Business - Business News

POSTED: Sunday, Jun. 21, 2009

Whatcom County's job recovery may take until 2012

Even as the economy begins to show signs of getting back on track, Whatcom County may not see job recovery for quite some time.

Recently IHS Global Insight, a national economic forecasting company, released a report predicting when U.S. metro areas would return to pre-recession employment levels. Most of the metro areas - including Bellingham - won't see a job recovery until early 2012, while several hard-hit areas of the U.S. shouldn't expect it to return until after 2014, according to the report. The harder-hit areas include manufacturing strongholds in Michigan and Ohio, as well as areas devastated by the housing bubble burst, such as parts of California and Florida.

Local economists are expecting job recovery to take a while, as a series of conflicting data show a bumpy ride. Hart Hodges, director at the Center for Economics and Business Research at Western Washington University, doesn't think job growth will actually begin until 2010 and isn't sure if this area will return to the sub-5 percent unemployment seen in the early part of 2008.

Last month the local unemployment rate was 8.4 percent, while the state and national rate rose to 9.4 percent.

"(This year) I'm expecting a mix of news where some businesses cannot find the workers they need and others are laying off the workers they have," Hodges said.

Further clouding the issue is the trend of recent U.S. job recoveries. The downturns with longest job recoveries have been the most recent ones - it took 46 months for job levels to recover from the 2001 recession, while the 1990 recession took 31 months. The job loss recoveries in recessions between 1948 and 1980 ranged from 10 to 24 months.

It's unclear to Hodges why it has taken longer for the job market to bounce back in recent recessions; he said it could because of the transformation of the job market, which is now more oriented to service and technology than before, when it was more resource based. Also, the federal government's stimulus programs could limit the severity of a recession, but also slow the recovery.

Whatever the reason, the past recessions and the severity of the job loss point toward the possibility that it'll take longer to recover than after the 2001 recession, pushing the recovery past the four-year mark.

What may be happening is a more structural change in the job market both nationally and locally, said Joe Giannamore, a regional labor economist for the Washington State Employment Security Department.

He noted that year-over-year job growth in Whatcom County had not been negative since at least 1990, indicating that the current job losses make this a different kind of local recession. Since this area has a relatively diverse job market, growth will be tied to what happens nationally rather than what happens to one industry. He believes the overall financial and real estate markets need to get back on track before we see improvement.

"Until the underlying issues self-correct, the economy will not be able to sustain growth," Giannamore said.

WHAT WILL LEAD US OUT

Since the most significant job losses locally have been in construction and manufacturing, Giannamore expects those industries would be at the center of a job recovery. In the past year, 2,300 local construction and manufacturing jobs have disappeared. Overall, the number of nonfarm jobs in Whatcom County last month was 82,400, a decline of 4,100 from May 2008.

If construction and manufacturing are going to drive growth, Whatcom County may be in trouble in the near term. Building permits continue to lag locally and the uncertain future of Alcoa Intalco Works in Ferndale could make for a long recovery time.

"If Intalco closes, it's going to be that much harder for us to replace all the jobs," Hodges said.

Last month, construction and manufacturing dominated the local occupations that have the most people looking for work. At the top of the list was carpenters, with 255 people in that occupation receiving unemployment checks, up from 146 in May 2008. Rounding out the top five are construction laborers, production workers, truck drivers and electricians.

Unless there are some significant companies that move into the area, Hodges expects any kind of job growth would be broad-based. The leading indicators of job growth will be seen in increased activity at temporary job agencies and an increase in durable goods purchases.

"Employers will be tentative when it comes to hiring, starting with part-time help if they are busy," Hodges said. "But it will take a while. This recession had many different factors to make it more severe, so it'll take longer to come out of it."