4 out of 5 new jobs are low pay

From the Economic Policy Institute – 4 out of 5 new jobs created in the U.S. fall below the median. And 3 out of the top 5 are in health care. Basically, we have offshored our high value jobs and replaced those with low value service jobs. Our government policies are based on economics theories that global wage arbitrage leads to the best economic outcomes for Wall Street everyone.

Jobs … but low pay.

The nation is now mirroring Spokane’s long time economy:

The most recent jobs data show that every industry – with the exception of health care, education, and the government – has fewer jobs today than before the recession began, strong evidence that demand is weak across the entire economy.

Incoherent Cluster Strategy for Spokane

M92 - Globular Cluster

Image by Astro Guy via Flickr

The photo, at right, is an astronomical globular cluster.

10 to 20 years ago, the focus was on such things as high tech manufacturing in electronics and medical instrumentation. Ten years ago, “energy” or “alternative energy” popped up. 5 to 7 years ago, the new focus was going to be an information technology cluster and wireless technology.

In 2005, the new focus would be

“…financial services, advanced manufacturing, logistics, information technology, health and biomedical, and higher education and research and development.”

Between 2005 and 2008, the plans evolved  to regional health care delivery and the “emerging bioscience cluster”. All the tech stuff  disappeared from the 2008 regional economic strategy plan. Poof! Gone! (IT is still on the list but mostly because of INHS’s excellent system integration work in health care medical records systems and start up NextIT innovative online customer support tools.)

Finally, in 2009, the Spokane County Commissioners signed off on the latest list of “clusters”. And it is not much like the others … no surprise. Amusingly, their official list of five clusters has six listed clusters. Attention to details anyone?

The Inconsistencies of Cluster Promoters

Cluster promoters tell us that tight knit industry clusters foster cooperation, communications and new synergies between people and businesses, creating new opportunities and more competitive firms. The very concept of clusters is all about geographically close communities and face to face interaction.

But then they start defining Innovation Zones and Technology Triangles by drawing ever expanding geometric shapes around Spokane to cover tens of thousands of square miles.

Which is it: clusters are tight geographic ecosystems or sprawling blobs? A cluster can not be both!

Clusters are defined in terms of their size in the local economy. Other than government and health care, and maybe transportation/warehousing/distribution, Spokane does not have industries that today rise up to the scope of true clusters. Local promoters therefore promote the lack of clusters as a benefit because we have a diversity of (too small to be) clusters.

In other words, not having clusters is a benefit?

Meanwhile, local promoters still make claims about either a tech or information technology sector in Spokane. Yet the State’s own laws mandated that the State stop supporting high tech in Spokane and several agencies that previously functioned to assist tech startups were shut down between 2005 and 2008.  (The details of the State laws and the agencies that were shut own are here.) Local promoters are inconsistent in promoting industries that by State law, will not have the state’s support behind them because they do not fall into the State selected clusters.

Local promoters push local clusters that by State law, are not going to be supported in Spokane.

Bottom Line: The cluster policy for Spokane is incoherent and inconsistent and likely causes actual harm to the economy by diverting resources away from business opportunities in Spokane.

Chart shows identified clusters (from a 2004 report) for the decade 2000 to 2010. The red circles are the segments that seemed to meet the clustering definition. At the time, it was hoped that the blue circles near the middle of the chart would emerge as clusters too. But all but Higher Education have declined since then. As the 2009 EWU report notes, IT and Bioscience clusters do not exist in Spokane.

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Sterling Financial Corporation of Spokane, Wash., Completes $730 Million Recapitalization Effort

Sterling Financial was in a bit of a financial mess and was required by regulators to raise $730 million:

Sterling Financial Corporation of Spokane, Wash., Completes $730 Million Recapitalization Effort – MarketWatch.

As part of the deal, taxpayers, who had loaned the bank $303 million in TARP funding, will get $60 million in stock instead. New investors get full value for their investment, however.

Existing shareholders end up owning 2% of the company, essentially wiping them out, along with their largest creditor, the taxpayers, who will lose 80% of their “investment”.

Foregoing the loan payback appears to be a $243 million Federal subsidy to a Spokane business. Nice. That should be a boost to the Spokane economy.

New bus service to run between Spokane and Kettle Falls

Gold Line – Travel Washington – Kettle Falls to Spokane, WA.

The Federal government will pay about 70% of the costs of running the twice per day buses between Spokane and Kettle Falls, Wa. Which would be an additional subsidy to the Spokane region.

Crime rates in Spokane Valley

However, he recently provided information to the Spokane Valley City Council showing that burglaries in July had nearly doubled compared to the same month in 2009. And, reports of car prowling have jumped from 63 last July to 156 this year

via Officer shoots, kills nursery owner, pastor – Spokesman.com – Aug. 26, 2010.