OUTSIDE CITY HALL | Job growth in South Lake Union exaggerated

Vulcan Inc., Paul Allen’s development company, recently celebrated 10 years of activity in South Lake Union (SLU). 

At the party, quotes were posted on large bulletin boards from us and former Seattle City Councilmember Peter Steinbrueck questioning the merit of pouring so much public money into SLU. Next to our quotes were graphs from a recent report alleging that 13,647 jobs have been added in South Lake Union since 2004, exceeding initial predictions of 8,500 to 10,000 jobs. 

Laughs were shared all around, apparently directed at us, and I guess we’re supposed to feel embarrassed. 

That recent report, it turns out, was authored by Michael Mann and Paul Sommers. Mann now runs a planning and consultant agency but, until 2008, was head of the Mayor Greg Nickels administration’s “South Lake Union Agenda.” In that role, he worked with Vulcan to promote biotech development in SLU and ensure that hundreds of millions of our city tax dollars went into making that agenda happen. 

Sommers, an economics professor at Seattle University and occasional consultant for the biotech industry, was commissioned by Nickels back in 2004 to create the initial report projecting that 8,500-to-10,000-job increase by 2010.

The Mann/Sommers report argues that the creation of 13,647 new jobs has more than paid off the city’s investment. Columnists for Publicola, Crosscut and The Seattle Times all uncritically accepted these numbers.

But hold on a minute. Here are the numbers we’ve just obtained from the Puget Sound Regional Council’s (PSRC) Employment Data specialists. 

Since 2000, they’ve regularly updated job gains and losses for each of the region’s “urban growth centers,” including SLU. Their figures come directly from the quarterly data on employment and wages that employers must, by law, provide to Washington State Employment Security Department. Even part-time and temporary jobs are factored in. You simply can’t get more accurate than those numbers.

Over the decade, during the era SLU was described as the new biotech and job growth center of the region, we actually saw an overall drop in employment, with a paltry gain of 548 jobs between 2004 and 2010 — a far cry from the Mann/Sommers claim of 13,647.

Getting those numbers

Why the discrepancy? To get that figure of 13,647, Mann and Sommers took the total new square footage added in SLU over the period, then used a standard jobs multiplier. 

But they conveniently failed to subtract the number of jobs lost over the same period, mostly blue-collar jobs with the warehouses, shops, light industry, retail, low-income housing and other longtime uses removed often as a direct result of Vulcan’s redevelopment.

Mann and Sommers also expanded their area of study beyond the boundaries of how SLU is normally defined to include new developments not truly in the neighborhood at all. 

On top of that, they failed to take into account vacancy rates in those new developments running as high as 40 percent over their period of study. You can’t have new jobs if the space isn’t occupied. 

Also, Mann and Sommers don’t even mention that a significant portion of new jobs in SLU are simply jobs that have relocated from other parts of the city —including the relocation of more than 2,000 Amazon jobs from Beacon Hill and downtown. 

On the basis of this alleged net gain, Mann and Sommers then calculate what they say is a substantial increase of millions in new tax revenues for the city. 

To be sure, these new developments have produced new tax revenues, but a lot of the gain is offset by tax losses due to removal of blue-collar jobs and businesses in the area, as well as tax losses in neighborhoods that lost businesses relocating to SLU.

From revenues to city costs

Our biggest criticism of the report is that it completely ignores the staggering cost to taxpayers: the amount of state, local and federal dollars poured into SLU for very little return in terms of jobs or tax revenues. 

When you factor state subsidies into the equation for the Mercer Corridor, the SLU streetcar, undergrounding and networking the area to prevent electrical interruptions, a planned new electrical substation, improvements to the existing Broad Street substation, Terry Avenue improvements, a new waterfront park — these costs approach $1 billion.

The federal government says we should expect one job to be created for every $15,000 in public subsidy. Even if you assume SLU did generate those 13,647 jobs, that translates into $73,000 per job. 

Just think what we could have done if we had taken that $1 billion and put it into job creation where it was needed in Southeast Seattle to serve struggling communities of color, or to help shore up good, old, working-class jobs in the Duwamish area or to support small businesses often described as the true wellspring of job growth for ailing cities.

Let’s hope that, in the future, there is a more careful and thoughtful press scrutiny of “glowing” reports coming out of South Lake Union, especially when those reports come from interests that will reap the benefits while we’re stuck with the costs.

JOHN V. FOX and CAROLEE COLTER are coordinators for the Seattle Displacement Coalition (www.zipcon.net), a low-income housing organization.

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