A new state forecast says Washington’s economic recovery from the pandemic will be slower than hoped. The state’s manufacturing and construction industries also face grave declines.
This should be a five-alarm fire for state leaders, including Gov. Jay Inslee and the Legislature.
Sustaining and growing industries, jobs and the opportunity they provide must be a top priority. The Legislature should convene in special session sooner than its regular start date in January.
Another consideration: The forecast doesn’t take into account what would happen if Boeing’s 787 production line in Everett is halted. Company officials are evaluating whether to consolidate its two lines in one location.
Even if 787 production remains, Washington will lose 43,000 manufacturing and construction jobs over the next five years, according to the latest outlook by the Economic and Revenue Forecast Council.
Another 40,000 jobs at Boeing, and suppliers would be affected by losing 787 production to South Carolina.
Losing tens of thousands of family-wage jobs — and potentially many more because of the aerospace downturn — means even more jobs will be lost in sectors they support, such as retail and restaurants.
That will compound the difficult recovery ahead for small businesses across the state.
Where is the urgency and leadership that Inslee showed early in the pandemic, or in 2013, when the state was at risk of losing tens of thousands of jobs related to 777X production?
A special session was needed this summer even before the worsening economic outlook, to reduce spending and blunt the effect of an $8.8 billion plunge in state revenues. Leadership in three of the four legislative caucuses were game with Senate Democrats balking. But Inslee, who is running for reelection and heavily supported by public-sector unions, has refused to make that call.
Meanwhile, Democrats controlling the Legislature are preparing to push for substantial tax increases when they reconvene, including a proposal to impose a Seattle-style tax on jobs statewide.
Given the state’s new projection of job declines in core sectors, the benefits of any new taxes must be weighed against the negative effects they would have on sustaining and growing private-sector jobs.
That calculus must prioritize sustaining and growing jobs in manufacturing and construction, as much as preserving and growing state employment.
Washington also needs a new emphasis on manufacturing to capitalize on federal stimulus programs.
Both presidential candidates are promising big efforts to grow U.S. manufacturing over the next four years. This editorial board has endorsed Joe Biden, who proposes investing $700 billion to boost manufacturing and research, and create 5 million jobs.
With its skilled workforce, advanced research clusters, low energy costs and proximity to Asia, Washington could be a prime beneficiary if state policies support such a manufacturing resurgence.
Four percent of Washington workers are employed by the state, compared to 6% in construction and 8.4% in manufacturing, as of last September.
What’s more, private sector economic activity provides most of the taxes that fund the public sector, noted state Sen. Randi Becker, an Enumclaw Republican and vice-chair of the Legislature’s special committee on economic recovery.
“Government gets their revenue from the people who are working,” she said.
Becker is concerned the combination of new taxes and more restrictive labor rules will further Washington’s decline by encouraging manufacturers to move to states like Idaho and Montana.
Before the pandemic, manufacturing employment was expected to be flat through 2025. Now it’s expected to decline 8%, to 270,100 jobs.
A slowdown in construction was expected before the pandemic, with the Amazon building boom cresting and Seattle politicians doing their best to kill that golden goose with hostile policies. Construction is now projected to decline 9% from 2019 levels, to 199,600 jobs, in 2025.
Amazon and Microsoft are doing well for now, but the state can’t be overly reliant on a few companies or even a single sector to have a strong, resilient and diverse economy.
“It’s important for economic development just to have a broader job mix in the state than tech workers,” said state Sen. Mark Mullet, an Issaquah Democrat and small-business owner who chairs the Senate economic development committee.
The pandemic and the economic crisis it’s causing for government, business and households demands immediate attention.
But Washington’s elected leaders must give equal attention to the longer term harm that will result from projected declines in jobs in core industries.