The Decline of Boeing Jobs

The terrorist attacks of Sept. 11, 2001, only accelerated a long-term employment decline at Boeing.

In the three years before 9/11, Boeing shed 24,000 workers in Washington.

In the three years following the attacks, 27,000 more Boeing jobs disappeared here.

After six years of aerospace decline that included three solid years of general recession, Boeing is at last recovering and rehiring.

However, engaged in a ferocious competition with Airbus, Boeing executives are adamant that they won't go back to the traditional cycle of massive layoffs and rehiring but will settle at a leaner employment level.

Last month, Boeing employment here stood at 56,500.

With production of the new 787 scheduled to begin in 2007 and increased production rates planned for existing Boeing programs, state economic forecasters are predicting strong growth again in local aerospace. They project as many as 14,000 new jobs in the sector over the next three years.

The Service Sector Expands, Shifting the Economy

In the constant churn of jobs dying and new ones being born, about 400,000 jobs were created last year in King, Pierce and Snohomish counties, state employment data indicate.

But the new jobs are different from the old.

Compared with the declining manufacturing jobs, the growing service jobs "tend to have lower wage rates to begin with, and less-generous benefits packages," said Marilyn Watkins, policy director at the Seattle-based Economic Opportunity Institute, a nonprofit, labor-oriented think tank.

A September report from the institute noted that compared with the $51,000 average wage in manufacturing, leisure and hospitality pays an average of $16,000, health care $33,000, local government $37,000 and construction $39,475.

Displaced ex-Boeing employees who can no longer find jobs in manufacturing have flowed into retraining courses at community colleges across the region. At Green River Community College, for instance, more than 400 have retrained since fall 2001.

The most popular courses include automotive technology, business management, nursing, and training for careers in the criminal-justice system.

A state labor-market report published in January projected the two fastest-growing occupational groups in Washington through 2012 as "building care and maintenance" and "personal care and service."

These two categories, with average 2003 wages of $23,000 and $19,000 respectively, include landscapers, hotel staff members, maids and nannies employed in private households and those who provide in-home care for the elderly.

Bill Center, president of the Washington Council on International Trade, an association of business interests that promotes global trade, insists that the new service-sector jobs are not all low-end.

"They're in biotech, software and architecture, in financial services, education and medicine," he said.

Watkins and Center are both right. This economy is creating jobs — high-end, low-end and middle-income; it just isn't creating many manufacturing jobs.

"The problem is that the people who lost their jobs are not qualified for the new jobs," Center said.

Manufacturing Losses Hit Wages

The U.S. has shed 3 million manufacturing jobs since 1998.

"Manufacturing has dropped to just slightly below 10 percent of the state's total employment, which is the lowest it's been going back decades and decades," said Scott Bailey, a regional economist with the state Employment Security Department. "Nobody expects it to get back to 10 percent again."

A 2004 analysis of national job-loss data by John Schmitt, for the Center for Economic Policy Research, cited "crisis levels of displacement," with 10 percent of manufacturing employees losing their jobs between 2001 and 2003.

Fully one-third had not found another job by the end of 2003, Schmitt reported.

Of those who did get a job, 73 percent earned lower wages. And 40 percent saw their wages fall by a fifth or more.

In Washington state, statistics show that of all those working in aerospace in 1998, those who remained in the industry through mid-2004 earned an average more than twice as much as those now working outside aerospace (see graph).

Is Outsourcing to Blame?

The latest Bureau of Labor Statistics data indicate that 52,000 people in large companies nationwide, two-thirds of them in manufacturing, lost their jobs directly because of offshore outsourcing in the first three quarters of 2004.

That's just over 2 percent of the total axed from large companies during that period. But because the information is reported voluntarily by the employers, the percentage likely understates the true impact of outsourcing.

A study last fall by Dr. Kate Bronfenbrenner of Cornell University and Dr. Stephanie Luce of the University of Massachusetts-Amherst calculated that the bureau's figures for the first quarter of 2004 understated the number of jobs sent offshore by a factor of six.

The study concluded that in 2004 as many as 406,000 jobs shifted from the U.S. to other countries.

The true impact of outsourcing remains controversial. "There's mass confusion in the field on this one," said regional economist Scott Bailey of the state's Employment Security Department.

Undeniably, Boeing, in seeking to stay competitive with Airbus, has dramatically reshaped airplane production as a global partnership with overseas suppliers of parts.

A spokesman said Boeing does not have data on how many of its layoffs could be attributed to outsourcing.

A January 2005 report by state economic analyst Alex Roubinchtein estimates that the aerospace-employment decline is one-third cyclical and two-thirds due to permanent structural changes — factors that include increased imports from outside the U.S. and increased productivity.

That means as many as two-thirds of the 51,000 local aerospace jobs that Boeing cut from 1998 through 2004 may have permanently disappeared.

Dominic Gates, dgates@seattletimes.com or 206-464-2963