Amazon effect might not lead to employment surge
~December 20th, 2018
It’s unusual—arguably unprecedented—to go into a new year knowing one employer plans to hire 1,500 people in the Spokane area.
A pair of Spokane economists, however, are projecting job growth in 2019 similar to what has occurred this year, despite Amazon.com Inc.’s plans to ramp up staffing rapidly when it opens its new fulfillment center on the West Plains next August.
Doug Tweedy, Spokane-based regional economist for the Washington state Employment Security Department, says employers in the Spokane Metropolitan Statistical Area added about 5,800 new jobs this year, which is better than expected—he had projected 5,000 new jobs in 2018—and accounts for a job increase of just over 2 percent. He expects total employment to grow by 2 percent again in 2019.
It’s encouraging, he says, that initial unemployment claims are down considerably in late 2018 to levels not seen for nearly 30 years.
“As we go into 2019, that’s a really good sign,” Tweedy says.
Grant Forsyth, chief economist at Spokane-based Avista Corp., is projecting job growth of between 1.5 percent and 2 percent next year.
“If you look at the leading indicators, they seem to be signaling a slowdown in growth in the second half of 2019,” Forsyth says. “We can do better than what the leading indicators are showing, because of Amazon.”
Even if the economy continues to grow at the current clip, Tweedy says the envisioned Amazon jobs must be considered in context. He says the need for such a fulfillment center is due to a structural change in how consumers buy goods. While employment is increasing in nonstore retail and warehouse and distribution categories, job losses occur in traditional retail.
“It’s kind of a churn,” Tweedy says. “You gain in one area and lose in another.”
A number of factors could slow growth in the new year, Forsyth says. The federal income tax cut helped this year, but many economists believe the effects of that stimulus will begin to wane in late 2019. Also, a high interest-rate environment could weaken construction and other spending activity.
Most significantly, however, an ongoing trade war with China could have a profound effect on many companies in the Inland Northwest—both those that sell goods overseas and those that buy parts and other goods made in Asia.
“We’re pretty exposed because not only are we exporting a lot, we’re also importing a lot,” Forsyth says.
This year, Tweedy says, the two hottest sectors for job growth have been education and health care, the latter of which has grown significantly during the past five years.
Some of the employment growth in the education sector is indirectly related to gains in health care, he says. The job increases in education have occurred largely at Spokane-area universities and colleges, including the two medical schools in Spokane’s University District—Washington State University Elson S. Floyd College of Medicine and the University of Washington-Gonzaga University Regional Health Partnership.
Despite the current robust job market, Tweedy says he wouldn’t consider the labor market to be at full employment. He says about 12,000 unemployed people in the Spokane area still need to re-enter the labor pool.