Opinion

'Our economy will recover when the jobless rate turns' | Forecasts for 2010

By MINNIE KNYCH

Mark Twain popularized the saying, “There are three kinds of lies: lies, damn lies and statistics.” What we all know is that statistics never tell the whole story and that is especially true regarding the San Juan County economy.

Statistically, we are blessed with a lower unemployment rate (6.8 percent) than the rest of the state (8.8 percent) and the nation (10 percent). However, when you consider that just one year ago, San Juan County unemployment rate was 3.5 percent, it is evident that San Juan County has been seriously impacted in this economic downturn. In addition, these statistics only report those people that are currently receiving unemployment benefits and reporting to Employment Security regarding their job search.

There are two groups of unemployed persons who are not counted in the official tally.

The first group is those people who have stopped receiving unemployment insurance but are still unemployed or under-employed. Some may have just simply received all the benefits they are eligible for. Others may have taken a temporary or part-time job to help put food on the table while they continue to look for work. Since these people are not counted, their numbers alone could bring the national unemployment average to 17 percent or more.

The other group is those individuals who have been self-employed and have not paid in to the employment security system. San Juan County has many of these small business owners and entrepreneurs who have made a good living in the past but are finding it hard to stay in business in this economy. There is no way to accurately count these people — yet they are still unemployed.

As noted, statistics are debatable and different areas of the country have different experiences. Statistics are even more skewed with you are dealing with small numbers. In a rural county like ours, anecdotal evidence has more validity than in larger populations. The story of a single individual is more illustrative of the whole picture than it would be in an urban area like Seattle. To paraphrase a political adage, “All economics are personal.”

The most dramatic change that I can point to my job this past year is that I now see more people looking for scarce jobs, where before my experience was more employers looking for scarce workers.

A large part of our population are retired people and those living on accumulated assets and Social Security. In many instances, their investments are worth less, interest they were earning is reduced and, for the first time, there is no increase in the cost of living in Social Security payments. Some of these people have, by necessity, begun to compete in the job market with younger workers. Others are just spending less, which is a further drag on our local

economy.

For San Juan County, the recession became obvious in October 2008. The closure of Rosario Resort decreased dollars flowing into the local economy and increased the ranks of unemployed. At the same time, construction and real estate were both in the doldrums. At the beginning of the recession, when construction workers were being laid off, some contractors told me they were recession proof because they had jobs scheduled two and three years out. By February 2009, some of those contractors began to look for another line of work because the scheduled jobs were cancelled.

Construction, usually the sector of the economy that brings the most tax dollars to county government, is still very slow. Homeowners who have lost their jobs now have time to do emergency maintenance themselves, or decide non-emergency home repairs or renovation can be put off until better financial times. Home buyers are finding that it is more economical to purchase a ready built home than to build that dream house. This doesn’t bode well for the construction industry in 2010.

Tourism, the business sector that employs the most people in San Juan County, has changed also. While July was a good month, downtown merchants report that tourists looked more and bought less in general.

In the job market, the most noticeable difference was that unemployed adults took many of the summer jobs that teens usually fill. This was a good deal for the businesses who could hire more experienced people with established work records, but teen unemployment was greater this summer than in past years.

The health care industry has so far escaped the slowdown. There have been no significant layoffs in health care, but I am seeing evidence of the possibility of fewer future openings in that sector. For instance, Islands Convalescent Center reports a full staff at this time.

Some are suggesting that the strength of the stock market indicates that we are coming out of the recession. You may have heard the term “jobless recovery.” Only Washington, D.C. could come up with an oxymoron so out of touch with reality. If people are unemployed, they are not spending and that will be a drag on the economy. Likewise, if there are no jobs being created, it means that businesses are not growing and may be shrinking.

My normal inclination is to be very optimistic; however, until the unemployment rate begins to turn around, the economy will still be precarious. Nationwide, small businesses account for 80 percent of all non government employees. In San Juan County, we only have small businesses. It is possible that more of our private sector small businesses will find it hard to survive the long hard winter thus causing the ranks of the unemployed to swell. The economy is in trouble because people borrowed more than they could afford. Government appears to be following in their footsteps.

Until government spending is brought under control, small businesses will be uncertain about the economy and will not begin to hire new employees or borrow money for expansion. That will keep the economy in limbo for some time to come.

— Minnie Knych is director of the local Northwest Workforce Development Council office.

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