Non-stop flights from Spokane International

Spokane International provides non-stop flights to 12 airports year round. 3 of the destinations are all in the SF Bay Area so its non-stop to 10 geographic destinations. The 13th destination is seasonal only.

SeaTac in Seattle serves 19 International destinations and 73 domestic airports.

The number of cities that can be reached via non-stop flights can impact the type of industry in an area. If your business requires travel by employees, clients or vendors to and from many locations in the U.S., you will want to locate in a city having a large number of non-stop destinations. Otherwise, time spent sitting in airports making flight transfers is potential down time for staff and clients.

Spokane International Airport handled more passengers in 1996 than it does in 2010. In spite of the lack of passengers, SIA is completing a $30 million extension to a runway and next year, another $30 million will be spent to remove a dip in a runway. The longer runway will, they say, enable the airport to serve more distant locations than it does today.

Spokane International Airport does not have any international flights.

Destinations reached non-stop from Spokane (embedded chart comes from SpokaneAirports.net but may no longer be accurate as of February 2011):

Is Spokane a High Tech Mecca?

Downtown Spokane web site (July 2010):

Spokane is already home to high-tech firms including General Dynamics, Cyan, Vivato, Telect and Itron. This clustering of mutually beneficial businesses provides a synergism that attracts businesses providing support services to help high-tech companies grow.

That would be a good description of “industry clustering” except that:

  • General Dynamics’ Itronix division in Spokane Valley, Wa, closed in 2009.
  • Vivato of Spokane Valley, Wa closed in 2006.
  • Telect laid off most of its 1,360 local workers and now employs 100+ 80 in Liberty Lake, Wa. (April 7, 2011, Journal of Business, page A17)
  • Cyan Worlds, located outside Spokane in Mead, Wa, has scaled back.
  • Itron moved to Liberty Lake.

Sadly, the “synergism” of “mutually beneficial businesses” has been broken as dozens have left the area or scaled backLess than 1/2 percent of all jobs, for example, involve creating software solutions. According to the Milkin Institute, Spokane ranks very low as a place to run a technology business.

Area promoters have stated since 2004 that downtown is home to 150+ technology-based businesses. It is unclear where the estimate comes from but it was first used and posted on the Fernwell Building web site in 2004 – and the 150 number has remained constant ever since.

Spokane Job Openings by Required Degree

The following chart shows the type of degree required for job openings in Spokane. Surprisingly, the demand for college degrees, especially advanced degrees, is very low in Spokane. In 2008 and 2009, the relative demand for advanced degrees increased. This occurred because of the overall economic downturn – employers have a “buyers” market which means that the most overqualified are more likely to get hired … and the least skilled were likely to get fired (they are also the easiest to replace when the economy improves).

Relative to the supply, in Spokane about 9-10% have an advanced graduate or professional degree – but job demand for such individuals is in the low single digit percentages. Similarly, about 20% have a 4 year degree but annual demand for such people runs between about 7% and 20%. Consequently, Spokane appears to have a more educated supply of labor than the local market demands at present.

Data Source: http://www.communityindicators.ewu.edu/

Percent of Spokane Students Taking the SAT

In Spokane, the percent of high school seniors taking the SAT exam has fallen sharply in the past few years. Elsewhere, the number of students taking the SAT, nationally, reached an all time high in 2007 and again in 2008.

In 2009 in Washington, 53% of graduating seniors had taken the SAT but just 38% in Spokane had done so:

“Average combined scores for the US and Washington were 1,016 and 1,055 respectively. In 2009, 53 percent of Seniors in the State took the test. Over the last seven years, combined SAT scores in Spokane County have been 1-17 points less than the statewide average and 23-41 points higher than the national average.”

Data Source: http://www.communityindicators.ewu.edu/graph.cfm?id=205. This site, from EWU, is an excellent source of data.

Spokane Health Care Costs

As a regional health care delivery center, there are many providers of health care services in Spokane. But oddly, health care prices in Spokane are higher than the comparable city of Boise, and are higher than those charged in Seattle. Spokane’s health care prices are 8.3% higher than the national average.

Long term elder care in Spokane also costs more than in Seattle.

Source: 2010 Spokane Vitals

Spokane Incomes Compared to Similar Cities

The following chart is courtesy of the City of Boise. Cities generally pick similar sized cities to compare their own city’s economy. Spokane picks Boise as a comparable city, and Boise picks Spokane as comparable, therefore, the following data is relevant:

Some newer data might be the following from 2008 (but source not yet verified):

  • 2008 Spokane median household income: $41,588
  • 2008 Washington state median household income: $58,078

On a statewide basis, the average Spokane household income is 28% lower than that for Washington State.

What This Means
In Spokane, most government, health care and education workers earn salaries similar to those in more expensive cities on the west side of the state.

Most other workers, however, earn substantially less.

Spokane’s workforce seems split in to two worker classes – those in the core group of government, health care and education – and everyone else.

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Spokane Ranks Low for High Tech Business

The State of Washington has established a centralized, top-down, government managed economic plan known as “industrial clusters” – read the background here. Spokane has been identified for a handful of clusters other than high tech. A consequence is that critical support for a high tech eco-system has vanished.

The following two items are from the linked text on industrial clustering.

  • The Milkin Institute established a measure of a region’s capacity for “high tech” known as the “Tech Pole” rating. In overall tech, Silicon Valley ranks the highest at 100.0 (Seattle is 47) and Spokane ranks 0.5. As we dig down, in the area of Software, Seattle ranks 100.0 and Spokane ranks 0.01. In electronics, Spokane ranks 0.04. (See http://www.milkeninstitute.org/nahightech/nahightech.taf?rankyear=2007&&type=metro&ID=1325)
  • Illustration of the lack of a tech ecosystem: In the entire Spokane region, there is only one Masters level technology degree – a single MS in computer science at EWU. There are no other technical or engineering Masters degrees or PhDs in the area.  In science, EWU also offers one Masters in biology, and WSU-Spokane offers an MS in exercise science.

The “Tech Pole” rating puts Spokane in a virtual last place position for conducting a high tech business. Spokane lacks a strong tech ecosystem necessary to support high tech businesses today. Read more of this post

1 out of 3 Spokane High School Students Drop Out

Yet one in three kids in Spokane drops out of high school, a ratio Spokane leaders call a “crisis,” and one that needs a plan of action.

via Levy would finance battle against Spokane high-school dropout rate – Spokesman.com – Feb. 21, 2010.

According to discussion in the comments to that news article, with data sources cited, the on time graduation rate in Spokane schools has been getting worse in recent years. For the entire County, on time graduation rate is 70% in 2008 versus 77% for the State of Washington.

Spokane School District is said to have one of the highest rates of suspensions in the State and spends much more per student, than nearby Mead School District which has a higher graduation rate.

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Low Wages in Spokane and Housing Affordability

Many communities suffer from housing that is considered not affordable. In most cities this is because housing is too expensive for many buyers (which happens due to low cost credit that made homes available to those who would never be able to pay off the loan, creating housing bubbles).

Spokane, though, has a different problem – low wages – as described in this Spokane Housing Affordability report:

The equation for determining housing affordability is based on the price of housing and household income.  In many areas of the state it is the escalating price of housing that creates a housing crisis.  In Spokane, however, the housing affordability problem stems from the other half of the affordability equation — low household income.

I think what they are trying to say is that housing costs in Spokane really are low compared to other cities throughout the Northwest. Yet affordability remains low because wages in Spokane are surprisingly low.  Part of the reason for the low wages is because much of the job market demands low skilled labor.

Chart source: Trulia.com – data appears to be from US Census 2000:

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Major manufacturing and high tech employers close, leave Spokane

Since 2001, dozens of major companies have closed or significantly downsized their Spokane operations causing a loss of an estimated 20,000 high paying jobs (the estimate came from an old Spokesman-Review news article).

I estimate that about 70% of the job losses were due to moving factories and design centers off shore. Another sizable contributor is outside companies buying local companies and then shutting down the Spokane facilities or scaling the operations down. Some of this is related to the recent economic down turn but much is also related to huge changes in how companies do business – and offshoring.

(Update: This comment to an SR news story suggests the problem was that the local Agilent division was poorly managed and not building world class products. The comment after that one says the same thing. This could be due to local culture issues which might have plagued many of these firms – obviously, its not just Agilent that was lost here. More on our local culture and how that might not lead to creating world class products is here, here, here, here, here, and here.)

What happened – as explained on the “Start Here” page:

During previous recessions, national corporations sought to reduce their costs. One way they could do that was to move their manufacturing and related design engineering to a lower cost city some where in the U.S. – like Spokane. Recessions benefited cities like Spokane. But by 2001, as a new recession took hold, national and world-class companies had a new option – moving jobs outside the U.S. Consequently, the low cost of living in Spokane and its low wages, which were marketed as benefits of moving to Spokane were now usurped by cheaper locations off shore.

How Bad Were the Losses?

These two charts add context and put the losses into perspective

Important notes – Keytronics’ peak was in the mid 1980s, before moving all manufacturing to Mexico. Kaiser went from (news reports) of about 4,400 to 600 to 700 at Trentwood. Eggheads peak was in the late 1990s. The others peaked since 2001.

The blue column represents the “past” job total while the red column represents the “present” job total of the firms shown. We know that the blue bar should be 6,000 workers taller than it is, for example, and we know that we have not captured all newer jobs created in the red bar. However, from the Employment Security Department’s official data, there is a gap of at least 15,000 fewer jobs than a decade ago which confirms that the relative proportion of jobs shown is not far off the mark.

The next chart is the official ESD total of non-farms job in Spokane County. This chart is used to corroborate that the preceding data is “in the ball park”. As you can see from the chart and data table, about 15,000 jobs are missing from the peak.

(The number of farm jobs in Spokane is small. The ESD chart does not include active duty military and the self employed.)

List of Companies Closing in Spokane in Recent Years

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Impact of Offshoring on Spokane Jobs

From the 1980s to the early 1990s, manufacturers sought areas with a lower cost of business (namely wages), which made communities like Spokane a good area to locate satellite manufacturing facilities. This later became known as “inshoring” (rather than moving jobs offshore, we moved them to cheaper areas within the United States). These manufacturing businesses also brought high skilled engineering and marketing work forces.

In the 1990s, off shoring was growing rapidly. These companies now found it cheaper to move out of Spokane to off shore locations. Agilent moved its manufacturing to Ireland and Malaysia and the last bit of Agilent in Spokane – firmware (embedded software) is moving to Korea.  ISC/Getronics, I believe, moved much to Ireland and India and other locations (Getronics, a.k.a. Wang/Olivetti as it changed hands – once had over 1,000 workers – and one unconfirmed report that put it at 2,000 workers here, is no longer in Spokane). Software Spectrum moved its work to India.  Telect, which once had 1,200 workers, moved its manufacturing to Mexico (leaving 80 as of April 2011). In fact, 70% of these jobs were moved off shore – and out of Spokane.

Update July 29th, 2010:  Clearwater Paper of Lewiston is laying off seven accounting staff and replacing them with new workers in India.  The offshoring created by post year 2000 recessions will continue to wreak havoc on employment in the formerly low cost/low wage inland communities. Read more of this post

Spokane’s Economy Reliant on Government

All data is from the State of Washington, Employment Security Department’s monthly press release on the current employment situation in the state.

[This post is to be updated with more information on the data source and where these numbers come from… ]

Spokane’s workforce is heavily skewed towards both government related jobs and services. 87.7% of jobs in Spokane are categorized in to the Services category versus 52% in Seattle. Roughly, the opposite of services is going to be manufacturing products.

37.7% of Spokane’s jobs are working for the government, health care or education, and 60% of health care services are paid by the government.

Approximately half of the services category is devoted to the government/health care/education cluster.

Finally, about 45% of the total population is working at any job versus about 60% in King County.

Walla Walla is included because it is another small to mi-size community with a state prison and this helps to understand whether the high government worker percentage in Spokane is due to the prisons here, or not.

Observations
Only Pierce County and Olympia MSA have a greater percentage working in government/healthcare or education.

Spokane’s major economic growth initiatives center around a future medical school and expansion of health care services and related businesses. If those measures play out, we may see half of all workers in Spokane County to be in the government/health care/education sector, which would be the highest in the state, even higher than Olympia.

Spokane is gradually becoming reliant on government.

“Industry Clusters” Assigned to Spokane

The State of Washington has chosen an industrial policy known as “regional economic clustering” or “industry clustering” where the State government selects which industry clusters will operate within each of the 12 Workforce Development Areas defined in the State. The State further has enacted several state laws that require State agencies to prioritize their support for the State-selected industry clusters.

For Spokane, the focus will be

  • Health Care services,
  • Business Support Services,
  • Colleges and Universities,
  • Sheet Metal & Metal Buildings.

Or

  • Health Care,
  • Business Services,
  • Manufacturing,
  • Construction,
  • Transportation/Warehousing

Depending on who made the list. (Why the discrepancy? This inspires confidence in central planning…)

State law requires agencies and programs to support the identified clusters. The side effect is that all support for businesses outside the clusters is largely eliminated.

(This is a very long post – click on Read More to see the entire post) Read more of this post

Spokane Income Distribution

Charts from City-Data.Com showing household income distribution and home values distribution for 2008.

Spokane:

Seattle:

Keep in mind – home prices are a proxy for the typical incomes in an area, and vice versa.

Innovation in Spokane

One way to measure innovation in an area is to count the number of granted patent applications, per 100,000 population.

This chart is from the Spokane Vitals 2010 document issued by Greater Spokane, Inc.

As you can see, from 2004 to 2008, the rate of patent applications in Spokane fell sharply. But the devil is in the details and is influenced by the choice of starting date.

In 1998, Spokane had 50 patents issued per 100,000 population. By that measure, over the coming decade, patents issued fell by -75%, not the -17.8% shown in the GSI chart. The 1998 figure is from the United States Patent and Trademark Office. In fact, the patent rate was approximately 50 for the years 1997 to 1999 – and even 33 back in 1990.  Local patent production is today a fraction of what it was twenty years ago.

Based on the sharp drop in the patent rate in the Spokane MSA, Spokane’s science and technology innovation ability has plummeted.

Update November 25, 2010:

The following chart shows patent growth in the State of Washington from 2000 to 2004. This graphic comes from the WATechCenter. Unfortunately, this chart does not over lap the table, above, and they stopped producing this report after 2006.

The following chart shows patents relative to other regions. As noted above, Spokane was approximately 4x greater in the period 1997-1999.

Spokane Higher Education Enrollment

Greater Spokane, Inc., is formerly known as the Chamber of Commerce. On their Higher Education page, they boast that:

“The Spokane Region offers a diverse group of higher education institutions, with nearly 70,000 students enrolled at community colleges, regional and research universities and two nationally recognized private schools.”

Actual screen capture of the above:

Since 25% of the local population is below the age of 18, that suggests 70,000 of the 360,000 adults here are enrolled in college right now – or about 19 1/2 percent of the adult population. Hmmm … that doesn’t seem likely, particularly since only about 27% of the adults in the Spokane MSA have a 4 year degree.

The GSI claim is perplexing because their own web page lists the enrollment of the local public and private colleges and that adds up to 31,230, not 70,000. The real number is actually a decent number to boast about – so why the exaggeration? Further, the local colleges and universities are excellent. Washington State University is a world-class research university and Eastern Washington University was named by Newsweek as “Best value for the tuition dollar” nationwide.

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Is Spokane the “Most Wired City” in the World?

More than a decade ago, Spokane promoted its downtown as one of the most wired cities in the nation saying that the downtown area had “more miles of fiber per capita than any other city in the nation“, most of it actually dark fiber at the time the claim was made (and they were still promoting the dark fiber in 2008).

(The key to the claim seems to be “per capita” as downtown Spokane has a population of only 2,133 people as of 2006 -(page 12).)

To this day, several web sites promote the “most wired city” claim, not mentioning that was likely true for a short time near the dot com peak and only for a several block area in the downtown. In 2010, Spokane is not on the Forbes Top 20 list of “most wired cities”.  Indeed, many cities today proclaim themselves as “the most wired”.

Sadly, most of the area not only remained disconnected from broadband Internet but was off line until 2005 to 2007, depending on the neighborhood. For example, my neighborhood did not receive DSL or cable modem service until 2005-2006.  This was common throughout much of the region. AT&T bought the older TCI Cable plant but after five years, had upgraded only 25% of the network to support broadband Internet. Not until Comcast took over did the network build out get done quickly. Qwest was then having some financial difficulties and had to cut back on infrastructure projects (since resolved).

For various reasons, Spokane County residential areas lagged many other cities by years. Yet this nonsense claim of “most wired” was translated into further false claims about Spokane.

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Why Move to Spokane?

The leading reasons for moving to Spokane focus on “quality of life” issues:

  • “Low cost of living” which primarily means very low cost of housing relative to other areas in the country
  • Traffic jams are almost unheard of
  • Smog is nearly non-existent most of the year
  • Warm, dry climate in the summer
  • Four seasons – typically has snow every winter lasting from weeks to many months on the ground
  • Good schools and as is stated repeatedly here, “a great place to raise a family”
  • Easy access to plentiful outdoor recreation including lakes, forests and parks

For a business, the leading reasons for moving to Spokane are:

  • Low cost of living, which means low wages
  • Considered to have an excellent quality, low cost, blue collar work force available
  • Good quality, predominately undergraduate colleges and university programs
  • Graduate programs in nursing, health sciences, education, business and law.

For a working person, moving to Spokane makes sense if you:

  • Work in health care – there is an over-sized health care sector here (according to the state – between 13% and 18% of all jobs here are in health care – about 2 to 3x the level of other communities)
  • Work in government – government is the largest employer.
  • Work in a field that supports the above functions
  • Work in a generic field, like accounting, where your skills are needed and can be applied in most any community
  • You are retired – either “young” or “old” retired and bring income from elsewhere (pensions, savings, investments) due to the low cost of living here.
  • You want to start your own small service business making enough to live on, but not necessarily a big income. In a way, this is could be perfect for the “part time retired” person or someone looking to slow down from the big metro area “rat race”.
  • You work in a field that has openings here – and find the advantages of living in Spokane exceed the “cost” of a lower income compared to other cities.

Spokane is a not a culture of ambitious people. Spokane is where people come to enjoy the mountains or retire to a slow pace (or as a commenter put it “a no pace”) lifestyle. If you are young and ambitious, or older and ambitious, many past and current residents would recommend you head to a coastal city like Portland/Vancouver or Seattle area. Those cities have opportunity and high wages – and a demand for ambitious, highly educated or highly skilled workers.

This quote from City-Data.Com is an accurate summary:

“Spokane really is for those that lack any sort of ambition or have come to the end of the road in their career and want to look at mountains and trees.

2010 Spokane economy update from EWU

A regional economic report (May 2010) chooses a unusual title slide to describe the Spokane economy:

Spokane County Historical Population Growth

Like many areas, Spokane’s economy has historically undergone booms and busts – and appears to be in some sort of a plateau or bust right now: see  the 15 year stagnation in Spokane International passenger traffic.

Spokane underwent a high tech boom and bust in the 1990s and the early 2000s, peaking in 1998[1] before the dot com collapse and before the 2001 recession. Since then, the high tech sector has largely vanished and no longer appears on local economy strategic plans.

Booms and busts have occurred before, as noted in this news article. To address these downfalls, the area apparently produced its first economic strategy plan in 1991 (the document itself has mysteriously disappeared and there is no longer any record of what it contained).

In 1995 and 1996, more plans were produced and “highlighted the shortage of good-paying jobs” in Spokane County, a problem that plagues Spokane to this day in 2010.

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