Washington State Employment Security Department: Regional economic review 2020

2019 brought in yet another solid year of social, economic and labor force growth in the Benton-Franklin Region. Total payroll (including farm) employment increased for the seventh straight year to 126,735 in 2019. Average annual wage grew by 3.8 percent or $1,959, and it was at $53,541.60 in 2019.

Local economic and population expansions have driven growth in many industries over the past seven years. The most significant driver of diverse industry segments has been population expansion. The state Office of Financial Management is estimating that population has expanded by another 2.0 percent and topping at over 303,000 in 2020. The region has a higher percent of population under 18 years of age, at 29.3 percent, compared with the state at 21.8 percent, with population 65 years and over at 12.5 percent, being slightly below the state average of 15.9 percent.

2020 brought the pandemic to the region, and it’s now (over) 52 weeks since the first closure in the state and the region due to COVID-19, and the region is in a mixed recovery of lost jobs. Starting March 15, 2020, the Region’s economic and labor market conditions began to erode as we entered “Stay Home, Stay Healthy” orders. Unemployment insurance initial claims reached over 27,000 claimants by the end of April 2020, and statewide that number was over 880,000.

The region’s resident labor force was able to apply for and receive benefits, including those who traditionally did not qualify for regular state benefits. From March 2020 through March 2021, there were over 73,254 initial claimants and unemployed residents who received in total more than $435.9 million in state and federal benefits, while statewide that number was at $16.8 billion.

The region’s unemployment rate spiked from 5.4 percent in March to 14.0 percent in April, lower than the state rate of 16.3 percent. Regional total nonfarm payroll jobs fell by 11,200 in April 2020 or 9.5 percent of total nonfarm employment. Washington state lost 10.7 percent of total nonfarm jobs in April, which is well over 370,400 nonfarm jobs. It was the largest one-month job loss on the record.

The impacts on the regional nonfarm payroll jobs were less severe than that of the resident labor force, with the year-end loss of 3.1 percent or 3,600 nonfarm jobs (December 2019 to December 2020). The loss of jobs in April was 11,200 jobs or 9.5 percent of total nonfarm when compared with March 2020 and the local economic activities were well positioned to recover well over 81.0 percent of the lost lobs, but additional losses of jobs were recorded in November and December.

The largest job losses in 2020 were recorded in the following industries: food services with 22.2 percent, local government 7.3 percent, financial activities 7.0 percent over the year, accommodation services 5.1 percent, state government 3.2 percent and professional and business services 0.5 percent.

Overall, a combination of all industries and job losses was met with resiliency and a fast comeback. The region’s economy is recovering faster than the whole state but remains below pre-COVID-19 shutdown levels.

Though the pandemic has left its mark on the U.S. and world overall, with statewide fast and swift response to COVID-19, many residents, workers, businesses and others still have experienced rapid, unprecedented hardship and challenges. Unemployment increases and payroll job losses registered some of the largest monthly movements on record, adding to the well-known and documented losses during the Great Recession and Hanford layoffs.

The outlook generally is much brighter for the region, however, with the seasonal downturn and continuous COVID-19 industry reopening restrictions, we are expecting overall total employment to start growing in 2021, with many volatilities that will come with COVID-19. Also, we are expecting a return of lost jobs in 2021.

The growth in total employment is expected to come from many different industries, with main drivers being housing-related jobs, healthcare, trade services and hospitality, as we expect continuous increases in local resident population to augment demand. GDP and personal income growth in 2019 for the region is expected to follow the state trend of increases. Also, we are expecting 2020 decreased in GDP, but yielded a higher increase in personal income mainly due to the higher transfer payments due to COVID-19 fiscal spending.

Anticipated demographic changes and rapidly advancing technology will bring continued change to the region, meaning opportunities and challenges. For example: The region’s population is expected to continue growth between 2020 and 2030, but at a much slower pace than in the past decade. The major driver of growth may become in-migration versus natural changes, which the area has benefited equally from in the past decade.

All data and analysis sources are from Employment Security Department — Labor Market and Economic Analysis and Bureau of Labor Statistics, Office of Financial Management and U.S. Census.

This story was originally published April 30, 2021 at 12:01 AM with the headline "Washington State Employment Security Department: Regional economic review 2020."