Labor Market Update for the
Pacific Northwest
January 2008
This article includes excerpts from the
Winter 2008 edition of Applied HR Strategies' HR
Intelligence Newsletter.
Regional
labor markets are mostly healthy, nationally not so much
– recent data for
November 2007 shows unemployment rates of 4.7%, 5.5% and 3.0%
respectively in Washington, Oregon and Idaho (December 2007).
Regionally, as job growth slowed in 2007, unemployment rates moved up in
the Fall. Although job growth is not quite at the rate it was in late
2006/early 2007, it was still at a respectable 2.5% - 3.0% in Washington
for most of the year, nearly twice the national growth rate. The star of
the region is Idaho, despite its unemployment rate shooting up to a
still extremely low 3.0% in December (from 2.7% in November). The
national unemployment rate shot up to 5.0% in December (from 4.7% in
November). Only 18,000 jobs were created in the United States in
December. Excluding government hiring, total employment actually
declined.
Regionally, metro areas are generally stronger, with the Seattle at only
3.8% unemployment in November, while the Portland area was at 4.7%
recently (October). No doubt, job growth is slowing, especially outside
of the major metro areas. In WA State, year-over-year growth for 2007
(excluding December) was 2.7% vs. 3.0% to 3.5% growth for most of 2005
and 2006. The IT and technology areas are the strongest overall in terms
of percentage job growth. Aerospace and construction growth have slowed,
but they’ve been strong for some time. Most of these big industry jobs
are in the larger metro areas.
The
housing markets are finally slowing down in the Pacific Northwest after
being substantially stronger than the US as a whole for the past two
years. Even so, construction employment was 7.5% higher in Washington
over the past year (much of it for a boom in commercial construction),
although that seems certain to slow or even reverse course. It remains
to be seen if the housing slowdown will have a substantial impact on the
regional economy. Most economists seem to think there will be some
slowing in the regional economy, but few are predicting a recession, at
least not yet.
Despite the regional optimism, most area economists are predicting
slower job and economic growth for 2008,
and that now seems certain based on recent national data. Regional
economists are near unanimous that regardless of what happens
nationally, the northwest region’s economies will remain stronger than
the nation’s as a whole. In the Puget Sound region, for instance,
many employers continue to report difficulty in hiring skilled workers,
especially experienced technology professionals, just about anything
engineering-related, and in the accounting and finance areas.
While wage growth has been very strong in some hot areas, Applied HR
Strategies expects wage growth to moderate in throughout 2008, even
in the “hot” job categories. Nationally, wage growth in technology has
already started to slow.
Washington State firms rake in venture capital
– Venture capital (VC) investments in the state continue their strength,
virtually ensuring that the already tight tech labor markets will
continue for a while, at least. In the third quarter of 2007, $300
million in venture funding flowed into WA State companies, mostly in
software, internet or health-related companies. VC funding is an
important leading indicator of labor market demand and thus is an
important metric is gauging labor market demand, since much of the
invested dollars go towards maintaining labor pools and hiring new
talent. In the second quarter, Washington ranked third overall in VC
dollars invested (behind California and Massachusetts). The only other
western states to break the top 10 were California (in 1st
place nationally) and Colorado.
Most analysts and VCs report that current funding levels are healthy and
sustainable, at least for now. Few think that we are approaching
“bubble” levels, such as when VC investments went through the roof in
the late 90s, leading to a huge “pop” and then a dramatic drop in
funding in the early 2000s.
-
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.
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