In its December 8, 1987 Pierce County Strategic Development Plan, the County Department of Economic Development provided what it considered to be its 21st century vision. In a self-‐congratulatory manner, they wrote that the county 1. exports more goods and services than it imports, resulting in an expanding economy, rising real property values, diversity of jobs and career opportunities, higher per capita income, and an improving quality of life. 2. is a magnet for families and individuals of “character,” education, and achievement. 3. has more new business start-‐ups than most metropolitan areas, because it attracts innovators. The report also asserted that the County was strategically attracting these individuals, relying on the high quality natural environment, a strong commitment to education and personal development, and a business climate in which decision-‐ making uncertainties had been reduced to a minimum. In terms of urban form, the report claimed that the County had “conquered the urban sprawl and congestion that increasingly plagues many urban areas.” And that the region provided a “well-‐planned transportation system” that served high and low density areas. Short commute times or “pleasant longer-‐distance trips to workplace” were considered to be the hallmark of the County. The report also identified Tacoma as its center, as well as the financial, service, and medical care center for much of the Southwestern Washington. The Port is also mentioned as an additional and valuable asset for the region’s economy. The narrative ended with a statement regarding Tacoma’s urban regeneration. The report claimed that with all the renewal projects as well as new additions, such as the Tacoma Dome, downtown Tacoma had turned into “a mecca for tourism, conventions, and the performing arts.” With all these assets, the authors naturally concluded that “Pierce County has become the preferred place to live in the Pacific Northwest.” This is a stunningly positive outlook. However, a little over a quarter of a century later, we still aspire to achieve what the report claimed to have already occurred.
Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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In what follows, I will try to paint a picture of the emerging socio-‐demographic and economic landscape of the region, including Pierce County and the City of Tacoma. This analysis will occasionally refer to what was articulated in the 1987 strategic plan. This is not to criticize a document with the benefit of hindsight. It is meant to suggest that a more robust, socially inclusive development agenda is needed; one that sees all residents, current and future, as individuals of “character” with a collective capacity to elevate this region. Population On page 8 of the 1987 strategic plan, the authors predicted that by 2000 (thirteen years after the publication of the report), the County’s population would grow by another 149,955. In reality, the County population surpassed this projection to arrive at about 700,000 (see Figure 1). However, during the same time period, Tacoma, the largest city within the County, grew by less than 20,000 people. In fact, from 1970 to 2010, the City witnessed a less than impressive growth of 44,000 in its population. This translates to an average annual growth of half a percent. Clearly, the growth in the County was everywhere but in Tacoma.
1970-‐2010 Popula.on 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 1970
1980
1990
Pierce County
2000
2010
Tacoma
Figure 1 – Historical Population of Pierce County and Tacoma. Source: Census Bureau
Looking across multiple decades and comparing the observed growth with that in the state, Tacoma’s performance appears to be low in every respect (see Figure 2). However, it is interesting that the only decade in which the city grew by an annual average growth rate higher than one percentage point was the 1980s. Despite these Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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elevated rates, Tacoma grew at a slower pace compared to Pierce County and the State. During the last decade (2000 to 2010), Tacoma’s annual average growth rate of a quarter percentage point was at its lowest level. This can easily be considered a state of no growth. Comparing historical annual growth rates for King and Pierce counties (see Figure 3), it becomes clear that the late 1980s was a comeback time for the County. After a period of decline in its population growth, the County witnessed growth rates close to that of the state and King County. While this could have been viewed as positive news for the County, the City of Tacoma benefitted very little from this growth. Growth Rate (%) Over the Previous Decade 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 1970-‐1980
1980-‐1990
State
1990-‐2000
Pierce County
2000-‐2010
Tacoma
Figure 2 – Population Growth rates across the last four decades
Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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Annual Population Growth (%) 6.00
4.00
2.00
2008-2009
2006-2007
2004-2005
2002-2003
2000-2001
1998-1999
1996-1997
1994-1995
1992-1993
1990-1991
1988-1989
1986-1987
1984-1985
1982-1983
1980-1981
1978-1979
1974-1975
1976-1977
1972-1973
1970-1971
1968-1969
1964-1965
1966-1967
1962-1963
-2.00
1960-1961
0.00
-4.00
Source: Washington State Office of Financial Management -6.00
King
Pierce
State
Figure 3 – Annual Population Growth Rates
The result of decades of slow growth in Tacoma and faster rates in Pierce County can be easily seen in Figure 4. Over four decades, from 1970 to 2010, a significant majority of population growth appeared in smaller cities, suburbs, and county areas, where population densities are typically below 500 persons per square miles. Northeast Tacoma, neighboring Federal Way, is the only area within the boundary of the City where population grew substantially. This of course was made possible by development in a new area.
Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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Figure 4 – Population Growth Rates between 1970 and 2010.
Despite this seemingly unimpressive growth patterns, it is important to note that other cities of similar size in the State did not fare that much better than what was experienced in Tacoma (see Figure 5). For example, Spokane and Everett have followed the same growth trajectory as Tacoma. Over the course of the 20th century, Seattle has simply turned into a lone growth pole in the state, creating an extreme case of uneven development that attracts the largest portion of capital and population in the state.
Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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700,000 600,000 500,000 400,000 300,000 200,000
Tacoma
SeaFle
EvereF
2010
2000
1990
1980
1970
1960
1950
1940
1930
1920
1910
1900
0
1890
100,000
Spokane
Figure 5 – Historical Population Growth Patterns
Demographically speaking, the largest level of growth among any one racial and ethnic group has occurred among Latinos. State of Washington witnessed its Latino population grow from about 57,000 to slightly less than 756,000 between 1970 and 2010. This translates to slightly more than a 13 fold increase. This means that by 2010, about 11% of Washingtonians were Latinos, with a majority being native-‐ born. In Pierce County, the Latino population grew from about 2,200 in 1970 to nearly 73,000 in 2010. This represents more than 33 fold growth. Since 2000, however, the pattern of growth has not been void of important demographic shifts. The first one to consider is age. During this period median age increased from 34 to 35.9. This suggests aging or a departure of the younger population. For that we turn to Figure 6, clearly illustrating that despite the observed population growth patterns, between 2000 and 2013, the county lost a significant portion of its working age population (35 to 44 years old). These are typically young families, who left with their children (as evidenced by the decline in the number of people 19 or younger).
Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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Pierce County Age Structure 2000-2013 18 16
Percent of Total Population
14 12 10 8 6 4 2
2000
85 years and over
75 to 84 years
65 to 74 years
60 to 64 years
55 to 59 years
45 to 54 years
35 to 44 years
25 to 34 years
20 to 24 years
15 to 19 years
10 to 14 years
5 to 9 years
Under 5 years
0
2013
Figure 6 – Changes in Age Composition from 2000 to 2013
The economic environment, differential opportunity structures regionally and nationally, and a number of other factors contributed to this demographic outcome. As the net migration map illustrates (Figure 7), the move is mainly to neighboring counties with better employment opportunities and a few counties in the West and the Southwest, particularly Arizona (e.g. Maricopa Country, where Arizona State University is located and affordable retirement communities can be found). Regardless of their motivation, if this pattern continues, the county could face a number of challenges related to its economic development aspirations. For one thing, its working to non-‐working ratio will decline, signaling a less vibrant labor market.
Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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Figure 7 – Net migration patterns for Pierce County between 2007 and 2011.
Aging also manifests itself in a particular geography. As Figure 8 suggests, the majority of the older residents are in Western neighborhoods of Tacoma, Gig Harbor, and less densely populated areas of the county. Related to the pattern of aging is the distribution of children (Figure 9). It appears that the majority live in areas where County population grew between 1970 and 2010 (see Figure 4). This suggests that the suburbanization process of the last four decades is not unlike the national patterns. Young families with children left cities for suburbs in search of larger houses, bigger yards, private space, better schools, and all the other amenities needed to raise a family. However, the geographic consequence of suburbanization and the location of the main transportation corridor in the South Sound region (I-‐5) have contributed to a re-‐sorting of the population by socioeconomic status. As figures 10 and 11 show, the most diverse neighborhoods are to be found in the corridor extending from SeaTac to South Tacoma, where median household incomes are low.
Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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Figures 8 & 9 – Median Age and Percent Children
Figures 10 & 11 – Diversity and Median Household Income
Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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In terms of educational achievement, the picture is somewhat more troublesome. A significant majority of those with a BA or higher live in King County, from Seattle to Kirkland (see Figures 12 and 13). This is perhaps the clearest indication of uneven development, where Seattle and its satellite cities in King County have become the singular poles in the region to attract people, arranging them spatially by education, wealth, race and ethnicity. However, the presence of the University of Washington Tacoma is playing a similar role to that of the Seattle campus. The number of individuals engaged in higher education is increasing in the vicinity of the campus in downtown Tacoma (see Figure 14).
Figures 12 & 13 – Educational Achievement
Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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Figure 14 – Enrolled in College or Graduate School
This creates an interesting potential for future development in the South Sound region, particularly in Tacoma. In due time, UW Tacoma could potentially contribute to the economic growth of this region by producing the needed workforce for economic development and further growth of the region, a task historically played by UW Seattle in West King County. This also allows us to contemplate the possibility of calling the South Sound an emerging “learning region.” This is a unique local economic development character that focuses on translating R&D activities into production and distribution, moving technology from its conceptual design to everyday usage. Since UW Tacoma and other local universities do not offer doctorates and in-‐depth technology research, this approach utilizes the skilled workforce these places of higher learning produce to establish a strong (second phase in R&D) approach to technology-‐focused production. I will discuss this in more detail later in this report. Economic Performance and Characteristics This section of the report draws from historical and recent economic data to paint a picture of the overall economic landscape in the region. It is hoped that this analysis will help contextualize our past and current performance levels in order to consider more viable economic development plans that are rooted in contemporary realities, be it related to our workforce, employment patterns, or the nature of firms currently active in the region. Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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Unemployment Historically, Tacoma Metropolitan Division (MD) has reported higher monthly unemployment rates than the Seattle MD. This has typically ranged from one to two percentage points. The only time the two regions converged in their unemployment rates was in the early part of the last recession. Since 2010, however, the gap between the two has widened, arriving at a 2.5% difference as of December 2014 (4.7% vs. 7.2%). In fact, compared to the last fourteen years, the second half of 2014 appears to be an anomaly. Note that despite the overall gap in the unemployment rates of these regions, for most of the last decade, their overall unemployment patterns (Figure 15) appear to be in sync with each other. This reflects their connection to the larger national and global economy. The difference between the two graphs simply points to the differential position of Tacoma and Seattle in the larger economic hierarchies. The departure from the historical patterns, particularly since September 2014, is nonetheless alarming. Since then, as Seattle MD has continued to report a decline in its monthly unemployment rates, Tacoma MD has returned to rates above 7%, widening the gap to 2.5 percentage points. We can either view this as an anomaly that will be correct or a slight decline in the position of Tacoma in the economic hierarchies. If the latter is true, Tacoma could be witnessing a period of downscaling within the larger regional economy; losing position not only to Seattle, but to the larger network of cities in the U.S. and beyond. Monthly Unemployment Rates January 1990 to December 2014 12.0% 10.0% 8.0% 6.0% 4.0%
SeaFle MD (King-‐Snohomish)
JAN
JAN
JAN
JAN
JAN 2010
JAN
JAN
JAN
JAN
JAN
JAN
JAN
JAN
JAN
JAN 2000
JAN
JAN
JAN
JAN
JAN
JAN
JAN
JAN
JAN
0.0%
1990 JAN
2.0%
Tacoma MD (Pierce)
Figure 15 – Unemployment rates, January 1990 to December 2014 (Source: Employment Security Department/LMEA; U.S. Bureau of Labor Statistics, Local Area Unemployment Statistics) Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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To complicate the matter further, wages in Tacoma MD seem non-‐competitive in many categories (as far as labor is concerned). Tables 1A and 1B illustrate how Tacoma compares with Seattle MD (which includes Seattle, Bellevue, and Everett) and national levels. In almost every category, wages are lower in Tacoma, except for ‘farming, fishing, and forestry’ and ‘protective services.’ Compared to the national mean wages, Tacoma MD does best in the same two categories. Following those, wages for ‘healthcare support,’ ‘transportation and material moving,’ ‘construction and extraction,’ ‘installation, maintenance, and repair,’ and ‘production’ are well above national levels. Putting the entire picture together, it appears that outside healthcare, Tacoma MD does not offer a wage structure that could be called attractive to the highly skilled labor force. In ‘computer and mathematical’ occupations, mean hourly wages in Tacoma MD are 8% below national level, when Seattle MD reports 25% above the national level. Comparatively speaking, the San Francisco-‐San Mateo-‐Redwood City MD reports wages 27% above the national level, which is comparable to the Seattle MD. Unlike Seattle, however, the San Francisco-‐San Mateo-‐Redwood City MD is consistently higher in various occupational sectors, achieving an overall hourly wage that is 45% above the national level. In the Seattle MD, the similar figure stands at 27% and in Tacoma MD at 1%.
Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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Table 1 A -‐ Occupational employment and wages by major occupational group, United States and the Tacoma Metropolitan Division, and measures of statistical significance, May 2013 Percent of total employment Major occupational group
United States
Tacoma
100.00%
100.00%
$22.33
Management Business and financial operations Computer and mathematical
4.9
3.8*
53.15
49.93*
-‐6
5.0
4.1*
34.14
31.52*
-‐8
2.8
1.4*
39.43
36.09*
-‐8
Architecture and engineering Life, physical, and social science Community and social services Legal Education, training, and library
1.8
1.2*
38.51
38.26
-‐1
0.9
0.6*
33.37
33.30
0
1.4
2.3*
21.5
20.33*
-‐5
0.8
0.7*
47.89
37.13*
-‐22
6.3
7.0*
24.76
23.90*
-‐3
1.3
0.8*
26.72
22.91*
-‐14
5.8
6.8*
35.93
38.66*
8
3.0
3.0
13.61
16.02*
18
2.5
2.6
20.92
25.89*
24
9.0
9.4*
10.38
11.92*
15
Building and grounds cleaning and maintenance
3.2
3.2
12.51
14.04*
12
Personal care and service
3.0
3.3
11.88
13.08*
10
Sales and related Office and administrative support Farming, fishing, and forestry
10.6
11.0
18.37
16.88*
-‐8
16.2
15.7
16.78
18.00*
7
0.3
0.1*
11.7
17.54*
50
Construction and extraction Installation, maintenance, and repair Production Transportation and material moving
3.8
5.0*
21.94
25.56*
16
3.9
5.0*
21.35
24.68*
16
6.6
4.9*
16.79
19.49*
16
6.8
8.0*
16.28
19.14*
18
Total, all occupations
Arts, design, entertainment, sports, and media Healthcare practitioner and technical Healthcare support Protective service Food preparation and serving related
Mean hourly wage United States
Tacoma
Percent difference (1) $22.46 1
Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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Table 1B -‐ Occupational employment and wages by major occupational group, United States and the Seattle-‐Bellevue-‐Everett Metropolitan Division, and measures of statistical significance, May 2013 Percent of total employment Major occupational group
Total, all occupations Management Business and financial operations
United States
Mean hourly wage
Seattle
100.00% 100.00%
United States $22.33
Seattle
Percent difference (1) $28.36* 27
4.9
5.4*
53.15
59.30*
12
5
7.4*
34.14
38.00*
11
Computer and mathematical
2.8
8.0*
39.43
49.35*
25
Architecture and engineering
1.8
3.5*
38.51
42.51*
10
Life, physical, and social science
0.9
1.2*
33.37
34.54
4
Community and social services
1.4
1.3
21.5
21.56
0
Legal
0.8
0.9*
47.89
49.49
3
Education, training, and library
6.3
5.1*
24.76
26.67
8
Arts, design, entertainment, sports, and media
1.3
1.9*
26.72
27.87*
4
5.8
4.7*
35.93
40.93*
14
Healthcare practitioner and technical Healthcare support
3
2.2*
13.61
17.43*
28
2.5
1.8*
20.92
25.27*
21
9
7.9*
10.38
12.74*
23
3.2
2.4*
12.51
14.84*
19
3
3
11.88
14.53*
22
Sales and related
10.6
10.3
18.37
22.15*
21
Office and administrative support
16.2
13.5*
16.78
19.38*
15
0.3
0.1*
11.7
16.12*
38
Protective service Food preparation and serving related Building and grounds cleaning and maintenance Personal care and service
Farming, fishing, and forestry
Construction and extraction 3.8 3.7 21.94 27.38* 25 Installation, maintenance, and 3.9 3.3* 21.35 25.58* 20 repair Production 6.6 6.1* 16.79 21.04* 25 Transportation and material 6.8 6.3* 16.28 19.92* 22 moving Footnotes: (1) A positive percent difference measures how much the mean wage in Tacoma is above the national mean wage, while a negative difference reflects a lower wage. * The percent share of employment or mean hourly wage for this area is significantly different from the national average of all areas at the 90-‐percent confidence level. Source: Bureau of Labor Statistics http://www.bls.gov/regions/west/news-‐release/occupationalemploymentandwages_tacoma.htm http://www.bls.gov/regions/west/news-‐release/occupationalemploymentandwages_seattle.htm
Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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Comparing the pre-‐recession salary data with more recent information requires some pause as well. According to the Washington State Employment Security Department, between 2005 and 2013, the Pierce County average salary increased from $36,247 to $44,541, an increase of 22.9%. During the same period, King County average salaries jumped from $50,143 in 2005 to $67,329, an increase of 34.1%. The rate of growth in the number of employees is also higher in King County. This suggests that Pierce County may be facing a period of economic downscaling (in its relative economic position). While it continues to rank sixth (in the State) in average salaries and second in the number of employees and firms between 2005 and 2013, Snohomish and Clark counties added more firms and Snohomish added significantly more employees (nearly 30,000 more than Pierce and half of what King county reported). In terms of average salary increases, Pierce County ranked 14 among counties in the state. Regional Market Share: Firms, Employees and Revenue The fact that Pierce County continues to be second in terms of number of firms and employee size could be comforting to some. However, the simultaneous reality that wages are lower and that other counties are gradually gaining stronger economic footholds should create a motivation for this region to plan and enact a more robust economic development agenda. For that, we need to understand how the overall economic performance translates into market shares in employment and firms/organizations within particular sectors of the economy. For this analysis, I will utilize the 2013 database of workplaces provided by ESRI. Please note that in all analyses, the two largest employers in King County, Microsoft and Boeing, are missing. Information regarding these two companies is not included in the acquired database. In a way, this is helpful, since it prevents a significant skewing of the data in favor of these two companies. However, as I discuss the figures below, the readers should remember this missing data. For some geographic analyses, however, I will employ Washington State commuter trip data, which contains self-‐reported employer information, including those of Boeing and Microsoft. As of 2013, 18% of all firms in the four counties of King, Snohomish, Thurston, and Pierce were in the latter. However, employment share of the County stood at 12% (see Figure 16). This means that typical employers in Pierce County hired fewer employees than their counterparts in King and Thurston counties. This is illustrated in Figure 17, indicating that employers of 250 or more employees are fewer in number in Pierce County, compared to others. However, employment size does need to be a point of concern. Seattle has a much larger number of smaller employers (with one to four employees) than Tacoma or Kirkland (see Figure 18). This hardly affects its economic position. If anything, it suggests a suitable condition for startups and smaller subcontractors, further illustrating its economic health and growth potential. Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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Number of Firms Thurston 6% Snohomish 17% Pierce 18%
King 59%
Number of Employees
Thurston 10% Snohomish 10%
Pierce 12%
King 68%
Figure 16 – Employment and Firm Location Patterns. Source: ESRI, 2013. (Computed by the author)
Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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Figure 17 – Number of employers by employment size. Source: ESRI, 2013. (Computed by the author)
Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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Figure 18 – Number of employers by employment size. Source: ESRI, 2013. (Computed by the author)
In terms of economic sectors, Pierce and Snohomish counties have a much larger proportion of their employment in construction and contracting businesses than King and Thurston counties (see Figure 19). Comparatively speaking, the largest proportion of employees in King County is engaged in FIRE (Finance, Insurance, and Real Estate) industries and retail trades. In Pierce and Snohomish counties, the largest employers are involved in ‘professional and non-‐professional services.’ However, the manufacturing sector is a proportionally larger employer in Snohomish County, than in Pierce and King County. Despite the sectoral variations in employment patterns, revenues seem to be significantly different between King and Pierce counties. Even though the latter has a larger proportion of its employees in services, its revenue from this sector is not proportionally large. In fact, in terms of their share, service sectors in both counties produce about a fourth of revenues in each county (see Figure 20). Furthermore, in King County, over a quarter of the overall revenue is derived from the FIRE sector, whereas in Pierce County that share is only 10%. Pierce County does slightly better in wholesale trades.
Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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Misc Industry (Public Administra[on) 3%
Agriculture, Forestry, Fishing Mining 1% 0%
Construc[on, contrac[ng 4% Manufacturing 7%
King County
Transporta[on, Communica[on, Electric, Gas & Sanitary Services 8%
Services (Professional & Non-‐Professional) 35%
Wholesale Trade 5%
Retail Trade 27% Finance, Insurance and Real Estate 10%
Misc Industry (Public Agriculture, Forestry, Administra[on) Fishing 4% 2% Mining Construc[on, 0% contrac[ng 10%
Manufacturing 7%
Pierce County
Services (Professional & Non-‐Professional) 47% Wholesale Trade 7%
Transporta[on, Communica[on, Electric, Gas & Sanitary Services 6%
Retail Trade 11% Finance, Insurance and Real Estate 6%
Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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Misc Industry (Public Agriculture, Forestry, Administra[on) Fishing 2% 3% Mining 0%
Construc[on, contrac[ng 11%
Snohomish County
Services (Professional & Non-‐Professional) 45%
Manufacturing 13%
Retail Trade 11%
Transporta[on, Communica[on, Electric, Gas & Sanitary Services 4% Wholesale Trade 4%
Finance, Insurance and Real Estate 7%
Finance, Insurance and Real Estate 3%
Retail Trade 5% Wholesale Trade 1% Transporta[on, Communica[on, Electric, Gas & Sanitary Services 0% Manufacturing 1%
Services (Professional & Non-‐Professional) 19%
Thurston County Misc Industry (Public Administra[on) 67%
Construc[on, contrac[ng Mining 3% 0% Agriculture, Forestry, Fishing 1%
Figure 19 – Counties by share of employment in various economic sectors. Source: ESRI, 2013. (Computed by the author)
Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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Agriculture, Misc Industry Forestry, Fishing Mining (Public 0% 0% Administra[on) 1%
Construc[on, contrac[ng 2%
Manufacturing 9% Services (Professional & Non-‐Professional) 25%
Transporta[on, Communica[on, Electric, Gas & Sanitary Services 11%
King County Wholesale Trade 8%
Finance, Insurance and Real Estate 27%
Retail Trade 17%
Misc Industry (Public Administra[on) 0%
Agriculture, Forestry, Fishing 1% Mining 0%
Construc[on, contrac[ng 6%
Manufacturing 11%
Pierce County
Services (Professional & Non-‐Professional) 27% Finance, Insurance and Real Estate 10%
Transporta[on, Communica[on, Electric, Gas & Sanitary Services 11%
Wholesale Trade 13%
Retail Trade 21%
Figure 20 – Sales/Revenues by economic sectors. Source: ESRI, 2013 (Computed by the author)
Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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Economic Geography Using WA-‐CTR (Washington State Commuter Trip Reduction) data, I have produced what is called an employment density map (see Figure 21). Basically, employer addresses and their employment magnitude are used to create what would be akin to the topography of employment in the region. Figure 21 also illustrates the location of employers with 100 or more employees, superimposed on the employment density patterns. As this map reveals, there are a number of large employment clusters in Snohomish, King, and Pierce counties. However, the largest are to be found in King County, particularly in Seattle, including the area closer to the University of Washington (UW Seattle itself is also considered a large employer with many affiliated employment centers), Bellevue, Redmond, SeaTac and Tukwila. A smaller cluster appears in Auburn and closer to Federal Way. However with the departure of Weyerhaeuser, this cluster may not appear on future maps, unless an employer with an equal or higher number of employees occupies the current building. In Pierce County, the only cluster of importance appears in Tacoma, due to spatial proximity and size of employment in the two hospitals, the University of Washington Tacoma, and a few other employers in the area.
Figure 21 – Employment Density. Source: WA-‐CTR, computation and mapping by the author.
Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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While an extensive geographic assessment of every economic sector is beyond the purpose of this report, I offer two additional sets of geographic analyses to highlight the importance of agglomeration economies, on one hand, and a deeper economic distinction between King and Pierce counties. For this, I focus on six sectors within high tech industries and two in biotechnology. Using industrial codes and the ESRI firm level data, I extracted only those companies that fall within one of the following six categories of technology firms: 1. 2. 3. 4. 5. 6.
Telecommunication Data processing, hosting, and related services Computer system design and related services Scientific research and development services Computer and electronic manufacturing Electronic equipment, applications, and component manufacturing.
The six counties of Snohomish, King, Pierce, Thurston, Mason, and Kitsap house a total of 7,020 companies and 65,467 employees in these economic sectors. Please note once again that Boeing and Microsoft are missing from this database. If they were to be included the employment size would more than double. Leaving these two major employers aside, it is still stunning to note that King County’s share of all other companies is still larger than the other counties put together. King County’s shares are 68.4% of firms, 80.4% of employees, 89.7% of revenue, and 70.2% of the office spaces utilized by these firms. Pierce County’s shares are respectively 10.7% of firms, 3.4% of employees, 1.7% of the revenue, and 8.2% of the office space. This pattern suggests that Pierce County benefits neither in research and development nor in production from the regional concentration of technology companies. It also indicates that, at least in the selected economic sectors, we cannot really speak of a regional economy. It is simply western King County, from Kirkland, Redmond, and Bellevue to Seattle that these companies spatially congregate. This regional distinction becomes even more obvious when we consider the biotechnology related firms. As Figures 22 and 23 suggest, while almost all research and development related biotech firms are to be found in King County, non-‐R&D companies related to the same industry have a slightly higher presence in Pierce County. However, even in the non-‐R&D category, King County, along the same western concentration, contains the majority of the related firms. This pattern repeats for a number of other high yielding economic sectors, suggesting that the economic heart of the Puget Sound Region is only a small geography in West King County, extending from 405 to Downtown Seattle and SeaTac. South King County and most of Pierce County have benefitted very little from the historical accumulation of wealth and knowledge in this economic citadel. Snohomish, Pierce, and, for that matter, South King County, however, do serve a different regional function. They provide housing for those who cannot afford to live where they work. More troubling is that they live where public transit services are minimal and commutes can best be accomplished by driving alone to work. Given the nature of their work, few are able to work from home either. Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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Figure 22 – Location of Biotechnology Research and Development companies
Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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Figure 23 – Biotechnology non-‐R&D firms
Given the utility of Pierce and Snohomish counties to King County, it should not come as a surprise that we have a larger number of real estate construction companies or that we specialize in a particular type of housing. The 2012 housing permit data (see Table 2) clearly illustrates that while King County mainly focuses on multifamily housing of 50 units or more (62% of all permits), Pierce and Snohomish mainly focus on single detached housing (66% of all permits in Pierce County). Furthermore, a significant majority of those who live in neighborhoods along the northern section of Pierce County and Southern areas of Snohomish do not work in their county of residence (see Figure 24). Clearly, portions of Snohomish and Pierce counties are becoming homes for those who work in King County, a fact that does not require data. A simple morning and afternoon observation of the traffic along I-‐5 corridor will do. The challenge of affordable housing, however, seems pervasive in the region, even though the largest share of the problem is felt in King County. Figure 25 simply maps median multiples in the region. This is a crude estimate of affordability, computed by dividing median home values by median household incomes. Values greater than 3 simply point to degrees of unaffordability. As this map illustrates, the Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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very region with the largest level of economic development and revenue, as well as population growth, has the highest rates of housing unaffordability. It is clear, also, why Pierce County and Tacoma appear more appealing when one considers the cost of housing, albeit that the cost of transportation and its wear and tear on commuters could be high. In the absence of a viable transportation system that actually connects various cities and neighborhoods in Pierce and Snohomish counties to major employment centers, the region’s housing affordability problem has led to a worsening urban transportation condition. Table 2 – Housing Permits, 2012
Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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Figure 24 – Percent Commuters Working Outside the County of Their Residence. Source: American Community Survey, 2013, computations and mapping by the author
Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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Figure 25 – Median Multiples. Source American Community Survey 2012, computations and mapping by the author.
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Moving Forward Despite the positive voice of the 1987 Strategic Plan, neither has the city of Tacoma become a ‘mecca of tourism’ nor has Pierce County conquered sprawl. A quarter of a century later, the county has definitely grown to become the home of many small cities, offering an enjoyable quality of life for its residents. However, economic growth and the expected prosperity are best described as falling short of the established goals. As this report has shown, the regional economic share of Pierce County appears to be small compared to King County. While we continue to have some of the assets listed in the 1987 report (proximity to the growing Pacific Rim economies, a strong port, relatively high quality of life, cheap energy, and a strong healthcare system), we lack what was then considered a strength for the region: a well-‐paid workforce, a fast-‐growing high technology sector, and market leading firms. Additionally, some of the mentioned weaknesses remain: namely persistently high unemployment rates and distance from other population centers. Today, we can add distance from major employment centers to that list. The news, however, is not all bad. Unemployment rates are not dire. Pierce County is growing in population, if Tacoma is simply maintaining course. The South Sound region has sustained growth due to a growing Latino and Asian population. While the aging population could be viewed as a potential challenge for economic development purposes, we can put it in a more positive light: a seasoned workforce with valuable knowledge and experience lives in this region. Perhaps the greatest and growing asset of this region is its educated population. As illustrated in this report, while the economic magnet in the north houses the largest share of educated workforce (those with a BA or higher), the region is gaining a foothold by not only attracting a more educated population, but also by educating its own. Pierce County, especially Tacoma, has become what we could call a ‘learning region,’ a new potential center for innovation and socioeconomic growth. As Figure 14 illustrated, the number of people enrolled in colleges and higher education is increasing in this region, particularly where the University of Washington Tacoma is located. This is an asset that the region needs to capitalize on, similar to what has occurred in relation to the Seattle campus. Pierce County and the City of Tacoma could consider working more closely with the university to establish a rational economic development agenda that synchronizes the region’s goals (e.g. attraction of particular economic sectors) with the educational direction of the university. Reflecting back on the data regarding high tech and biotechnology firms, we can conceptualize an approach that creates positive synergies between the university and the region it serves. Historically, capital investment in technology-‐focused development has operated at two levels: capital deepening and capital widening. The first focuses on introducing innovation in new technological arenas, and the latter focuses on what can be called turning technology into everyday products in people’s daily lives (e.g., smart phones). As such, capital deepening is engaged in research and development, while Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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capital widening is engaged with production, distribution, and management (including services). Regions focused on capital widening become trendsetters, in this case in technology (i.e., Silicon Valley). However, to grow and sustain such a region, highly trained researchers are needed to engage in R&D activities. It should come at no surprise then that high quality research universities are fundamentally important. However, these regions should also provide a good quality of life for R&D employees, and when necessary public policies that focus on recruitment of particular labor, as well as firms. Capital widening strategies are more likely to build production facilities, establish branch offices, and house service functions of major firms. They also need to offer a good quality of life to their current and future employees/residents. Based on the data presented in this report, Tacoma and Pierce County cannot be considered as regions currently engaged in capital widening activities (e.g., little to no major R&D facilities for high-‐tech or biotechnology). This region is at best engaged with capital widening efforts. With the University of Washington Tacoma and a number of other major centers of higher learning, the region is poised to build a nascent, small R&D center, focusing on a number of university initiatives that are supported by various academic programs. Furthermore, it could begin to expand its capital widening operations that continue to provide employment for the largest portion of the population. For these to happen, however, commitment to educational and labor equities is necessary. Educational equity, through which access to higher education is made possible, is fundamentally important in order to provide the much needed training to the growing minority, immigrant, and first generation students. Labor equity allows us to consider the needs of the labor (including living wages), as it relates to the quality of life we hope to achieve in this region. Educational and labor equity policies will enable us to grow and maintain a viable local workforce, be they native or newcomers. (See Figure 26 for the conceptual model).
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Figure 26 – Conceptual model
In the end, attracting more people without a rational plan for appropriate jobs will translate to adding more people than there are employment opportunities, making us equate real estate development with economic development. This was a bad lesson that many jobless suburbs learned quickly. Jobs need to target who lives here, not who we hope will live here. Economic development is not about wanting to be someone else. It is about how to engage, more robustly, with the flows of global capital, enriching those who live here, and those who may find it viable to move here. Marketing Tacoma and Pierce County should not be focused on its cheap real estate and energy; it should be about the quality of life and employment opportunities they provide. We also need to focus on the South Sound region, as a whole, and not a few cities or neighborhoods within it. This includes medium and low density cities and suburbs, immigrant and minority communities, and areas where younger families choose to live. In the end, it is not about attracting large companies only. It is about growing local industries through entrepreneurship, and helping create an environment where capital grows to benefit everyone, including the workforce. With a major university in its midst, one that views itself as an Urban Serving University, Tacoma and the County are yet to utilize their latest and hard-‐won asset that could help turn the wheels of individual and collective prosperity in their favor. The road to this future is paved through collective, synchronized efforts that do not follow fads in economic development and understand the value of educational and labor equities in achieving the future that was hoped for in the 1987 strategic plan; one that the current and future residents of the County and the City hope to witness soon.
Context for Development: Demography, Economy and Regional Dynamics Ali Modarres / University of Washington Tacoma / February 2015
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