Geoscience Reference
In-Depth Information
Employment and population growth rates are calculated over 10-year intervals
between 1960 and 2010 for Washington and the United States. Recognizing that
employment change leads net migration, the employment growth rates are calcu-
lated 1 year earlier (e.g., 1959-1969 and 1969-1979). The rule of thumb is that the
difference between the state and national employment growth rates will equal
the difference between the state and national population growth rates, allowing
for the 1-year lag. This is essentially true for the entire 50-year period.
Washington's annual employment growth rate averaged 2.5 %, 0.7 % above the
national rate, while its population growth rate averaged 1.7 %, 0.6 % above the
national rate. This rule of thumb also holds over each 10-year period and each
5-year period, in spite of changing growth rates.
The strong tendency for people to follow jobs explains why Washington has not
been able to maintain a permanently low unemployment rate despite relatively fast
employment growth. In general, due to the mobility of labor, changes in the state's
rate of net migration keep the state unemployment rate from wandering too far from
the national rate (Fig.
8.2a
).
The inclination of the Washington unemployment rate to maintain equilibrium
with respect to the U.S. rate does not mean that the two rates will necessarily
equalize. Washington has had on average a high unemployment rate—about one
percentage point above the national rate—over the past 40 years. A relatively large
number of workers in seasonal industries, such as agriculture, fishing, logging, and
construction, and the attractiveness of Washington as a place to live (the “Mt. Rainer
factor”) have been conjectured as reasons for the above-average unemployment rate.
Moreover, this difference between state and national unemployment rates has
persisted through good times and bad. Between 1975 and 1980, for example, the
state expanded two times faster than the nation, creating 445,800 jobs. At the end of
the period, however, the state unemployment still stood 0.7 percentage points above
the national rate because of the influx of migrants. Two years later, in the throes of
the 1981-1982 recession, the unemployment gap widened to 1.9 %. The
Washington unemployment rate soared to 11.8 %, but it would have ventured
even higher had it not been for a sharp drop in the state's rate of in-migration.
6
A mobile population also tends to eliminate wage differentials between the
region and the nation. If wages are bid up during a growth spurt, the gain will be
temporary, as people move into the region and expand the supply of labor. As with
the unemployment rate, wage rates are effectively set in the national market.
Because of the existence of high-wage employers, such as Boeing and Microsoft,
6
WPSM depicts the relationship between employment change and population change in a “round-
about” manner. The model presumes that the Washington labor market, through changes in the rate
of migration, tends to maintain equilibrium with respect to the U.S. labor market. Specifically,
Washington population is forecast by predicting employment, the labor force participation rate,
and the unemployment rate. It is expected—and indeed borne out historically—that the
Washington labor force participation rate and the unemployment rate follow their national
counterparts in the long run. See Conway (
1990
) and Joun and Conway (
1983
) for a further
discussion of this approach to modeling regional population change.
