The State of Working Washington 2006

Report | October 1, 2006 | By Marilyn Watkins, Cara Saunto, Inga Senftleben

Executive Summary

Washington state experienced strong job growth in 2005 and 2006, but the benefits of the booming economy have been unequally distributed. Because the job market has been so slack for so long, the typical family income has not kept up with inflation. Men from their mid- 20s to their mid-40s in particular are earning less now than they did in the late ‘90s. Women have managed to just keep pace with inflation, while continuing to earn far less on average than men.

Recovery from the 2001 recession has been remarkably slow. Between 2000 and 2002, the state lost 58,000 jobs, slowly gained them back over the next two years and ended 2005 with 66,000 jobs more than in 2000. Through mid-2006, the job numbers look even better. July 2006’s job figures were 83,000 over the previous summer.

The state has a lot of making up to do. During the 1990’s, Washington added 56,800 jobs each year on average. Between 1990 and 2000, the state’s population grew by 21.1%, while jobs increased at the faster pace of 26.5%. So far in this decade, jobs are growing more slowly than the rate of population increase. From April 2001, just before the recession took hold, to April 2006, Washington’s population grew by 6.7%, or 400,700 people. Jobs over that same period increased by 5.2%, or 140,000 jobs.

The jobs that are expanding are often different than the ones that were lost. Manufacturing employed 16% of Washington’s workforce in 1990, but only 10% in 2005. Education and health services, professional and business services, information, and construction have all gained in job share. Wages in these sectors are quite diverse.

While some Washington residents are doing very well in the current economy, prosperity is not widespread. One of the most significant economic trends nationally in the past decade has been a sharp rise in productivity. From the mid 1970s to the mid-1990s, productivity grew at an average annual rate of 1.4%. Between 1995 and 2000, the productivity rate rose to 2.5% a year, then increased again to 3.1% from 2000 to 2005.2 Rising productivity means that each worker produces more in an hour of work. The question is, who benefits? In the 1990s when the labor market was tight, the benefits of rising productivity were distributed up and down the economic ladder, with workers at all skill and education levels seeing real increases in their incomes. However, during the jobless recovery after the 2001 recession, the benefits of productivity growth have gone almost exclusively to the very highest earners and to corporate profits.

In Washington state, income for the typical family in 2005 was $4,000 less than in 1999 after adjusting for inflation. Men saw their average monthly earnings increase by one third in inflation adjusted dollars between 1994 and 1999, from $3,381 to $4,482, but by 2004 their average monthly earnings had fallen to $4,227. Women’s monthly earnings rose by a more modest 23% from 1994 to 1999, from $2,044 to $2,512, then remained largely stagnant, inching up to $2,597 by 2004.

At least Washington is doing much better than the national average. Our state median income is about $5,000 above the national. The U.S. increased jobs by only 1.3% between 2000 and 2005, compared to 2.4% in Washington. So far in 2006, jobs in the U.S. are up 1.2% over 2005, compared to 2.1% in Washington.3 Public policy makes a difference in how economic gains are distributed among working families. Because of Social Security and its annual cost of living adjustments, poverty among seniors remains lower than for any other age group, both in Washington and throughout the United States. Fewer children lack health insurance than adults, because of both state and federal programs designed to get coverage to kids who need it. Thanks to Washington’s minimum wage law with annual cost of living adjustments, the state’s lowest earning workers did not lose ground during the recession, and the state’s poverty level remains lower than the national average for both adults and children.


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Posted in State Economy