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Friday, March 1, 2024
March 1, 2024

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Washington job market stays strong as banking crisis, interest hikes raise doubts

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Alex Singleterry, owner of two bars in Seattle’s Ballard neighborhood, thinks the pandemic job market may finally be fading.

After years of labor shortages, Singleterry has been able to add eight employees at the Ice Box Arcade and his new bar, the 4Bs Tavern — in part, he says, because job seekers today worry less about COVID-19 and more about things like inflation.

Some applicants are telling him, “‘I need to get back [to] generating some income and stop spending my savings,’” he says.

Singleterry’s experience may be familiar to many employers across Washington, where hiring has slowly stabilized after a worrying slump last fall. In February, Washington employers added 15,300 jobs, according to a report Wednesday by the state Employment Security Department.

The report also revised January employment up from 10,800 jobs to 12,700.

February’s gain was the biggest monthly jump since July, and a modest but welcome sign that Washington’s job market continues to improve, despite some high-profile layoffs in tech.

Indeed, employers in the “information” sector, which includes many tech companies, actually added 1,000 jobs in February, according to the department.

But paradoxically, one factor behind that growth may be workers’ fears of new economic turmoil with persistent inflation and worries about the banking industry.

“I think people see what the rise in prices has been with inflation and are more worried,” said state economist Paul Turek. “So there seems to be a little bit more impetus for getting back into the [job] market and working again.”

Data also seems to suggest that “maybe people were taking second jobs,” Turek said.

February’s report showed job growth in nearly all the state’s industries. Topping the list were professional and business services companies, which added 4,600 jobs. That was followed by education and health services, at 4,500; government (2,700) and leisure and hospitality (2,400).

Only three sectors lost jobs: construction, which was down 100; financial services, down 300; and transportation, warehousing and utilities, down 1,500.

In fact, although total job openings across Washington are down from their peak in February 2022, the state’s labor market is still tighter than it was before the pandemic, according federal data.

“There are still more total job openings than there are unemployed job seekers,” the department noted in a statement Wednesday.

That’s definitely the situation for Singleterry, who despite his recent hiring still can’t find enough staff for his growing business.

“We need three more people immediately, and we’re looking at another nine over the next five months,’ he says.

But there are red flags, as well. The unemployment rate in Washington remained unchanged from February, at 4.6%, is a full percentage point above the U.S. unemployment rate, although the latter ticked up from January’s rate of 3.6%.

The state’s job market is also likely to hit economic headwinds on several fronts.

Tech layoffs may pick up steam, which could bleed over into the broader job market. On Monday, Seattle-based Amazon announced another 9,000 layoffs, on top of 18,000 since last fall.

With inflation still relatively high, the Federal Reserve is expected to keep interest rates higher, which could undercut hiring. On Wednesday, the Federal Reserve raised a key interest rate by a quarter of a percent.

And now a banking crisis, starting with the failure earlier this month of Silicon Valley Bank, could cool hiring by pressuring most banks to tighten credit and cut lending. “With less borrowing, you’ve got less spending [which] eventually has an impact on the labor force,” says Turek.

As important, many consumers have tapped out their savings and are maintaining spending by relying more on credit cards and other debt. In December, total credit card debt it a record $931 billion, according to TransUnion.

According to a study by WalletHub, the average household has a credit card balance of $9,990, which is just $2,015 below what WalletHub calls the “breaking point” for the average household’s finances, or around $12,005.

According to GitHub, the average household in Seattle was carrying $12,249 in credit card debt as of December, up $1,851 from a year earlier. Households in Tacoma carried $11,877 in credit card debt, up $1,646.

Singleterry has seen that shift among some of his customers.

“I don’t really ask my customers about their personal finances,” he said. “But what I have definitely noticed is a lot of people are putting things on credit cards.”

“You can only do that for so long,” he added.

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