Local Unemployment On the Rise (Wait, Still?)

The last time we checked in on unemployment data for the Seattle area, local data was rapidly catching up to national stats, with statewide unemployment jumping from 4.7 percent in April to 5.3 percent in May, and Seattle-area unemployment bumping up seven-tenths of a percent to 4.1 percent.

Well, it didn’t take long for Washington to catch up with the nation.

Unemployment in Washington state last month jumped to its highest level in 3 1/2 years, as job seekers surged into an economy that is having trouble generating enough new jobs for them.

The state jobless rate was 5.7 percent in July, up from a revised 5.4 percent in June (it was originally reported at 5.5 percent), according to figures released today. Washington now has the same jobless rate as the United States as a whole, after 13 straight months of outperforming the nation.

The state’s economy gained 3,300 payroll jobs in July, after losing a downward-revised 1,800 jobs in June. July was the fifth straight month of little to no change in the nonfarm payroll figures, suggesting that Washington’s jobs engine is stuck in first gear.

In the Seattle metro area, the unemployment rate rose to 4.3 percent last month from 3.9 percent. About 8,500 people reported entering the labor force in July, but only 1,800 of them found work right away.

When/if our unemployment rate reaches 5 or 6 percent, I wonder if local real estate agents will still be extolling the virtues of our “strong employment” that “holds up the local housing market?” Or maybe they will start to realize that the strong housing market has been at least partly responsible for holding up the area’s strong employment.

(Drew DeSilver, Seattle Times, 08.12.2008)

Update: Here’s a more in-depth article from Drew DeSilver in today’s Times.

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About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

20 comments:

  1. 1
    Groundhogday says:

    And with lower tax revenues, we are facing state and local government hiring freezes, layoffs of temps, etc… Starting the downward spiral.

  2. 2
    David McManus says:

    Get ready for state income tax proposals now that tax revenue is getting reduced. This will be marketed to the sheep under the guise of “emergency” or “desparate times require desperate measures”. I for one, would cut wasteful spending, but I’m not running the show.

  3. 3
    Slumlord says:

    The thing I am watching for is when airlines start canceling all those Boeing orders, and the subsequent downturn in Boeing employment. Some argue that higher fuel prices will encourage airlines from the Middle East to buy those shiny new, super-efficient 787s. I suspect that they will find it more profitable to buy slightly used, yet deeply discounted planes from bankrupt American and European carriers. Things will get nasty around here if I am right. I want to be wrong, but I doubt that I will be. It is already starting to happen to Airbus.

    http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSN0728923020080807

  4. 4
    vboring says:

    airbus chose to build an airplane that nobody wants and which is incompatible with most airports. this is not really the same situation boeing is in.

    air travel in the US may be down, but the still weak dollar makes Boeing planes helluva cheap for international airlines and the recent turbulence in Asian markets may not impact airplane sales there. long term, expectations are that Chinese will continually increase how much they travel by air. Boeing is probably just fine.

    WaMu, on the other hand, is living on borrowed time

  5. 5
    mark says:

    What, nothing on this story?

    11.1% of Seattle-area homes sold at loss in past year.

  6. 6
    mukoh says:

    Slumlord,
    Boeing last time I checked had orders up to 2014, correct me if I am wrong.
    The orders for 787s are fueled exactly by the rising jet fuel costs and 787 being the most efficient jet out there to buy right now.

  7. 7

    David McManus,
    A state income tax here is the ‘third rail”…Even if it were wise to do it, it won’t happen. Support for it in the past has ended politicians careers.
    I’m not sure it’s a bad idea, to get tax revenue from a variety of sources, but I’d only do it if property taxes and sales tax was lowered commensurately.

  8. 8
    David McManus says:

    David McManus,
    A state income tax here is the ‘third rail”…Even if it were wise to do it, it won’t happen. Support for it in the past has ended politicians careers.
    I’m not sure it’s a bad idea, to get tax revenue from a variety of sources, but I’d only do it if property taxes and sales tax was lowered commensurately.

    I’ve known not to never say never, Ira, especially when one party is in control. We’ll see what happens in Nov. I doubt that if we ever got a state income tax the state would give us a permanent break on prop taxes and sales taxes. Maybe for a year or two, but then they would come up with excuses to increase sales and property taxes. See California / New York / etc. for examples.

    Back on topic, does anyone know why unemployment figures don’t take into account out of work self-employed people? I would think if you were a real estate pro who didn’t have any clients / income, aren’t you technically seeking work?

  9. 9
    biliruben says:

    A sales tax would get the mantel of most regressive taxation scheme of the 50 states off our back. It might also go a little ways towards funding the 30+ billion in unfunded infrastructure needs that continue to go undone. Maybe start getting some useful transit around these parts to boot. Write a constitutional amendment banning sales tax in perpetuity if you have to. Just get a more fair way of taxing the citizens of Washington.

  10. 10
    vboring says:

    David asks a good question.

    does anyone know where to find real unemployment data?

    the headline numbers have very little to do with reality. after excluding the underemployed, those who have stopped looking, and adding imaginary new jobs according to model, it is amazing that the reported unemployment number is ever above 0%.

  11. 11
    MarkM says:

    Overall an income tax does seem to be a better solution. The only caveat is there would need to be some restrictions in place. I moved from Seattle to Cleveland awhile ago for about 2 years. Here’s what you got for working in Cleveland:

    — 2% Income tax for city of Cleveland (included bonuses, etc, straight off the top, no deductions)
    — 7% Sales Tax for the State of Ohio
    — State Income Tax

    Now I’d be willing to bet that initially the sales tax was rate was low but you can see it’s not that dramatically different from ours. That’s my greatest fear is that we’ll try to mimic Oregon but the politicians will find a reason why we have to bring back the Sales tax as well.

  12. 12
    Harley Lever says:

    Should I take the summer off and enjoy the weather or should I go right back to work?

    It will be interesting to see what the rainy season brings. Washington state has some of the best unemployment benefits. For those who do not need to go right back to work the appeal of having the summer of is overwhelming.

  13. 13
    MarkM says:

    By the way, my apologies about getting sidetracked by the sales tax issue.

    In regards to unemployment, I’m a bit surprised it hasn’t gone up more when you consider:

    – WaMu having layoffs
    – Weyerhaeuser having layoffs
    – Starbucks having layoffs

    Yep, we still have Boeing & Microsoft and the many spinoffs but there’s not really much recession proof if all areas of the economy are sputtering. Not to mention all the real-estate related jobs in PugetSound area (agents, builders, etc).

    The SeattleP-I started a “layoff tracker” in their business section back in the days of the dot com bust. Somewhat out of date but still interesting to see what’s happening:

    http://seattlepi.nwsource.com/business/layoff.asp

  14. 14
    David McManus says:

    Washington state has some of the best unemployment benefits

    500 dollars per week doesn’t help when your mortgage payment is 3000 and you can’t find a buyer for your house.

  15. 15
    WestSideBilly says:

    does anyone know where to find real unemployment data?

    the headline numbers have very little to do with reality. after excluding the underemployed, those who have stopped looking, and adding imaginary new jobs according to model, it is amazing that the reported unemployment number is ever above 0%.

    Good luck. The BLS numbers (CPS + JOLTS) are the best compilations that I’ve ever found, and those numbers are bordering on meaningless.

    When you start getting into the semantics of what unemployed really means, the numbers lose their value. BLS defines unemployed as not working at all, having looked for a job in the past 4 weeks , and wanting to work. They have a specific category for “discouraged workers” who give up looking who are not working, want to work, but haven’t looked for a job in the past 4 weeks but have in the past 12 months. After 12 months of not working & not looking, you are completely off the radar and are removed from the job force.

    Part time workers are counted as employed, even though about 60% of part time workers are seeking full time employment but can’t find it (they’re defined as underutilized). Underemployed workers are simply treated as employed based on the hours they work.

    I don’t know that there is a better way to do it, but it’s not very accurate.

  16. 16
    WestSideBilly says:

    Back on topic, does anyone know why unemployment figures don’t take into account out of work self-employed people? I would think if you were a real estate pro who didn’t have any clients / income, aren’t you technically seeking work?

    That would depend entirely on how you answered the survey. But generally speaking, I believe if you were still trying to sell houses, even if you had no clients/income, you’d be considered employed.

    From the BLS CPS release:

    People are classified as employed if they did any work at all as
    paid employees during the reference week; worked in their own business,
    profession, or on their own farm; or worked without pay at least
    15 hours in a family business or farm.

    So unless you’ve given up and are looking for different work, an RE agent with 0 clients is still employed.

  17. 17
    Harley Lever says:

    David McManus,

    What data due you have that supports that all people laid off have $3,000 mortgages and are trying to sell their homes?

    Did you miss my statement “For those who do not need to go right back to work”?

  18. 18
    jonness says:

    “Back on topic, does anyone know why unemployment figures don’t take into account out of work self-employed people? ”

    Politicians have changed the way we count over the years in order to make themselves look better. This allows them to compare the current numbers with historical data that was counted more accurately. When they do that, it makes it look like the economy is actually in pretty good shape.

    In short, all government economic statistics are lies; thus, you cannot compare the numbers over time and expect to measure the relative health of the economy.

    See the link for more info:

    http://reddocs-econews.blogspot.com/2008/07/data-fudging-101-history-of-us.html

  19. 19
    David McManus says:

    David McManus,

    What data due you have that supports that all people laid off have $3,000 mortgages and are trying to sell their homes?

    Did you miss my statement “For those who do not need to go right back to work”?

    I did not say ‘all’. For sake of argument, let’s just say they have….2000 per month mortgages. 500 per week may help them make the house payment, but how do they eat, clothe themselves, get to work, etc.

    Your comment:

    For those who do not need to go right back to work the appeal of having the summer of is overwhelming.

    seemed to imply that majority of folks who are out of work can just sit back on the unemployment benefits and enjoy the weather. I beg to differ, having been out of work for 3 to 4 months in 2003. I was laid off due to headcount reduction two months after we closed on our house. The last thing on our mind was sitting back and enjoying the summer.

  20. 20
    David McManus says:

    Sorry, I should not have included “get to work” in my comment above. Ha!

    Tim, we need a way to edit posts here!

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