Published January 2001

Research group details decade of growth

By John Wolcott
Herald Business Journal Editor

There is no prosperity without growth, but prosperity sustains both the economy and society, a new report by the Washington State Research Council notes.

The study, reviewing the past decade since the state passed its Growth Management Act, is the first in a series planned by the council to address issues affecting economic and population growth.

Washington state has enjoyed “spectacular growth in the last decade,” with most of it focused in Puget Sound’s tri-county area, but the debate over the relationship between growth and prosperity continues unabated, according to the December study.

“At the edges, the debate (over growth) can be summarized as ‘pro-growth’ vs. ‘no-growth,’ but for most Washingtonians, the issue is more complicated. Now, the debate focuses on ‘smart’ growth … although the definition of what is ‘smart’ growth is far from uniform,” the report notes.

What is more agreed upon is that during the past 10 years, attempts to limit or direct that growth have faced monumental challenges.

“Statewide, the 1990s netted Washington 600,000 new workers. It was the greatest job-generating decade in history,” according to the state’s Chief Employment Security Economist, Dennis Fusco. “Labor-force growth shot up strongly early in the decade as net migration into the state ballooned, attracted by a rising area economy sitting in the midst of a national recession. As the national economy picked up, labor markets progressively tightened and statewide unemployment dropped to 30-year lows in late 1999.”

Today, in Snohomish County and the rest of the Puget Sound region, personal income is up, unemployment remains down and housing prices have skyrocketed in response to unprecedented demand and new regulatory restrictions.

At the same time, the past 10 years have seen thousands of new vehicles added to a highway system that has seen minimal increases in capacity in decades. As a result, the report notes, Seattle-area traffic congestion ranks as the second worse in the nation.

“But the effects of growth have not been distributed uniformly,” the report comments, noting that “in Eastern Washington and many parts of rural Western Washington, unemployment remains high, and per-capita personal income in some areas has actually fallen.”

In the council report, available at the group’s Web site, www.researchcouncil.org, the group notes that communities throughout the state support organizations that promote economic growth, some of them coordinating the planning to determine the assets available for an area to build its economy. Others develop programs to identify and attract specific businesses.

“What’s the purpose? What is the perceived reward that attracts such intense effort and investment?” the report asks. “The simple answer is the anticipation of wealth creation and greater prosperity.”

Businesses create jobs that support workers and their families, the report states. Businesses create taxable wealth, and tax revenues allow people to work together to accomplish objectives too big for a few to do by themselves, such as building and maintaining schools, parks, utilities, roads and many other services.

The Bureau of Economic Analysis found the state’s total personal income grew from $96.1 billion in 1990 to more than $176.2 billion in 1999, about a 50 percent inflation-adjusted increase.

Per-capita personal income (PCPI) — income per person, on average — in Washington has grown from $23,878 in 1995 to $30,295 in 1999. Compared with the rest of the country, this has resulted in Washington moving from 18th nationally in PCPI to 12th in just five years.

“Statewide, taxable retail sales grew from $48.5 billion to $80.2 billion from 1990 to 1999, according to the state’s Department of Revenue. This represents inflation-adjusted growth of about 35 percent. This magnitude of retail spending generated retail sales and use revenues for the state’s general fund that grew from about $3.3 billion in Fiscal Year (FY) 1990 to nearly $5.3 billion in FY 1999,” the council report notes.

Population increase and business growth feed each other, the report states. As businesses locate and expand within an area, they need people to fill the jobs they create. Statewide, unemployment continues to be low. In October 2000, it was 4.4 percent compared with a national average of 3.6 percent. This rate reflects the seasonal characteristics that still affect much of the state’s economy. Snohomish County’s unemployment rate was 3.6 percent.

Population, though, is the growth factor most noticed by the average observer. The state’s population ballooned during the 1990s, growing from 4.9 million in 1990 to 5.8 million in 1999, a change of 18 percent, half of it recorded in the Puget Sound area.

As population grows, opportunities are created for new and expanding businesses catering to the larger number of people, and the cycle of growth continues, according to the report.

“Economic growth results in greater opportunity for people at the lower end of the economic ladder,” the report notes. “The ranks of people in poverty in Washington dropped from about 12 percent in 1993 to about 9 percent in 1999. ... And although poverty remains an issue in Washington, economic growth has clearly afforded important opportunities to people of all skill levels who might otherwise have been un- or underemployed.”

Also, urban growth can benefit neighboring communities, the report states. In the greater Seattle area and King County, price increases and increased commute times have caused people and businesses to look to nearby counties — Snohomish, Pierce, Thurston, Kittitas and Kitsap — for office space, employees and housing.

“The prosperity that economic growth brings also provides people with the discretionary time and money to share with others. … The need to choose between economic growth and environmental quality may seem obvious when economic activities affect the quality of our air or water, … yet data from around the world support a more optimistic view. Once people have enough income so that they are not struggling to put food on the table, they become more willing and able to take actions to reduce or avoid environmental damage and improve the quality of the environment,” the report notes.

The report concludes that “the issue is not growth vs. no-growth or, indeed, whether we should grow. When an area has been identified to be attractive, as Washington state obviously has, growth is inevitable. The issue is how we should grow. Our challenge here in Washington, where quality of life and environmental integrity are strongly and widely held values, will be to lift the debate to a new level.”

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