Regional VIEW Newsletter

November 2006     [pdf version]

The Annual November Luncheon of the Prosperity Partnership played to a sold out crowd of 1,200 and featured our first ever collaboration with Rotary Club of Seattle. (Luncheon photos by Jay Dotson.) WSU Grad and U.S. Senator Patty Murray presented WSU President V. Lane Rawlins with an award, acknowledging him "For a career of leadership in creating jobs and educating the people of the Puget Sound region and the State of Washington. New Report Measures Regional Competitiveness Puget Sound Trends: Region's Income Growing Faster Than Inflation Back Issues

People in central Puget Sound are among the best educated in the country. On a per capita basis, the region ranks number one in industry spending for research and development. The region also has a thriving arts community.

That's some of the good news from a new Prosperity Partnership report evaluating the region's competitiveness and reporting on progress made in implementing the Regional Economic Strategy. For the first time, a set of 20 economic and social indicators is being used to track the performance of the region's economy and compare central Puget Sound with five other similar U.S. regions.

The report also highlights areas where the region needs improvement. For example, Washington state lags in the production of bachelor's degrees, suggesting that new, good-paying jobs could go elsewhere or be filled by non-residents. In terms of business climate, Washington has one of the highest business tax shares in the country, which is particularly hard on small businesses and startup companies.

The report was introduced at the annual Prosperity Partnership Fall Luncheon, which featured a dynamic group of speakers, including U.S.

Senator Patty Murray, WSU President V. Lane Rawlins, Washington State Senate Republican Leader Mike Hewitt, Microsoft Senior VP Brad Smith, Renton Mayor Kathy Keolker, Pierce County Executive John Ladenburg and YWCA Strategic Initiatives President Rita Ryder, plus a video message from Washington Governor Chris Gregoire.

In addition to the competitiveness indicators, the document reports on progress made on the First Year Action Items, and lays out the Partnership's 2007 Action Items. Following are some highlights from the report, titled 2006-2007 Puget Sound Regional Competitiveness Indicators. To read more, go online to prosperitypartnership.org, or contact the PSRC Information Center at 206-464-7532, infoctr@psrc.org. Over 35 percent of the population in King, Snohomish, and Pierce counties has a bachelor's degree or higher, which is an increased share in the last four years alone. However, Washington ranks 36th in the nation in bachelor's degree production. The Prosperity Partnership has developed a legislative proposal for 2007 to increase the number of bachelor's degrees produced in our state's higher education system.

State Rank in Bachelor's Degrees Awarded per 18-24 Year Olds (2003) Source: NSF State Rank Colorado #20 Arizona #22 Minnesota #24 Washington #36 California #43 Note: 2004 ranks were not available.

While California ranked first for total R&D expenditures, Washington led in per capita industry R&D dollars at $1,504 - more than twice the national average. Top R&D subjects in the region are life sciences (67 percent), environmental science (10 percent), and engineering (10 percent). Washington is among the 10 states with the largest share of their taxes being paid by businesses. The state's B&O tax is hard on small businesses and startup companies. The Prosperity Partnership is working with regional leaders on developing a balanced, pro-competitive tax structure proposal.

A gallon of milk or a tank of gas costs more than it did a decade ago, but average pay has grown even faster in the central Puget Sound region. Since 1995 the region's per capita income growth has outpaced inflation, with income gains fueled in large part by the technology sector.

During the tech boom from 1995 to 2000, the state and region experienced a steep increase in per capita income, with stock options and software sector industry wages playing a significant role. However, by 2000 when the regional economy started taking a turn for the worse, the rate of income growth slowed significantly, lasting up until 2003. Nationally, the Puget Sound metropolitan area was among the hardest hit by the 2001 recession.

The gap between the state and region's annual per capita income has grown wider since 1995. In the Puget Sound region, annual per capita income in 2004 was $41,100, more than $6,000 or 17 percent higher than the state's per capita income. This is double the difference between the state and the region's income in 1995.

In all four of the Puget Sound counties, per capita income growth has exceeded inflation growth since 1995. Since 1995, inflation grew by 18.3 percent, an average annual growth rate of 1.9. In comparison, King County personal income grew by almost 61 percent, an average annual growth rate of 5.4. Kitsap had the second highest increase with almost 53 percent growth in income, a 4.8 percent annual growth rate. Pierce and Snohomish followed with total growth rates of 47.3 and 41.6 respectively, with annual growth rates of 4.4 and 3.9 percent. Of the four counties, King was the only one to experience the sharp increase between 2003 and 2004. The Microsoft dividends paid out that year were allocated to the county that they resided in, so King County received the bulk of the pay out.

Overall, the state and the region have outperformed the rise in inflation since 1995. Some losses did occur during the recession; however, by 2004 income growth picked up. To learn more, check out the November issue of Puget Sound Trends at psrc.org. For more information, contact Kristen Koch at 206-587-5667 or kkoch@psrc.org. Detailed income estimates and personal consumption expenditures are available at www.bea.gov.