Tri-City retailers may rejoice this holiday shopping season
By D. Patrick Jones
It’s November and ’tis the season. Holiday decorations, a parade of ads, the Hallmark channel showing lots of Christmas trees and, of course, the ever-present music reminds us that it is time to shop. For most retailers, as this quarter goes, so go the results for the year.
So, a look at retail sector in the Tri-City economy seems to be keeping with the season.
Benton-Franklin Trends offers a few ways of learning about retail here. The Trends is a project of Eastern Washington University’s Institute for Public Policy & Economic Analysis that highlights local, state and federal data to measure the economic, educational and civic life of Benton and Franklin counties.
One Trends indicator asks how many people work in retail. According to the data, nearly 11 percent of the two-county work force did, on average, in 2017. Retail’s share was nearly 14,000 people in 2018. Only three sectors employed more: agriculture, government (local, state and federal) and health care. This ranking may not surprise any longtime Tri-City residents.
A parallel look at the regional economy delivers the same ranking. Measuring activity by “value added” is the backbone of concepts like gross domestic product, or GDP. The feds now offer this measure for all metro areas in the U.S. Wages and benefits make up the lion’s share of value added, so metro GDP largely captures income to workers, or labor.
The Trends data portrays the five largest sectors in the Tri-Cities by this measure. Retail comes in as the fourth largest sector as well. (Note that the composition and ranking of the “top five” sectors differs a bit between these two measures.)
So retail is big business here. But it is in many economies. For example, in the labor force indicator, the Washington economy provides a comparison. For the state, retailing ranks as third largest. In percentage terms, its share is about one point higher. Could the presence of Amazon’s Seattle headquarters have anything to do with that?
Another takeaway from the graph of sectors by labor force in the Tri-Cities: the share of retail workers has been remarkably stable over the past 15 years. It doesn’t appear that online retailing has taken too big a bite out of local retailers.
Besides retail’s contribution to the Tri-City labor force, another reason to care about the health of this sector lies in its contribution to local government finances. In the absence of an income tax and with property tax capped at 1 percent growth per year on existing property, the sales tax has become ever more important to the fiscal health of Washington counties and city governments. What’s been the recent path of taxable sales in the two counties? Trends indicators lay out the course. On an annual basis, the answer is: fairly strong. In 2017, the total for the two counties was more than $5.4 billion. The most recent three-year average has been more than 6.5 percent growth per year for both two counties.
Interestingly, the experience between the two counties diverged over the last three years, as online readers can observe. In Franklin County, for example, the most three-year average annual growth rate has been nearly 9 percent. In Benton County, the average was about 6 percent.
What kind of Christmas cheer will the season bring to regional economy and local governments? The National Retail Federation has predicted a 4.1 percent increase in retail sales this year nationwide. Locally, if the results of the first quarter predict the final quarter well, retailers in the Tri-Cities stand to enjoy a joyful season. The results show a 10 percent jump over 2017. One quarter does not a year make. But given insights from recent employment and income reports, a mid-single digit increase at the cash registers seems highly likely.
D. Patrick Jones is executive director for Eastern Washington University’s Institute for Public Policy & Economic Analysis. Benton-Franklin Trends, the institute’s project, uses local, state and federal data to measure the economic, educational and civic life of Benton and Franklin counties.