After a strong rebound this summer, Washington state’s job market now seems caught between a steady stream of layoffs and a slowdown in hiring by employers. 

Washingtonians filed 18,403 new, or “initial,” claims for unemployment benefits for the week ending Saturday, according to figures released Thursday by the state Employment Security Department (ESD).

Although that’s down 8% from the prior week — and well below the massive levels from the first weeks of the pandemic — it’s still more than three times the number of claims that were filed the same week last year. 

At the same time, the pace at which employers in Washington are hiring — or rehiring — has slowed markedly. In August, nonfarm employment increased by just 19,800 jobs, according to the most recent monthly ESD employment report

While that helped drop the state’s unemployment rate to 8.5%, down from 10.2% in July, it also represented a sharp slowdown after months of strong hiring. In May, June and July, employers added 90,500, 108,200 and 102,800 jobs, respectively. That was after they shed more than half a million jobs in March and April combined.

August’s slowdown is bad news for a job market that still has 337,800 unemployed workers, or almost twice the number from a year earlier. If employers continued adding jobs at August’s pace, it would take more than eight months to get unemployment back to the August 2019 level.

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Economists point to several possible reasons for the hiring slowdown.

Much of the hiring from May to July was actually the rehiring of workers who had been furloughed temporarily, said Matthew Gardner, chief economist for Windermere Real Estate in Seattle. “Those were people who knew that at some point … they were going to come back, and obviously many of them did,” Gardner said.

Now, however, much of the remaining unemployment is centered in sectors — such as retail, accommodation, food service, and arts and entertainment — that were hard hit in March and April and have been much slower to rehire due to pandemic-related concerns, Gardner said.

Many employers fear that a possible surge in COVID-19 cases this fall could lead to new government restrictions and more nervous consumers, which could result in new layoffs. Others are keeping staffing low until they know whether Congress will extend federal relief — notably, the Paycheck Protection Program loans that kept many smaller businesses afloat this summer. Facing those uncertainties, many employers “may just be a bit more cautious” about bringing employees back, Gardner said.

Anneliese Vance-Sherman, an ESD regional labor economist who covers the Seattle area, pointed to other factors behind the slowdown in hiring.

Many of the hardest-hit sectors, such as retail, food service and hotels, are also seasonal and would be shedding many of the temporary summer hires around this time, she said.

Another factor: Some of the May-through-July hiring surge was likely driven by consumers who were comfortable returning to retail shops, restaurants and other nonessential in-person businesses as soon as they reopened, Vance-Sherman said.

But other consumers remain unwilling to take that risk, which puts a cap on how fast employers can rehire. “Until most people feel safe venturing out, there is a limit to how much business can be done in sectors that are built on face-to-face experiences,” she said.

The problem, Vance-Sherman says, is that many employers may not be able to wait, due to COVID-19 related losses and other financial pressures. “The longer it takes for businesses to get themselves up and running again, the less likely it is that they will be able to survive the pandemic,” she said.