The Future is in the Past: Economics 101 for Spokane

Education, jobs, community, self-worth, culture and being-buying-living locally

As always, writing about a middle-sized community in the Pacific Northwest is like peering into the looking glass. All references to the One Percent, de-emphasizing community rights, brain drain and monopolization of all business sectors and privatizing the profits and socializing all the heavy burden and costs to the local community/economy, all of that applies to You Name It, USA!

I truly believe that Spokane is the most compassionate community in America.
— Spokane Mayor David Condon, February 2015

Today, we have the largest gap of income inequality ever seen in this country, with no signs of a reversal happening. We have a gold rush mentality when it comes to the environment and its precious resources that has a handful of corporations literally driving the planet off a cliff. Spokane is not immune. There is no bubble. There is no counter-cyclical economic trends that insulate us from what’s happening beyond the city limits. We are completely plugged into the grow, grow, grow mindset that is not lifting this community into a better place.
— Kai Huschke, Envision Spokane, March 2015

There are foundational questions about any community’s economy that need to be addressed, but many times both the queries and responses stay cloistered behind the walls of academia or obfuscated by the very people who should confront them: economists, politicians and business leaders. Here, some Economics 101:

  • What is the state of Spokane’s economy?
  • Is there a hidden economy in Spokane?
  • Jobs, jobs, jobs. Just what are the jobs in Spokane?
  • Who are precarious workers and the under-performing lower classes as they relate to Spokane’s economy?
  • Are current economic development models flawed?
  • How do people in Spokane survive in an economy predicated on low wages?
  • What needs improving for the state of Spokane’s workforce, jobs, economy?

The not so funny thing is when soliciting comments on the state of the Inland Northwest economy from “economists” plying their trade at University of Washington, Washington State University, and Gonzaga University, I get reluctance by most to dive into the very under-girder of what we face here.

Economists like to deflect questions when their expertise is far afield of the local place they actually live in, profit from, and influence through the inculcation of knowledge from the very folk who allow them to make good money, gain tenure and set down community roots: aunts and uncles, parents and grandparents of the youth of the Inland Empire.

However, a few submitted to dialogue – David Bunting, 30-plus years at Eastern Washington University and head of the economics department, and 34-year-old Andrew Cassey, who went to school in Delaware and Minnesota and became a WSU-Pullman professor in 2008.

For Bunting, he sees education – and the state’s retraction of its commitment to state matching funds – as the lynchpin for younger folk living in the area to make economic strides.

We discussed these huge debts students now incur, sometimes $60,000 for an undergraduate degree and over $120,000 for a doctor of veterinary medicine diploma.

“Access to higher paying jobs means a willingness to pay for that access. I am not sympathetic to the debt complaints,” Bunting said. He went on to say that for an EWU undergraduate degree, the average indebtedness is $28,000.

While Bunting’s lack of empathy for the $1.3 trillion student loan/debt issue nationwide is problematic for tens of millions of Americans, he did posit the idea that education should be free, or could be in the form of a community college or lower tier school like Eastern.

“Why don’t more people go to community college?” he asked “Washington has a low percentage of post high school school attendance. Obviously, a big obstacle is you can’t live or go to school without working.” He sees expansion of school aid and low interest loans as part of the fix.

The Dog that Wagged the Tail

It’s clear that Spokane is not the big dog in the kennel. The big canines are Seattle and Portland, two million-plus cities that seem to be magnetic forces for many Spokane youth once they finish high school or college. That brain drain can be theorized on many levels of causation.

“Spokane is the tail of the economic dog in the state,” Bunting said. That tail is comprised of 450,000 people in the county and another 1.5 million in the geographic area we call the Inland Empire: 20 Washington counties and another 10 Idaho counties.

WSU’s Andrew Cassey studies international trade policies and looks at microeconomics and the systems of economic growth and development. He’s optimistic about the future of the Inland Empire, or Spokane specifically, five years out, though he is not open to predicting what might be trends or the next big thing economically for our city.

He’s really interested in why the governors of Washington are always going on trade missions to Japan, when there are opportunities just north in Canada. Even “cold calls” to India might generate new product and service deals that would put Spokane on the economic map.

The WSU economist studies those change points, transformative models, where economic development starts at a place of zero and then economic growth and activity take off. The question of why something happens in any given economy – for instance, why Spokane became a lumber and mineral transportation hub in the late 1890s and early 1900s – really interests him. He calls it “identifying industrial clusters.”

“A lot of communities large and small have developed economic plans around a particular industry,” Cassey said. He wants to know what causes that concentration – is it a natural geographic consideration, random, political? “I have developed a statistical test for these clusters.”

The idea behind this inquiry is to figure out what precipitates economic growth in an area and then why that growth dries up and a given industry just picks up and leaves.

Luck of the Draw – Who Gets Paid a Living Wage?

For Bunting, he uses Boise as a study of contrasts with Spokane – Boise “got McDonald’s” in the form of Simplot potatoes. Boise landed the HP ink factory and Micron computers. He said that Hewlett Packard’s “Boise attraction” was predicated on a vice president’s wife vying for Boise “since the skiing’s better there than in Spokane.”

Ironically, Bunting’s idea of the leading drivers of Spokane’s economy – health care and education – are the same ones bandied about when I first moved here in 2001 and started urban and regional planning graduate work.

Remember Mayor John Powers, the first strong mayor of Spokane (2000 – 2004) and his One Spokane vision for tackling poverty? Even Governor Gary Locke back then was recognizing Spokane’s underachievement statistics: In 2001, more than 50 percent of the city’s workforce was employed in the service and retail sectors, with annual incomes of $21,000 and $19,000 respectively. Not sustainable for a large sector of the city in an economy where a family of four needed $27,000 for basics fourteen years ago.

When Powers was cracking the anti-poverty whip and proposing a green roof for city hall, the poverty rate in River City was 14 percent. Today, it’s nearly 19 percent. More people are living below the federal poverty line now – 38,000 – than in 2000 – 30,000.

So, poverty going up 21 percent since the year 2000 makes for what sort of economy? For Spokane school children, imagine more than 6,300 living in poverty, and more than 45,000 participating in the basic school food program.

Survival of the Fittest Means the .1 Percent Wins? And $15 an Hour for Me?

For local activist Kai Huschke of Envision Spokane who has helped launch the Community Bill of Rights, the same old good old boys’ (now, girls’) club and the idea of perpetual growth in profits for outsiders – national and transnational corporations – are what have hobbled Spokane’s potential going on decades.

“What is an economy for, or what would make for a sustainable economy?” Huschke asks. “The ‘endless production for more’ type of economy we have today is not a viable, sustainable economy. That economy needs to die. When it dies it allows for a truly sustainable economy to emerge, one focused on true needs: ones that are localized and that will be just and equitable to people and the environment.”

Economists like Bunting view the USA as a boom and bust economic drama – akin to The Grapes of Wrath narrative of the Oklahoma farmers and their families having to pack it in and head west during the “great depression.” Many faced “Oakies Go Home — California Doesn’t Want You” signs and physical roadblocks manned by sheriff deputies. Bunting sees a city’s “make or break” history as an inevitable product of political, economic and cultural factors, while Huschke and his Envision Spokane cohorts want stability and deep community building. I asked Kai Huschke, who lives in Vinegar Flats and is raising seven-month and seven-year-old boys with his spouse, Sagi, what makes for a sustainable job.

That would be a job built on equity, justice, and dignity. That would be a job that not only paid workers fairly but adequately to support themselves and their family. That pay needs to be enough to cover basic necessities and then some. The ‘then some’ would be to allow people a modest savings so they can invest in things like a home or education. Sustainable jobs also means having a sense of security and pride in that work. The current economy treats most workers like widgets – plug them in when needed and discard them when not. If a sustainable economy is built, a truly sustainable one, sustainable jobs will be part of that new paradigm.

The average economist would call for unfettered/unbridled free markets, unending profits for the One Percent and unnatural depressions in local economies as the levelers of society. For instance, the deep south depopulated after emancipation of blacks from slavery, creating large influxes in places like Detroit, Chicago and New York. The classic economist would place the current threats to Detroit’s people (bankruptcy, outward migration, loss of major industries) as a natural order of things economically speaking.

Is it a “choice” that those people who move to Portland because of its liberal culture, its outdoors lifestyle, and its “keep it weird” ethos are put back six years economically (compared to youth moving to any other US city)? Portland is gentrifying at breakneck speed; the city has a housing and rental stock priced out of range for many low and middle low income people; and the city’s high paying jobs are locked up for a few whereas a $9.25 an hour service and retail economy is what’s left for the majority, many of them college degree-holding folk? The same holds true for Seattle.

Aging, Sickness and Pain – The New Economy of the Baby-Boomers’ Grandchildren?

Over 10,000 Baby Boomers a day in this country turn 65. That number does give me and others pause.

Bunting mentioned how 20 percent of Spokane’s economy is based on health care services. A new medical school proposed for the University District aligns with that trend. All the physicians and nurses, the medical support staff and the technicians drawn to that medical mother lode will infuse money into the local economy.

However, success can be a double-edged sword, Bunting said, as he provided an illustration with Spokane’s successful local banks which have almost completely been bought up by larger banks like Umpqua, Columbia, Banner. The problem is that those banks’ headquarters are located elsewhere. The local adjuncts have lost the high paying jobs in HR, management and marketing as they’ve moved to Seattle, Portland, elsewhere.

Traditionally, banks have been good citizens and stewards of community causes and philanthropic giving. “A bank president is basically a public relations person, whose job is to increase the stature of the bank in the community. If the president is not headquartered here, civic activity goes with him,” Bunting said.

One of the bright lines for Spokane’s economy is there are pockets of progressive politics and liberal culture. For the director of the Inland Northwest Business Alliance, Christopher Zilar, landing the Rockwood Health Systems as members of INBA shows there are big employers in the city who are signing onto a non-discrimination agreement when considering LGBT issues.

As any business leader knows, most businesses are hiring, even if they haven’t put up the “help wanted” sign in the window or on Craigslist. Additionally, most businesses in Spokane, or any city, are considered small businesses, with 250 employees or less and $7 million or less in gross income. More than 80 percent of businesses have 50 or fewer employers.

What Zilar looks for in the LGBT chamber of commerce is what other chambers and business associations are looking for – members who are community-based and community-minded. Currently, INBA has 200 businesses signed on.

From a certain lofty perspective, all those fancy campuses such as WSU-Spokane, Gonzaga, Whitworth, EWU, SFCC/SCC; the Davenport Hotel and new Walt Worthy hotel across from the Convention Center; and Kendall Yards define a healthy local economy.

Again, those are limited or limiting employment prospects since construction jobs are transitory and most faculty are adjunct and Kendall Yards is slow to fill up.

“If you get out from under the bright lights of statistics and economic theories and out into the neighborhoods of Spokane, you can see the state of the economy, the state of the community,” Huschke said. “It’s not a pretty sight or source of pride by any means. Too many people living in poverty. Too many people scratching to get by. Those scratching to get by are working for inadequate wages and often at multiple jobs. How is that good for people, for families, for the community, for an economy?”

While folk like Bunting and Cassey proscribe making capital – zero interest loans – available to businesses and are against targeted taxation against corporations, it’s pretty clear what the typical low income Spokane family or individual making $25,000 has to do to make ends meet under the current “winner takes all… and … it takes money to make money” models.

Fees, food and sin taxes, jacked up utility rates, car insurance costs, fines and levies, the high cost of gasoline, and all the expenses needed to survive in a “smart phone” and Internet world, these become mountains, not mole hills, for lower income families. One of the worse predators of struggling families are those payday lenders. In one recent report by the Center for Responsible Lending, the payday loan industry, which operates out of storefronts in poor neighborhoods, “create[s] a debt treadmill that makes struggling families worse off than they were before they received a payday loan.”

It has to be made clear, however, major banks, including JPMorgan Chase, Bank of America and Wells Fargo “have been acting as key intermediaries, allowing online lenders to directly collect money from the bank accounts of those borrowers who have accounts,” the report states.

On March 17th a new political committee, Envision Worker Rights, filed a Worker Bill of Rights initiative with the City of Spokane. As Huschke states:

The Worker Bill of Rights would secure the right to a family wage for those who work for large employers; the right to be paid equally regardless of who you are or where you come from; and the right to be free from wrongful termination from your job. It’s another root level thrust needed to drive us away from the dead end economy of today into that realm of sustainability that you asked about earlier.

The group is looking to qualify the Worker Bill of Rights for the November 2015 ballot.

Former Mayor John Powers’ friend and campaign treasurer, Roger Fruci, really took Powers’ second term bid loss hard, especially when he hears about all the rooftop gardens in the state and the impetus of the wind power industry in this state and elsewhere.

“The culture of Spokane seems to treat innovative ideas with sarcasm,” Fruci said. “I’m not a Spokane basher. I love Spokane. But this is not always the place you come with innovative ideas. And it’s a lot better than it was 10 or 15 years ago.”

What will the next “big thing” be for Spokane’s economy? IT and Computer applications? High tech manufacturing of Unmanned Aerial Vehicles? Retirement homes? Growing food? For economists, that prediction is dicey, but for those invested in families and businesses here, maybe the road to stability is reinventing “it takes a village to raise a business community.”

• Appearing in Spokane Living Magazine, June 2015 issue

Paul Haeder's been a teacher, social worker, newspaperman, environmental activist, and marginalized muckraker, union organizer. Paul's book, Reimagining Sanity: Voices Beyond the Echo Chamber (2016), looks at 10 years (now going on 17 years) of his writing at Dissident Voice. Read his musings at LA Progressive. Read (purchase) his short story collection, Wide Open Eyes: Surfacing from Vietnam now out, published by Cirque Journal. Here's his Amazon page with more published work Amazon. Read other articles by Paul, or visit Paul's website.