Economist: To restart economy in Seattle area, ‘safety and security is paramount’
As the COVID-19 pandemic seems to be on the tail end, and with the triple digit temperatures of early June that shocked the Seattle region, it will be interesting to see if either could have an enduring impact on the local economy, or even if they make the Northwest a less attractive place to live.
“Do I expect that we’ll see more events like this? Yes,” said Windermere Chief Economist Matthew Gardner. “But is it going to be an every day event? No. We went through quite a remarkable three-day period. The last time we had a day above 100 degrees, I believe was June of 2009. So it’s a long time ago.”
“Also, in the city of Seattle, less than 50% of all homes have air conditioning, and so if nothing else, I do expect to see air conditioner sales start to skyrocket again,” Gardner added.
Now, moving out of the pandemic with more people vaccinated, the city of Seattle and elsewhere are focused on getting back to a normal economy. To KIRO Radio’s Dave Ross, he sees that as necessary, not just for the good of Seattle but for the entire region.
“Oh, absolutely,” Gardner agreed. “I would actually put that as being first and foremost. The goal of the [Downtown Seattle Association], and of quite frankly everyone in Seattle, is to get people back. We know it is unlikely we’re ever going to get back to the 350,000 people in downtown during a work day because of work from home, which I know we’ve talked about before.”
“I think it’s going to be a blend — it’s not black and white — it’s not going to be always working either in office or at home, but more a couple of days a week at home and the balance in the office or vice versa,” he added. “But to get people to come back, absolutely, I think safety and security is paramount.”
The businesses who serve the workers — the bars, the restaurants, and even the retail — need people to come back as well.
“I think they understand that not everyone is, but if you think about bars and restaurants, they don’t just rely on the residential population who lives there,” Gardner said. “They rely on people going out for lunch and happy hour and these kinds of things. So it’s going to be very important for them to at least feel that the city is making an effort to improve downtown, that will allow people to come back without being too concerned.”
In terms of pandemic recovery and the local economy, Gardner says the state of Washington is doing pretty well, though it’s not at the very top.
“[Washington is] still down by almost 170,000 jobs,” he said. “Yet if you look at other states in the western part of the country, Idaho has recovered all the jobs lost to COVID-19. Utah has done the same. So we’re certainly not at the top of the pack. However, we do have certain benefits, and not just the companies that are here. We have a very talented workforce and a lot of companies are very interested in being here. However, one of the biggest issues that I’ve seen a number of years now that’s only going to grow is housing affordability.”
“Put it this way — at some point, companies looking to expand into Seattle are going to say, ‘OK, well, there’s a bunch of smart people I can hire, check that box, but how much do have I pay them?’ And the biggest component of salaries is cost of living,” Gardner explained. “So I think we need to be very, very cautious about that because at some point, businesses are going to say, ‘well, I’ve got to pay people how much just to be able to live?'”
If that happens, Gardner says other markets, like Spokane, Boise, or even Las Vegas, as examples, could then be more attractive.
But, as Dave points out, we’re a victim of our own success in that case. When you have a successful economy, people want to live there, so housing prices go up. That changes a bit knowing that, for some jobs, you can work from anywhere.
“And I mentioned earlier on that it’s not a we’re all working at home or we are all working in the office. What I do see occurring, and not in all industries and certainly not in all companies, is that they’re going to move, or they’re going to consider moving to more of a hub and spoke model,” Gardner said.
“What does that mean? That means they’ll keep the mothership let’s say here in Seattle, but as they grow, they’re going to start sending spokes out into other markets and creating satellites,” he explained. “And so do I expect companies to grow organically? Yes, they will. But are they necessarily going to grow in downtown Seattle? I would say some are going to think that there are other ways that they can do it.”
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