Unemployment rate down; labor force shrinks
A recent report on Okanogan County’s economy offers good news with historically low unemployment rates, but not-so-encouraging data showing a shrinking county labor force.
“On the positive side, this July’s 4.3% Okanogan County unemployment rate is the lowest rate for the month of July since county data began to be recorded electronically in 1990,” said Donald Meseck, regional labor economist with the state Employment Security Department.
Okanogan County followed a statewide trend, with Washington’s unemployment rate dipping to 3.6% in July. That’s the lowest rate for July since statewide data began to be electronically recorded in in 1976. The economic report released this month includes employment data through July.
While the downward trend in unemployment is welcome, Meseck said he sees a “concerning” trend in the contraction of Okanogan County’s civilian labor force in July. Compared to July of 2021, the labor force shrank by 660 residents, a decrease of 3.2%.
“The pool of labor is smaller this July than July 2021,” Meseck said. “Normally you want a high labor force participation rate. With population growth you get labor force growth. It indicates a healthy economy, people are getting into work, participating in the economy.”
The county’s labor force (defined as residents over 16 who are employed or unemployed) had been expanding since May of 2021, before contracting in July this year, Meseck said. “Concerning economic news is found in the fact that Okanogan County’s labor force has still not recovered to the pre-COVID era of three years ago,” he said.
In July of 2019, before COVID-19 shutdowns hit the economy, the state Employment Security Department estimated 23,401 Okanogan County residents were in the local labor force. This year, the number of county residents in the local labor force was estimated at 20,137, or 3,264 fewer workers.
“The labor force shrank. That’s bad news. But the number of unemployed plummeted. If one were to just look at the unemployment rate, we might get a false sense of security because it’s historical,” Meseck said.
“The labor force is smaller. Those people in the labor force, most of the people who want to work can find a job. There are more job openings than people to fill them. Many employers are finding difficulty filling jobs. It’s kind of a job-seeker’s market,” Meseck said.
State labor force data doesn’t gather survey information on why individuals are not working, Meseck said, so it’s not clear why more county workers aren’t participating in the economy.
But Meseck said he has a theory that could explain some of the decrease in labor force numbers.
The shrinking labor force statistics are seen across all counties in the region, including Douglas, Chelan, Grant and Yakima counties, Meseck noted. Those counties saw a trend toward lower labor force numbers that started in late spring. Because central Washington counties have “a sizeable portion of the labor force in agriculture,” this year’s smaller cherry crop could account for some of the decline in the labor force, he said.
Cold weather and a late snowfall resulted in the smallest cherry harvest in the Pacific Northwest in 14 years. With fewer people needed to harvest and process the crop, it meant fewer people sought or found jobs related to cherry production, Meseck said.
Nationwide, labor force participation is down, Meseck added. For some people in the post-COVID era, that may reflect a “re-evaluation of lifestyle, perhaps making choices about staying home and raising kids.”
Data in the recent report from the state shows that the number of nonfarm jobs in Okanogan County dropped in June and July after growing for the previous 14 months.
“Between July 2021 and July 2022, total nonfarm employment in Okanogan county retrenched by 330 jobs. It is also concerning that nonfarm employment in June and July has slipped below corresponding pre-COVID months in June and July 2019,” Meseck said.
The leisure and hospitality sector of the local economy took the hardest hit among various job sectors in job losses, with 380 fewer people employed in leisure and hospitality services this July compared to July a year ago. That’s 25.5% fewer jobs in leisure and hospitality (hotels, restaurants and bars, amusement and recreation), which is one of the top employers and income generators in the Methow Valley.
After layoffs and shutdowns during the pandemic, rehiring in leisure and hospitality was strong during 2021, with job opportunities expanding until April this year, when the sector began contracting. This July’s figures show the number of leisure and hospitality jobs was 1,110 jobs, 30.6% less than the number of jobs in that sector in pre-COVID July 2019.
The construction industry in Okanogan County also saw a downturn from May through July this year, with an estimated 680 jobs in the local construction industry in July 2021 versus 590 in July 2022, a 13.2% decrease. That’s in contrast to a statewide trend showing growth in construction employment for 16 months from April 2021 through July this year.
Meseck said state economists will be watching Okanogan County’s August employment figures “to see if these relatively weak nonfarm employment numbers in June and July 2022 are ‘blips on the radar screen’ or are indicators of a softening local job market.”