Paul Roberts / The Seattle Times (TNS)
The continued cooldown in tech and construction and faltering demand for office space helped drag hiring in Washington to its lowest level since last fall.
Employers added just 1,500 jobs in March, according to data released Wednesday by the state Employment Security Department. It’s the weakest growth since September and another sign that high interest rates, recession fears and a struggling commercial real estate market are affecting hiring.
Professional and business services companies shed 2,300 jobs in March, which likely was at least partly the result of “continued weakness in the market for office space,” said Jacob Vigdor, an economist with the University of Washington Evans School of Public Policy who follows state and local job markets.
“We know that office occupancy rates continue to be below pre-pandemic levels,” which may reduce demand for workers to manage and maintain offices, Vigdor said.
Office vacancy across the Seattle area jumped to 11.2% for the first quarter of 2023, and has now risen in 11 of the last 13 quarters, according to commercial real estate firm Kidder Mathews.
Much of that weakness reflects the lingering popularity of remote and hybrid work. Worker presence in downtown Seattle offices is just 45% of pre-pandemic levels, according to data posted by the Downtown Seattle Association.
Some industry experts worry that a combination of remote work and high interest rates will mean more “distressed” office properties, such as Renton’s Southport Office Campus, which will be auctioned off by its lender after remaining largely empty for the last three years.
Those concerns may also be dragging on the construction industry, which lost 3,600 jobs in March, in part as banks pulled back on loans for new buildings.
Even after accounting for normal seasonal declines, March’s construction job losses marked the third consecutive decrease, said Anneliese Vance-Sherman, a regional economist with ESD who covers the Seattle-area job market.
Vance-Sherman said she didn’t regard the three-month decline “as writing on the wall. But I do think it is something to watch.”
The good news: Hiring surged in the leisure and hospitality industry, which has struggled to find staff after COVID-19, and also in education and health services.
But those gains were blunted by the losses in construction and professional and business services as well as by anemic growth in manufacturing and retail.
Hiring in tech was also mixed. “Information” companies, which include many tech employers, added 700 jobs in March. But the category excludes Amazon, which the state counts as a retailer, and which has recently cut 18,000 jobs as part of a broader tech slowdown that started last spring.
For now, “residual hiring” in the tech sector “seems to be enough to absorb the laid off workers,” Vigdor said. More worrying, the Seattle-area economy can no longer count on the massive annual influx of highly paid tech workers that had become the norm before the slowdown.
“No more bringing 10,000-plus workers into the region from out of state every year,” said Vigdor of hiring curbs at Amazon, Microsoft and other tech firms.
The broader job market may feel a ripple effect from “softening demand for real estate and the other things that new migrants need,” Vigdor said.
