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Tri-Cities economy growing beyond Hanford

Wed, 01/27/2010 - 1:26pm
Pacific Northwest National Laboratory

PASCO, Wash. – A diversified Tri-Cities economy that's increasingly independent of Hanford spending has grown with 30 percent more jobs and 50 percent more income for local residents in recent years, according to a new economic analysis from the Department of Energy's Pacific Northwest National Laboratory.

"Hanford is still important to the Tri-Cities' economy, but not as much as it used to be," said Mike Scott, who conducted the analysis with fellow PNNL economist Richard Fowler. "Local employment, personal income and other economic factors have grown significantly in recent years, even though Hanford funding and employment leveled off through 2008."

The Tri-Cities' economy historically expanded and slowed with periodic changes at the Hanford Site, where plutonium was processed during World War II and the Cold War. But that started to change in the mid-1990s, the analysis indicates.

Scott presented the analysis, compiled in a PNNL report titled "Hanford and the Tri-Cities Economy: Historical Trends 1970-2008," today at the 2010 Tri-Cities Regional Economic Outlook in Pasco. The report discusses data through 2008, before the American Recovery & Reinvestment Act of 2009 brought an influx of Hanford cleanup funding. PNNL is a separate entity from Hanford.

"This analysis shows that the Tri-Cities is emerging with its own identity," said Carl Adrian, president of the Tri-Cities economic development organization TRIDEC. "People from Western Washington may be surprised to find that we're home to a diverse marketplace with many industries, including viticulture and technology. The Tri-Cities is a thriving, independent economy with a bright future that will stretch well after Hanford cleanup is completed."

Community leaders asked PNNL to compile the report after some businesses were considering locating in the Tri-Cities but thought the local economy was too Hanford-dependent.

Some of the report's notable findings are:

  • There was a 30 percent increase in total local employment ("local" refers to Benton and Franklin counties) between 1994 and 2008. There were 115,350 total local jobs in 2008.
  • There was a 33 percent increase in local non-agriculture employment between 1998 and 2008. There were 94,200 local, non-ag jobs in 2008.
  • Health services has grown the most of all non-ag employment. In 2008, the area's three major health care facilities employed 2,900 people.
  • There was a 50 percent increase in local total personal income between 1999 and 2007. Area residents earned an average of $30,385 in 2007.
  • Less than 8 percent of all local jobs were with Hanford prime contractors in 2008. Hanford prime contractors employed 8,666 workers in 2008.
  • That's half of the average 16 percent of area jobs being Hanford-related between 1970 and 1994. Hanford employment peaked at 14,462 jobs in 1994.

Employment

Total employment in Benton and Franklin counties - which are home to the Tri-Cities - has risen by 30 percent since 1994, the authors write. Employment with Hanford prime contractors dropped dramatically in the mid-1990s and has leveled off to an average of 7,770 workers per year since 1997. Prime contractors are companies that have contracts directly with the federal government for goods and services. Less than 8 percent of total local jobs were with Hanford prime contractors in 2008.

Some Hanford work was shifted to subcontractors - companies hired by prime contractors - in the mid-1990s. The report's employment statistics don't include subcontractor data because subcontractor employment figures weren't available for all the years discussed in the report.

Much of the area's employment growth is centered in the health care and food processing industries.  Non-agriculture employment in Benton and Franklin counties has increased by 33 percent, the authors note.  The greatest portion of that increase - 67 percent - comes from health services. The area's three major health care facilities employed 2,900 people in 2008. And between 2000 and 2007, the number of local food processing firms increased from 28 to 83, with food processing jobs increasing nearly 86 percent to 3,973.

PNNL is also helping the Tri-Cities' economy expand, the authors note. The research laboratory's employment increased 25 percent from 1997 to 2008, when 4,195 people worked at PNNL. A 2009 report by TRIDEC listed PNNL as the Tri-Cities' single largest employer. While PNNL has provided significant technical expertise for Hanford cleanup in the past, just 7 percent of the lab's work was Hanford-related in fiscal year 2009.

The authors note that before these changes, Hanford was historically the Tri-Cities' largest source of employment.

Income

While Hanford was downsized in the late 1990s, local personal income continued to rise. Between 1999 and 2008, personal income increased by 50 percent. Before that, personal income changes typically followed the Hanford budget's periodic fluctuations. 

"The trend in the general economy has shown significant decoupling from Hanford," the report states, adding local personal income has demonstrated "much less volatility than the Hanford budgets."

Population

The combined Benton and Franklin counties' population has also outpaced Hanford employment numbers. While several thousand positions were lost at Hanford between 1994 and 1998, the local population kept growing. From 1997 to 2008, the area population grew by 28 percent to 235,700, while Hanford prime contractor jobs grew only 18 percent to 8,666 workers.

Beforehand, population trends in Benton and Franklin counties historically mirrored growth and reductions at Hanford.

Housing

And local house sales continued rising after Hanford was significantly downsized in 1995, and Hanford prime contractor employment remained fairly flat, the authors write. Between 1996 and 2005, the number of residential sales increased 92 percent, and the average house price rose 69 percent to $190,800. But when adjusted for inflation, average home prices are similar to those in the late 1970s.

The area's real estate market previously kept pace with work at Hanford.


REFERENCE:  R.A. Fowler and Mike Scott. "Hanford and the Tri-Cities Economy: Historical Trends 1970-2008." http://www.pnl.gov/edo/resources/hanford-tri-cities-report.pdf

The 11th annual Tri-Cities Regional Economic Outlook took place today at the TRAC Center in Pasco. More than 300 of the region's business leaders and government officials were expected to attend the event, which TRIDEC hosts.

 

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