to improve, household formation is up. That will be a plus.”
Personal income, which rose about 4.6 percent in 2014, is projected to hit 4.8 percent in 2015, Lerch said.
Still, there are continuing challenges.
In December, for the fourth month in a row, Washington’s unemployment rate crept up. It hit 6.3 percent, higher than the national rate (of 5.6 percent in December) for the third month in a row.
That was not unexpected, since the jobless rate typically rises as more people look for work when prospects seem brighter.
But some also wondered whether that spoke to the difficulties of the long-term unemployed and part-time workers finding full-time positions.
“There are obviously still a lot of folks out there looking for jobs,” Lerch said.
And outside the greater Seattle metropolitan area, which has an economy that’s going strong, “there are still places that are hurting for sure,” he said.
Hourly wages, adjusted for inflation, have also been relatively flat.
“For consumers to really feel good, we would need to see those wages growing in terms of purchasing power,” Lerch said.
Dan Olmstead, co-owner of Poverty Bay Coffee Company, a micro-roaster in Auburn, is taking a measured approach to expanding his business.
“Our motto is ‘slow and steady wins the race,’ ” Olmstead said. “We’ve grown at a slow and manageable rate. And that’s worked out well for us.”
Olmstead, who also is part-owner of wholesale smoothie-supply company Cascade Valley Blend and Poverty Bay Cafe in Federal Way, said that so far 2015 is going well for him.
Sales at the cafe are up 25 percent from this time last year, and he projects a 10 percent jump in the roastery and the smoothie company.
He’s already hired two additional workers for the cafe this year, and if sales continue to climb, he may hire more later.
“I really believe that, as business cycles go, we’re just entering into the real growth period here,” said Olmstead. “We’ll see how long it lasts.”