By Kiara Doyal, The Seattle Medium
According to the Washington Employment Security Department (ESD), Washington’s economy added an estimated 400 jobs in May even as the state’s unemployment rate rose slightly to 4.5%, reflecting an ongoing shift after years of record-low unemployment and rapid job growth.
Anneliese Vance-Sherman, chief labor economist at ESD, said the slight increase in unemployment isn’t cause for concern.
“I think it is important to emphasize that we have been a steady 4.4% for months, so while it is a change, it is not really a big change, which is important for context,” she said.
Washington experienced a very tight labor market a few years ago, creating challenges for employers trying to fill positions and presenting opportunities for job seekers.
“We had a high number of job postings, which presented a lot of challenges for employers, but it also meant for job seekers that they had a lot of different opportunities available to them,” Vance-Sherman said. “At this time in 2022, we had a really low unemployment rate that was dipping below 4%.”
The pandemic contributed to this unusually tight labor market, and Vance-Sherman said the state is still learning to navigate changing dynamics between supply and demand in the job market.
“I think that the way the unemployment rate could come down would be if there was a surge of job opportunities available, but we are seeing that flatten,” she said. “With the supply being people, and demand being jobs, we are still learning how to function, but historically speaking, we still have a relatively low unemployment rate, it is just the highest it has ever been this year.”
In the past 12 months, Washington lost about 9,000 jobs — a 0.3% decrease overall.
“That was looking at the total change we have seen over the year in jobs,” Vance-Sherman said. “Just looking at each month’s preliminary numbers and comparing them to the year before shows us how things have changed over the course of the year because there is a lot of volatility when you are looking at month-to-month movements.”
Some sectors saw declines during the pandemic and continued to face uncertainty. However, the information and technology sector remained strong through much of the last four years, only recently beginning to plateau.
“This is one sector that, while every other sector was showing declines and those really sharp drops that we saw when we went into the large-scale lockdown, the information sector is one that just kept on going,” Vance-Sherman said. “We needed them more than ever. A lot of industries were relying on them for equipping people to work from home and enabling telework, so the pandemic really accelerated them.”
She added that the sector’s recent plateau is worth monitoring given its outsized role in Washington’s economy.
“We did see some job losses, and then we saw it kind of plateau recently, so I have been keeping my eye on it because there has been a lot of volatility,” she said.
On the private industry side, education and health services have remained consistent over the years. In May, new employment data showed that nonfarm employment increased by 3,100 jobs, while government employment declined by 2,700. The largest one-month gains in the private sector were seen in education and health services (up 2,700), construction (up 1,600), and wholesale trade (up 900).
“Health services have really been our consistent engine. It has been a relatively high-growth industry, and I think that is one thing that is worth pointing out, and that it is also one of our largest industries,” Vance-Sherman said. “So, thinking about the unemployment rate, if we take a big step back and think about what that really means, is that generally speaking, anything under 5% is considered to be pretty low.”
The labor force is defined as the number of employed and unemployed people over the age of 16. Being laid off doesn’t automatically mean someone leaves the labor force; if they are still searching for a job, they remain counted as part of it. However, if people stop looking for work for more than four weeks, they are no longer considered part of the labor force.
From April to May, in the Seattle/Bellevue/Everett region, the number of unemployed people increased from 101,266 to 102,909, while the labor force decreased by 5,775 people during the same period.
“Two things happened to cause the rate to increase. One is that we saw an increase in the number of unemployed individuals, but we also saw enough of a decrease in the number of employed individuals that it actually brought the size of the labor force down,” Vance-Sherman said. “It is kind of a mathematical construct, but what we saw was both an increase in the number of unemployed and a decrease in the number of employed.”
While some might worry about the implications of rising unemployment, Vance-Sherman explained that the state’s economy remains stable despite these shifts.
“When we are looking at the month-to-month numbers, they gradually are becoming smaller and smaller, but yes, this is the first report where it actually gets below the previous year,” she said. “It doesn’t mean that we are plummeting, it means that we have flattened out.”
She said that Washington continues to experience economic adjustments as it recovers from pandemic-related disruptions and historic job market shifts. For workers, these trends may mean fewer job openings compared to peak years, but the current unemployment rate remains within a healthy range.
“I think what we’re seeing is a readjustment back to a more normal labor market,” Vance-Sherman said. “It’s important to keep in mind that while we’re not seeing the explosive growth of the past few years, we’re also not seeing a major downturn. It’s more of a recalibration.”
