Washington bucks national hiring slump, but falls short of expectations

Washington saw only a modest rise in hiring in September as the pandemic continues to blunt the economic recovery and upend predictions about hiring, workers and the ongoing labor shortage.

The 17,600 jobs added last month by Washington employers represented just a 7.3% increase over hiring in August, according to data reported Wednesday, Oct. 20, by the state Employment Security Department.

And while Washington still outperformed the broader U.S. economy — which saw new hiring last month drop by 47% — the state’s September job growth fell far short of its red-hot performance in June and July, when it added 25,600 and 24,300 jobs, respectively.

Much of that slowdown in hiring likely reflects the coronavirus surge that started mid-August and continued into September, economists and employers say.

“We’re still growing, but it’s slower than what we were seeing prior to the current wave of COVID,” said Anneliese Vance-Sherman, an ESD regional economist who covers the Seattle area. Although the job market steadily improved since the massive layoffs in early 2020, Vance-Sherman said, September “feels like a little bit of a pause.”

Unemployment in Washington fell to 4.9% in September, from 5.1% in August. But in Grays Harbor County, the jobless rate was 6.6 percent (third highest in the state).

September’s modest job growth underscores just how far the state remains from a full recovery, despite nine consecutive months of increases in employment.

Washington’s workforce, which stood at 3.42 million as of September, was still down by around 61,000 jobs, or nearly 2%, compared to where it was in September 2019, ESD data shows.

That’s roughly 200,000 jobs short of where it would have been if pre-pandemic economic growth trends had continued, said Jacob Vigdor, an economist at the University of Washington Evans School of Public Policy and Governance. And if job growth continues at September’s downbeat pace, Vigdor said, “we may not get back to that previous trend until 2023.”

The September jobs report also underscores how different the pandemic recession has been from earlier downturns — and why predictions about this recession and its recovery have so often been wrong.

In Washington, as elsewhere, many analysts, employers and politicians were forecasting a hiring surge following the Sept. 4 expiration of enhanced federal pandemic jobless benefits. Many had blamed those benefits, notably an extra $300-a-week payment on top of regular benefits, for discouraging tens of thousands of unemployed Washingtonians from returning to work and fueling a labor shortage.

But those expectations appeared to be at least partly undercut, both nationally and in Washington, by last month’s hiring data, the first quantitative assessment of the job market since benefits ended.

If Washington’s labor shortage “was entirely attributable to the [pandemic] benefits, then I would expect September’s numbers to have jumped,” said Vance-Sherman. “And we didn’t see that jump.”

That was especially true in hard-hit sectors, such as leisure and hospitality, which was still down 47,500 jobs before September and gained just 6,500 last month — the biggest gain of any sector. Manufacturing, which was down 33,000 jobs in August, gained just 800 jobs in September.

September’s underwhelming jobs data mirrors anecdotal accounts from both workers and employers. While some employers did report an increase in hiring coinciding with the end of benefits, many others have seen little improvement, despite the fact that so many people remain unemployed and, presumably, available for work.

Although more than 100,000 Washingtonians lost federal benefits last month, nearly 50,000 were still collecting regular unemployment benefits as of Oct. 12, according to ESD data.

“We had a slight uptick but not anything really like earth-shattering,” said Jeremy Flowers, who works with the Western Washington offices of Express Employment Professionals, a recruiting company.

To be sure, the full effects of the end of benefits may take several more months to play out, said Vance-Sherman and other economists.

September’s data was taken from the middle of the month, at around the same time as final benefit payments were going out.

“Even if people were starting to look for jobs, it would be fairly unusual for them all to have gotten jobs right away,” said Debra Glassman, a teaching professor of finance and business economics at the University of Washington Foster School of Business.

In the meantime, many economists and employers say other factors will likely be as important to the pace of hiring.

HySecurity, a security equipment manufacturer in Kent, recently saw a surge in applications, but attributes that less to the end of benefits than to changes in hiring strategy, says Brandon Mambelli, vice president of operations.

HySecurity raised hourly wages by a $1 (starting pay is now $18) and offered a $1,000 hiring bonus. It also reduced job-skill requirements for new employees. “So rather than looking for somebody that has manufacturing experience, we’re taking folks with minimal experience,” Mambelli said.

But many unemployed workers may be staying away from the workforce for nonfinancial reasons. Some are challenged by lack of child care. Others may be holding out for jobs that have better conditions or are more stimulating.

“I was only really interested in finding interesting work,” said Ken Benham, a mechanical engineer who was laid off by a Seattle-area consulting engineering firm in January and only recently accepted a new job at Blue Origin, Jeff Bezos’ Kent-based aerospace company.

“There are clearly multiple factors shaping labor market conditions,” Glassman said. Ending pandemic unemployment benefits was “just one of this long list of factors” that range from caregiving responsibilities to “people responding to the experience of the pandemic with deep thinking about what they really want to be doing with their lives and maybe deciding, ‘I don’t want to go back to the kind of job or the industry I was in before.’”

That may help explain why many employers remain short-staffed despite significant wage increases. “You just wonder where the people are right now that were making maybe $14 an hour in 2019 and could be making $20-$22 an hour now,” said Flowers.

One potentially encouraging development: Some employers said Washington’s high vaccination rate was helping reduce the fear some workers have about contracting the coronavirus in the workplace.

Indeed, a vaccinated workforce may end up being an employment benefit as important as salary or vacation time.

“Almost all of my manufacturing staff is vaccinated at this point,” said HySecurity’s Mambelli. “So what we’re hearing is that folks are starting to feel a little bit safer about getting the back to the workplace.”