Brightening our economic picture

March 1, 2008 | Aaron Keating

In a photo-editing program like Photoshop, brightening a picture just takes a few clicks of the mouse.

It’s not quite that easy when it comes to changing our economic outlook. Still, there are steps we can take to minimize the impact of the current economic slowdown on our workers, businesses and families.

Let’s begin with the “un-retouched” picture.

The New York Times reports the nation’s labor market is deteriorating, and that many companies (which haven’t exactly been on a hiring binge over the past few years) are waiting for the economic picture to clear up before looking for new workers.

…the increasingly anemic job market comes on the heels of six years of economic expansion that delivered robust corporate profits but scant job growth. The last recession, in 2001, was followed by a so-called jobless recovery. As the economy resumed growing, payrolls continued to shrink.

Here in Washington, a long history of public policy promoting “high-road” development has resulted in an economy that tends to do better here than in the United States as a whole.

Still, as of 2007, long-term job growth here still hadn’t made up for the three-year job slump that started in 2001. Although the state added about 80,000 jobs in both 2005 and 2006, we needed an additional 128,000 jobs to employ the same percentage of the working age population in 2006 as in 2000.

And after significant real gains during the 1990s, average monthly earnings for Washington men actually declined between 2000 and 2005, and have held steady for women. Hourly wages for middle and high earners in Washington rose in 2005 and 2006, but stagnated or declined for lower income earners.

So, how do we brighten up this picture?

We can start by adjusting our tax system to be more fair to lower- and middle-income workers (who currently pay a much higher percentage of their income in taxes every year than wealthy residents).

Putting more money back in the hands of working families – who spend a much greater proportion of their total income on goods and services – will provide immediate stimulus to our economy.

Next, we can increase investment in shared public structures that support every sector of our economy – structures like: early learning and higher education; a modern transportation infrastructure, and reasonable, affordable health care.

In the next few years, demands for existing state services will likely exceed public income, even without needed improvements and expansions. Making our tax system more fair and increasing public investment in our infrastructure will create jobs now (when we need them most) and set up our businesses and workers to take advantage of an improving economy.

It’s not exactly two clicks of the mouse. But these are concrete steps our policymakers can take that will have real benefits for our state now and in the future.

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Posted in State Economy, Tax and Budget

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