Labor Market Update for the Pacific Northwest
May 2007

This article includes excerpts from the Spring 2007 edition of Applied HR Strategies' HR Intelligence Newsletter.

Regional Job Growth Slows, But Remains Healthy Overall
Recently released data for March 2007 shows unemployment rates of 4.6% and 5.2% respectively in Washington and Oregon. The national unemployment rate was 4.4% during the same period. The strongest areas of growth in most parts of the NW include continued growth in technology, aerospace (in WA), healthcare, business services and in construction (a northwest anomaly). Job growth slowed to 2.2% year-over-year in WA State, down from the 3% +/- rate of growth that was common in most of 2005 and 2006.

Most economists have been predicting slower growth in 2007, and it appears to have arrived. Overall though, the northwest economy appears a bit healthier than the national one, at least in the Puget Sound region, where many employers report difficulty in hiring skilled workers. Wages are containing to rise faster than they are nationally in some key areas, such as for financial and technology professionals. The 2+% job growth predicted for 2007 should still be enough to keep wage growth on an upward arc, especially in the tightest areas, such as for experienced technology, accounting/finance and other professionals (see below). While wage growth has been very strong in some hot areas, Applied HR Strategies expects wage growth to moderate in 2007, even in most “hot” areas.

Venture Capital Invested in Tech/Biotech Hits Six year High
Venture capital (VC) investments in the technology and life science sectors are an important leading indicator of labor market demand and thus is an important metric is gauging labor market health in these sectors, since much of the invested dollars go towards maintaining labor pools and hiring new talent. Nationally, $7.1 billion dollars was invested in the first quarter of 2007, the largest quarterly amount since late 2001. In WA State, nearly $366 million was invested, the largest since the first quarter of 2001 (coincidently, the labor market peak in the state at the time). One interesting shift is that biotechnology unseated software as the single largest industry sector receiving new capital. Other sectors that did well include media and entertainment (content, gaming, etc.), telecom, IT services/ networking and a new category called “clean tech” (alternative fuels, and other “green” technologies). The strength of investments in technology, life science and related sectors point to firm labor market demand in these areas, as well as and continued solid wage growth in most of key technology job families.

Tech Pay Increases Continue Unabated; Accounting/Finance Remains Strong
Technology sector job growth, while slowing somewhat in 2007, is still quite healthy, and so are wage increases. Estimated wage growth in many “hot jobs” in the upper single digits in 2006, according to AHRS’ research. Other recent research indicated the trend is in place nationally as well. The Yoh Index of Technology Wages showed a 5.5% increase year over year from January 2007 compared to January 2006. Even that index showed some slowing though later in the first quarter of 2007, indicating a slowing wage trend nationally. Growth continues in the technology and life science sectors in 2007, albeit at a somewhat slower pace, which should keep the labor markets in these areas from overheating as they did in the late 1990s.

Despite the slower job growth, many employers continue to report difficulty in hiring experienced professionals in many technology roles, especially for highly skilled and experienced staff. Higher level accounting and finance jobs, a once-placid job category, remains strong in today’s increasingly regulated environment. Tougher compliance regulations and increased reporting/disclosure requirements have placed a greater emphasis on financial reporting accuracy and transparency, and have put a premium on professionals/managers with deep compliance, planning and analysis skills.

- Doug Sayed, Applied HR Strategies

Applied HR Strategies (AHRS) is a Seattle-area HR and compensation consulting firm devoted to helping growth-oriented companies compete within the strong base of technology focused organizations in the Puget Sound region. Culpepper has partnered with Applied HR Strategies to publish reports analyzing compensation trends and practices in the Pacific Northwest.