If you were stress testing the Washington state economy, one big pressure point would be jobs — and we’re failing. The state’s unemployment rate shot up to 9.2 percent in March, with 344,000 Washingtonians out of work. Unfortunately, this leaves open the question as to whether we face a U-shaped downturn or the dreaded L-shaped near depression. The most optimistic had hoped that jobless numbers nationally would at least slow their very rapid decline. But that hasn’t been the case so far.
A seminar at Wharton earlier this year tried to dig deeper into the depth and breadth of layoffs. Bottom line: Companies are facing up to strategic weaknesses and distortions that have been building for years. Wharton’s Peter Capelli gives an example, “At Microsoft, for instance, its first-ever significant cuts are tied to the sharp decline in demand for traditional PCs, which have long been the company’s core market. The company recently announced some 5,000 layoffs. Signs of the shift in Microsoft’s market in recent years had already forced the company to begin looking for ways to further diversify its business — as seen most notably in its failed bid for Yahoo last year.”
I do suspect that states with better unemployment benefits and reporting systems more accurately show the state of their job situation. I’m not persuaded, for example, that Arizona’s real jobless rate was really 7.4 percent in February. With some of the poorest benefits in the nation, the state is more likely to have the discouraged workers that aren’t counted in the “official” numbers. It has been cutting funding to its employment security department for years. And it has a thriving underground economy. The reality is that joblessness is bad all over, in virtually all states and sectors. This will be the worst unemployment we’ve seen since the Great Depression.