Business Matters

Multiple forces shaping 2023 local labor market

Regional economists explore staffing shortages, missing workers and hybrid work
January 25, 2023 at 4:50 a.m.
Her Connection Hub in the York neighborhood of Bellingham serves as a coworking space for remote and hybrid workers. Regional economists say the final employer approach to remote and hybrid work still isn't settled.
Her Connection Hub in the York neighborhood of Bellingham serves as a coworking space for remote and hybrid workers. Regional economists say the final employer approach to remote and hybrid work still isn't settled. (Trenton Almgren-Davis/Cascadia Daily News)

By FRANK CATALANO
Business & Work Columnist

Data with grains of salt. When I was 5 years old, like most children, I wanted to figure out the rules of the world. Such as: If my mother was having lunch in the dining room of an elegant restaurant, would the cigarette machine in the lobby always eject a book of matches when I pressed the button on the front?

Turns out, it would. Quite a few times. Until the restaurant staff stopped me and escorted me back to the table. But that was a level of consistency, even predictability, those who track the labor market probably wish now applied to their work. 

That was a feeling I came away with after this month’s webinar, “Western Insights: Exploring the Labor Market,” presented by the Western Washington University College of Business and Economics and the WWU Alumni Association. Regional labor economists Anneliese Vance-Sherman and Scott Bailey, both with the Washington State Employment Security Department, didn’t so much provide potential scenarios for 2023 as outline the somewhat unpredictable forces shaping the job market this year.

I extracted three rules from their wide-ranging comments. Not about what to expect this year, but guidelines that casual observers should keep in mind as a pandemic-tinged great labor market experiment — with increasing wages, high job demand and still relatively low unemployment — plays itself out. 

Rule No. 1: Labor shortages predate the pandemic. Staffing challenges have garnered significant attention and led to a lot of employer angst as businesses reopened after pandemic closures. But some of the gaps, notably in child care and adult long-term care, were a problem before COVID. 

“The child care industry has struggled to come back,” Vance-Sherman said. Yet, “this has been a challenge for decades,” she said of the availability and affordability of child care. “It just got amplified during this time period.”

photo  Lexi Belinskia, a program assistant at YMCA, talks with children during snack time at the after-school program at Happy Valley Elementary. Regional labor economists point out staffing shortages in child care predate the pandemic. (Trenton Almgren-Davis/Cascadia Daily News)  


However, facility and staffing issues appeared to have had a more noticeable downstream impact than before. “A lot of care [is] falling on family members, so that’s been a challenge,” Vance-Sherman said, especially for those caregivers who might otherwise be in the labor force.

Rule No. 2: The mass of “missing” workers is morphing. Reasons for low workforce participation — that is, workers who appear to have dropped out of the job market — may not be just one thing, or even static. 

While Vance-Sherman said about 1 million workers are missing, at least two groups are bucking the trend and participating more. 

For example, she said, teenagers ages 16-19, “were able to jump into the labor market to a greater extent than we had seen before.”  Also increasing participation are those ages 60-64, according to Vance-Sherman, despite anecdotal reports of early retirements.

“Are we seeing a lot of retirement? Yes. We’ve got a very large generation entering into retirement,” she said, “But not early, not at an earlier rate.”

Bailey said other factors at play with missing workers are reduced immigration and long COVID. He said an estimated 12 million people are dealing with long COVID’s challenges and for many, “it’s knocked them out of the labor market.”

“It doesn’t matter what wages are being offered,” he said. “They can’t work.”

Rule No. 3: Hybrid work remains an experiment. Despite a huge jump in remote employment during the worst of the pandemic and a snap back to partly in-office, partly at-home hybrid work, Vance-Sherman said the final balance hasn’t been established.

While a hybrid model is attractive to potential employees, it doesn’t work in all industries or for all jobs. It’s also not completely novel in the workplace, Vance-Sherman said, even if “the scale of it is absolutely new.”

And now, CEOs at companies ranging from Starbucks to Disney have started to reel remote workers back in. 

“I still think we’re in the stage where we’re figuring it out, bit by bit,” Vance-Sherman said. She said different patterns could emerge based on what dominant employers do in different cities.

“I think that the large employers are going to get to shape that conversation and ecosystem for their local areas,” she said,  “but not until the unemployment rate starts to climb up a little, because right now the employees have a lot more influence than usual.”

Bailey and Vance-Sherman shared other observations in the Jan. 13 discussion from which more rules might be derived. Yet more interesting was an overarching bonus rule about labor market information, which I’d call: Trust the data. But be patient.

“Take all the data with a grain of salt because it does get revised,” Bailey said, with revisions often occurring a month later, sometimes six months later, in figures including unemployment rates.

“There’s always a tradeoff between the most recent data that we’re making decisions right now on,” Vance-Sherman said, “and the good data which is going to be older.”

Patience before acting? That’s a rule my 5-year-old self probably should have followed, too.

Places & things

photo  Erika Millage at The Third Planet in downtown Bellingham on Aug. 16. The long-time manager is the new owner of the boutique as of January 2023. (Hailey Hoffman/Cascadia Daily News)  


The Third Planet in downtown Bellingham has a new owner and a slightly new name. Longtime manager Erika Millage, who has been with the store at 200 W. Holly St. since it opened in 2014, assumed ownership from David Jess on Jan 1. At the same time, the store formally changed its name from The Third Planet to Third Planet Boutique

In an announcement, the store said it plans “to continue providing the high quality, carefully curated selection of products and maintain the excellent level of customer service that Third Planet has offered to the community for the last nine years.” A celebration is planned at the store during Downtown Bellingham Partnership’s next First Friday event on Feb. 3 from 5–8 p.m. 

(For the latest Places & Things, check here throughout the week.)


Frank Catalano’s column appears Wednesdays. Email: frankcatalano@cascadiadaily.com; Twitter @FrankCatalano.

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