Assessing The Local Economy

In Economy, News, Wake Up Whatcom by commonnw

You’ve probably heard news reports about the “Bellingham” economy, reports stressing pretty good jobs growth figures, rising wages, or a fairly-low unemployment level.

At the same time, the nation’s Bureau of Labor Statistics demonstrates Whatcom County’s wages are essentially in the bottom 20% (20.06) of average weekly wages in the United States among large counties . Locally, a smaller percentage of our population is employed today than was employed in 2008; we have yet to recover from the recession that marked much of the past decade.

So how do we account for the cheerful news reported in the press and the dreary realities demonstrated by national, regional, and local data sources?

ANY ATTEMPT TO UNDERSTAND THE LOCAL ECONOMY REQUIRES CONSIDERATION OF BASIC FACTS NOT OFTEN CONSIDERED IN PRESS REPORTS

CONSIDER: In most cases, when “Bellingham” is discussed in economic terms, the descriptor “Bellingham” includes all of Whatcom County.

For most purposes involving federal, state, regional, and even local data a regional area known as a Metropolitan Statistical Area (MSA) is looked at.  An MSA is an area with a population center of 50,000 people or more with close economic ties to the surrounding area.  The surrounding area of influence is included in the MSA so, in the case of Whatcom County, the entire county is included in the Bellingham MSA.

That means casual discussion of the term “Bellingham” need to be informed by more detailed data and, when the region is compared to other region’s economies, it is important to compare apples to apples and oranges to oranges.

For an example go to the Census Bureau’s easily utilized page featuring a broad range of facts about specific locales.  Type in Bellingham and then hit the Income link.  You will see that Bellingham’s Median Household Income is $44,441 for the year reported.  Whatcom County, as a whole, is at $54,207 and that includes the drag-things-to-the-bottom-effect of Bellingham’s poor performance.  When economic news is reported as applying to Bellingham almost always the Whatcom County number is utilized.  Of course, Bellingham’s cheerleaders will never point that out, but you should at least consider the fact in the context of any economic news or discussion you might be part of.

Meaningful data at the local level regarding the mix of part time and full-time employment is unavailable.

A huge gap in the data available to measure local economies exists in that literally nothing is available at the federal, state, local, or regional levels to distinguish between full-time workers and part-time workers, in an economy.  A population survey by the Census Bureau provides some limited national data (this survey is based on a questionnaire given to 60,000 people nationally, so local conclusions drawn from it will be inaccurate).

The full-time/part-time problem can (and we often see, does) lead to completely mistaken impressions of a local economy.  Two economic areas, one based on industries providing mostly full-time, high wage jobs with generous benefits, and one based on industries generally providing large numbers of part time jobs can seem to have similar general characteristics. They are profoundly different regarding the well-being of the people living in each region.  By way of example, a town like Bellingham might have 4% unemployment and a town like Seattle might have 4% unemployment but if Bellingham’s mix includes 49% of the workers as part-time while Seattle’s economy provides 75% full-time jobs, the structures of the two economies, and the lives of the citizens experiencing those economies are vastly different.

Unemployment rates are usually the figures pointed to by the press while many other indicators of equal, or more, significance are almost never reported on.

A meaningful, but seldom looked at figure is the labor participation rate; a ratio showing how many people of working age living in a market who are employed compared to how many people, of working age, live in that market.  A low participation rate indicates many people have simply left the labor market either because they are discouraged by being unable to find a job or, for a multitude of other reasons.  A low labor participation rate is an important indicator of a declining and unhealthy economy, all other things being equal.

In a recent discussion with a former local legislator the contention was made that we have a healthy economy because the number of workers employed had risen significantly over the last year or two.  Since 2008, Whatcom County’s workforce has only grown by about 1000 people while the population has grown by about 18,000 people.  That means the labor participation rate has fallen significantly.  Any proper analysis must take that into consideration.

Context is important. 

Imagine average wages in Bellingham increased by (let’s be wildly hopeful) $1,000 per month next year; but, at the same time, the average wage statewide increased by $2000 per month!

Wow!  We’d all be excited to see our wages go up $1,000 per month but, wait!  We would actually be falling behind because when wages increase, so do prices.  Prices in general would increase across Washington to provide the money to pay the average wage earner and extra $2,000 per month but we only saw an increase of $1,000.  Bellingham wages actually went down in comparison to the statewide average, which means that our buying power decreased.  Have you considered how this reality plays out and how it hurts people who live on a fixed income? Especially the elderly, who are capable and independent who do have a difficult time finding a part-time job to supplement their living if the cost of living index rises beyond theirs. With new regulations like mandatory, paid-time-off and health coverage, these problems are exacerbated for them, because the reality is that many of them do not need mandatory paid-time-off or health coverage. They merely need a part-time job to help them supplement their income which enables them to sustain their independent living.

As an example of context, consider the workforce participation example cited above.  Nationally, workforce participation has dropped considerably since 2008.

How much has workforce participation in Whatcom County dropped?  You’ll never see that figure reported!

For a good description of the importance of economic indicators other than employment rates, refer to this Pew Research report.

It’s a big mistake to underestimate the importance of urban myth in our discussions of the local economy; much of the economic decision making by our local city and county councils is based on urban myth.  

Urban myths endemic to Bellingham include the idea that many of our economic woes are tied to the fact that we have colleges here.  In fact, a recent study by Western’s economic department demonstrated that among peer cities with similar college influence on their economies, Bellingham does poorly.

We often hear that the fact we are a retirement area plays a big part in our poor economic performance yet, historically, Whatcom County is in about the middle of the pack for Washington in terms of percent of retired to the total population.

The actual City of Bellingham has based most of its economic hopes in recent decades on attracting industrial development.  Much of the desirable land suitable for business and jobs which is available inside the City of Bellingham is zoned for industry and requires months, and even years of effort and special permissions to be converted yet local, regional, and national studies demonstrate manufacturing is, and will continue to be, one of our slowest growing economic sectors of all.

In short, urban myths and legends, too often is used as a basis for decision making in Whatcom County to the detriment of our economy and, as a result, it hurts the quality of life experienced by ordinary people living and working in Whatcom County.