Hospital-sector recession looming?

The two primary industry clusters in Spokane are regional health care delivery and government.  Nationally, the health care sector is seeing signs of an industry recession and layoffs.

The Harvard Business Review thinks the growth in health care jobs is about to halt because the health care industry has been adding jobs faster than it is adding patient volumes – leading to long term, year over year declines in productivity.  A long term year-over-year productivity decline is not sustainable.

This change has apparently already started and could have impacts on Spokane with its over-sized health care sector:

Hospitals, a reliable source of employment growth in the recession and its aftermath, are starting to cut thousands of jobs amid falling insurance payments and in-patient visits.

via Layoffs reflect hospital recession | The Clarion-Ledger | clarionledger.com.

Potential reductions are not a certainty but are a possibility.

The following chart illustrates the dramatic impact the health care sector has had on Spokane County employment. Watch the blue line near the top. If the recent decline were to accelerate, per the above linked news report, this would be of concern to the Spokane area.

image002

 

The next chart is from the Washington Employment Security Department. Their horizontal chart has been flipped and rotated into a vertical format as it makes the sector size comparison easier for us humans. As you can see, the health care sector is the largest single employment sector in Spokane County.

2013MaySectorEmplRotated

 

Washington State July unemployment rate increases slightly

The statewide unemployment rate increased slightly to 6.9%.

So far, Washington has recovered about eighty-three percent of the jobs lost during the recession.

via July unemployment rate inclines slightly, while jobs continue to climb.

While the State recovered 83% of jobs lost, Spokane County has recovered just 36% of jobs lost.

Data from WA ESD June employment table:

  • Lowest June employment during downturn was 206,100, highest June reading reached previously was 221,400.
  • A total of 15,300 jobs were lost between the highest June and the lowest June employment levels.
  • As of June 2013, there are 211,600 jobs for a gain of 5,500 since the lowest point. This represents a recovery of 36% (5,500 / 15,300) of the jobs lost.

Spokane County job growth is just under half that of Washington state.  No explanation has been offered as to why that is happening.

“Encouraging signs emerging from Great Recession”

From airplane parts to medical devices, cookware, pharmaceuticals and mining equipment, factories across the region are collecting contracts that square with the national trend of burgeoning productivity.

Even though manufacturers rely more and more upon automation and greater productivity from every worker, hiring is on the rise. In Spokane, for example, there were 15,325 people employed by manufacturing firms in December, the most since late 2009.

via “Encouraging Signs Emerging from Great Recession”, Spokesman-Review.

It’s a rainy morning and unfortunately I have not yet forgotten how to make a chart. So let’s chart some actual data!

Historical Manufacturing Employment in Spokane County

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“Spokane is a great place….Things are good in Spokane.”

We wish it were true!

But back in the reality-based world and this last post on this blog … by the numbers, Spokane is not getting better, it continues its long downward slide.

Spokane’s Economy In Easy to Read Charts

For decades, wages in Spokane have grown at half the rate of the rest of the state, falling further behind every year. Spokane wages average about 20% behind the rest of the state. Government and health care workers make close to King County wages – but everyone else here earns much less than the -20% wage  differential implies.

Every year, Spokane residents fall further and further behind their counterparts in the rest of Washington and in the nation. This chart shows that Spokane per capita income was at 90% of the State’s level in the 1970s, but has declined to less than 80% of the State’s level by 2008 (the orange line). In 2010, average wages rose 2.7% nationwide, but rose only 2.3% in Spokane County. Stated another way, average wages rose 17% faster everywhere else while and Spokane residents’ income fell relative to everyone else.

The next chart highlights the wage differential for those working in higher skilled jobs in Spokane.  Education and health care, which are shown, are similar to King County. (Government wage data was not available for this specific comparison). As we move to the right into higher skilled jobs like manufacturing, finance and engineering, the wage differentials are enormous. Spokane will never attract a national or world class high skilled workforce when wages in Spokane are up to 50% less than across the state. Which is why the State and local power brokers have identified Spokane as the low wage, low skilled industry cluster for the state.

 

Tons more data after the break …

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Low demand for highly educated, high skilled workers in Spokane

As shown in the post, below, pay for high skilled private sector workers in Spokane County (law, business, science and technology) is surprisingly low.

What It Means

  • The demand for high skilled workers in Spokane County is low.
  • There are about twice as many people with a 4-year degree as there are job openings needing a 4-year degree qualified worker*.
  • There are about three times as many people with graduate degrees as there are job openings needing a graduate degree qualified worker*.
  • The low demand for highly educated workers in Spokane is a likely reason wages for the highly skilled are so low.
  • About 2/3ds of the job openings require a high school diploma or less.

Chart comes from the Community Indicators of Spokane.

Besides the “Recommendations” posted in the right most column of this web site, what else might be done to create an ecosystem demanding higher skilled workers in Spokane?

Update: Local PR news article refers to Spokane as a “blue collar city”, which helps to explain the low wage issue. This article is part of a lobbying effort to continue receiving a 30% taxpayer funded subsidy to movie makers in Washington. For amusement, see how the local TV news hacked this story down to a few meaningless sentences. Funny.

* About 25% of adults here have a 4-year degree but the demand is about 12% to 15% of job openings. About 10% have a graduate degree but the demand is about 2% to 4% of job openings. Spikes in 4-year degree job openings in 2007-2009 have to do with the recession when lower skilled workers were typically the first to get fired and higher skilled workers were the first to be hired.

Comparison of average wages between Spokane and King Counties

A sample of job categories was selected from the Workforce Explorer web site for Industry Trends. A few were dropped out because the job category did not exist in both counties.

  • Most Spokane County workers are paid less and professional high skilled private sector workers are paid a lot less.
  • While we have come to expect lower pay in Spokane, some of the differences are shocking.
Table of average wages in $s in Spokane versus King County. The difference is shown in the right most column. Bright green is higher. Dark green is “close”. Bright red is -24% or worse difference.
Occupation Spokane King County Spokane Pay
Public Schools/Education
Teacher 33207 36051 -8%
Elementary Teacher 58227 55921 4%
Education administrator 100703 102037 -1%
Government workers
Firefighter 61987 72591 -15%
Police and Sheriff 64560 72205 -11%
Zoologists and wildlife biologists 57261 62254 -8%
Health Care
Pharmacist 107792 95782 13%
Registered Nurse 65735 77800 -16%
Physician assistant 88684 100508 -12%
Dentist 147660 159630 -7%
Nursing aides 24342 30917 -21%
Private Sector Jobs
Science and Technology
Industrial engineer 69391 83122 -17%
Mechanical engineer 62946 82890 -24%
Software engineer, apps 70504 94071 -25%
Software engineer, systems 74135 99318 -25%
Computer programmer 54288 95782 -43%
Chemist 50917 73321 -31%
Chemical technician 38653 35160 10%
Law & Business
Lawyer 90215 118674 -24%
Paralegal 35344 53588 -34%
Marketing manager 108781 125807 -14%
Sales manager 82235 119374 -31%
Advertising/promotions manager 48198 101550 -53%
Architect 83145 72237 15%
Editors 58218 61492 -5%
Reporters and correspondents 40346 54105 -25%
Labor
Roofer 35953 46263 -22%
Truck Driver 39584 43626 -9%
Sheet metal worker 35946 57792 -38%
Cooks, all other 23731 29322 -19%
Retail sales 21486 24151 -11%
Bus and truck mechanic 42489 51252 -17%
Hairdresser, stylist, cosmetologist 33459 32702 2%
Mobile heavy equip. mechanic 41968 59303 -29%

Wage data from the State’s Workforce Explorer Industry Trends section.

What It Means
  • Education sector pays about the same.
  • Government and health care pay some what less.
  • Private sector highly educated workers are paid remarkably less.
  • Those considering moving to Spokane need to consider the income ramifications of their career sector.
  • At present pay levels, there will not be a science or technology cluster in Spokane. With extraordinarily low pay, Spokane will have difficulty attracting high quality scientists and engineers needed to create a regionally or nationally competitive science and technology cluster.
  • At present pay levels, the same issue impacts creation of national classes businesses.
  • “Editors” average is about the same in both counties. This may account for why there is little news coverage of the chronic low wage problem in Spokane – low wages do not affect them!  But reporters’ pay – ick!
Would be interesting to compare pay scales to Benton-Franklin counties, and to Clark County (Vancouver, Wa) area.

Related articles

Inflation Adjusted Average Wages in Spokane County

Good news – inflation adjusted average wages in Spokane County have gone up from 1990 to 2010.

Bad news – wage growth from 2001 to 2000 was 13.7% but wage growth from 2001 to 2009 was 5.5%.

  • The second period was selected to start from the lowest post 2000 wage (the bottom in 2001) to the end of the series in 2010.
  • The first period was selected to start in 1991 and run to 2000 (local peak) so that the same number of years would be in both groups.

What it means:  Wage growth in Spokane was much lower after the peak in 2000 and is now growing less than half as fast as prior years.

Oddity: Why did average wages shoot up in 2008 and 2009 in the midst of the worst recession since The Great Depression? Lower wage earners were laid off their jobs. Eliminating lower wage workers causes the average to rise.

Bottom line: Since 2000, average pay in Spokane has risen at a slower rate than prior to 2000. That’s unfortunate.

Reminder: The “average” is not the same as the “median”.