68.7 F
Seattle
Saturday, July 2, 2022

Washington: Productivity Good, Employment Not So Much

Photo by krisna iv on Unsplash

In the newly released figures on gross domestic product (GDP) by state for the second quarter, Washington got, if not good news, at least better news than nearly every other state. Figure 1 shows the drop in state GDP between the second quarter of 2019 and the second quarter of 2020.

Nationally, GDP was 8.5 percent lower in the second quarter than a year prior. The second quarter includes April and May, the two worst months of the pandemic shutdown, and June, the month when things started to turn around economically. In Washington, GDP dropped by 4.7 percent year-over-year, giving the state the third lowest GDP drop in the country, after Utah and Arizona.

The state does not fare nearly as well on the employment front. Figure 2 shows unemployment rates for August for the states. The data is based on a survey taken of households during the week of August 9.

At 8.5 percent, Washington ranked 36th among the states for unemployment. How can the state have such high unemployment when its GDP has taken such a modest hit? The answer is in productivity. The jobs that did not get cut in Washington are highly productive. The state’s workforce, on average, puts out a lot more value than most states.

Figure 3 shows a metric of relative productivity. For each state we see the degree to which a state’s share of national GDP is higher or lower than its share of national population. For example, Washington is responsible for 2.97 percent of the nation’s GDP, which is 28 percent higher than its 2.3 percent share of national population. The states in green are punching above their population weight, and the states in yellow/brown are punching below.

By this metric, Washington is the third most productive state in the nation, after New York and Massachusetts. This finding is consistent with other metrics showing that Washington has a high wage, high productivity economy. And since the unemployment that persisted into August tends to be concentrated in lower wage jobs, Washington can have stronger GDP performance while having many more workers on the sidelines.

The strong GDP performance, while good news for the economy overall and the future of the state, does not really tell us much about livings standards. After all, Washington and the other states in dark green in Figure 3, are high cost places to live. All those highly paid workers in the Seattle area see a big chunk of their large paychecks go toward expensive housing, commuting and local services.

Looking Ahead

Most economists expect a big surge in GDP in the third quarter, as the reopenings of various sectors of the economy show up in the data. As the Indexer has noted, retail sales are recovering fairly well, while services are still down. We see a similar pattern on the production side. Goods producing sectors–mostly construction and manufacturing–are getting closer to the old normal, while services in general lag behind. Both GDP and employment will likely see long tails of recovery as high-touch services wait for safety and customers to return.

Michael Luis
Michael Luis
Michael Luis is a public policy consultant who has been wrestling with housing, growth and economic development issues around Washington State for over 30 years. He is author of several books on local history and served as mayor of Medina.

Post Alley welcomes comments to our articles. Our guidelines: no personal attacks, stay on topic, add something of value to the discussion. Our editors will edit comments for clarity and to conform with our guidelines. We encourage writers to use their full names.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

LATEST

Why the Keystone State will be Key in the ’22 Election

1
No place is more pivotal than Pennsylvania, where Donald Trump has yet to concede his narrow loss to Joe Biden two years ago.

Disconnect: Missteps Over an Intruder at a Seattle Elementary School

0
On June 2nd, a series of events occurred in the Sand Point neighborhood including an incident at Sand Point Elementary School where an intruder...

Time to Lower the Heat in the Post-Roe Commentary

5
If the SCOTUS decision is the beginning, not the end, of the debate, we will need a lot more thoughtful commentary. Here are some examples.

Bolting for the Bigs: USC, UCLA Abandon PAC-12 for Big Ten (UW Next?)

14
It’s official now that the industry has fallen off the edge of the flat Earth propped so long by the mythology of amateurism.

Inside City Hall’s Serious Budget Shortfall

7
The multimillion-dollar gap -- viewed in the perspective of an annual budget in the $7 billion range -- is perhaps not horrific. But it still is bound to impact what the city can achieve towards meeting its on-going needs and ambitious social goals.

TRENDING

Disconnect: Missteps Over an Intruder at a Seattle Elementary School

0
On June 2nd, a series of events occurred in the Sand Point neighborhood including an incident at Sand Point Elementary School where an intruder...

Bolting for the Bigs: USC, UCLA Abandon PAC-12 for Big Ten (UW Next?)

14
It’s official now that the industry has fallen off the edge of the flat Earth propped so long by the mythology of amateurism.

Why the Keystone State will be Key in the ’22 Election

1
No place is more pivotal than Pennsylvania, where Donald Trump has yet to concede his narrow loss to Joe Biden two years ago.

Time to Lower the Heat in the Post-Roe Commentary

5
If the SCOTUS decision is the beginning, not the end, of the debate, we will need a lot more thoughtful commentary. Here are some examples.

Inside City Hall’s Serious Budget Shortfall

7
The multimillion-dollar gap -- viewed in the perspective of an annual budget in the $7 billion range -- is perhaps not horrific. But it still is bound to impact what the city can achieve towards meeting its on-going needs and ambitious social goals.