This are the accompanying slides for Director, State Department of Commerce Rogers Weed's presentation to Lynnwood Rotary on May 26, 2011

1. Washington State Department of Commerce Growing and Improving Jobs in Washington Rogers Weed Director May 26, 2011

2. Agenda State economy update Thoughts on competitiveness What is the state doing about jobs? Short-term Medium-term Long-term

3. Commerce Mission: Grow and improve jobs Key metrics: 1.Overall job growth and for high, medium and low wage jobs; 2. Income per job, hourly; 3. Growth in income per job; all vs. other states Global Priorities Competitiveness Education/ Workforce Training Efficient & Effective Regulation Infrastructure Investment Specific Priorities Community Capacity Rural Focus Sector Focus Small Business Commerce Strategic Plan available at www.commerce.wa.gov 3

4. Source: Yahoo! Finance; data through May 2011 Stock Market Rebounding

5. GDP growth faltered in the first quarter Source: BEA, data through 2011 Q1, first estimate

6. Non-farm Workers, Washington StateExcluding military and sole proprietors 202,233 jobs lost 170,800 jobs Data source: U.S. Bureau of Labor Statistics, Current Employment Statistics (CES); calculations by Washington State Department of Commerce

7. Unemployment Rates by CountyNot seasonally adjusted, April 2011 Source: Washington State Employment Security Department Statewide unemployment rate in April: 9.1% (down from adjusted April. 2010 of 9.8%) U.S.: 9.0% (down from Apr 2010 rate 9.8%)

8. Year-over-Year Job GrowthCompetitor states Data source: U.S. Bureau of Labor Statistics

9. Low, Medium, and High Wage Jobs3 month moving average (3-mma), through April 2011 Medium wage group might be stabilizing, but still early. Still year-over-year losses in construction-related sectors Data source: Washington State Employment Security Department

10. Sectors with Largest Losses Q2 2009 to Q2 2010 Note: 2010 Q2 estimates based on preliminary June 2010 data, and is subject to revision. Data sources: U.S. Bureau of Labor Statistics, Current Employment Statistics (CES); and Quarterly Census of Employment and Wages (QCEW, for wage data) calculations by Washington State Employment Security Department (ESD) and Washington State Department of Commerce

11. Home prices are once again headed down Feb. 2011 U.S. is down 3.3% Seattle is down 7.4% Source: S&P/Case-Shiller; data through February 2011

12. Competitiveness Studies 1-10 11-25 26-50 or bottom half Four in bold together compare over 90 measures

13. Rankings depend on… …what factors are measured (some important ones such as regulatory environment are not measured) …how they are measured …how they are weighted …small changes in absolute values …competitive set (U.S states, metros, & global) 13

14. Washington’s EconomySchematic Representation Innovation & Technology Outputs Inputs Private Traded Private goods & Services General Capital Labor utilization Perceptions Workforce Quality of Life Other inputs -Energy -Land Education Infrastructure Regulation and Law Public 14

15. Washington’s competitive strengths Private economy Employment growth, 1999-2009 (4th, Porter) Per capita personal income (9th, Climate Study) Median household income (10th, Climate Study) Foreign exports (2nd, Climate Study) Manufacturing value-added (1st, New Economy Index) Innovation and technology Patents/10,000 employees (2nd, Porter) Growth in patents (1st, Porter) Other inputs Electricity costs (1st, Climate Study) Capital Venture capital (3rd, New Economy Index) Infrastructure Broadband (15th, New Economy Index) 15

16. Washington’s competitive strengths (cont.) Workforce Scientists and engineers (2nd, New Economy Index) High tech jobs (9th, New Economy Index) Educational attainment, Bachelors+ (11th, Climate Study) Education UW & WSU (41 & 111 out of 191 ranked, US News) Regulation and law Regulatory environment/state management (5th, Forbes) State + local taxes per $1000 personal income (21st lowest, Climate Study) Quality of life State Parks and Recreation (5th, Climate Study) State Health Index (11th, Climate Study) 16

17. Improving our competitiveness Private economy Traded employment in strong clusters (33rd, Porter) Unemployment rate, December 2010 (31st, Porter) Innovation and technology E-government (27th, New Economy) Commercialization of IP & patents Capital Foreign direct investment (31st, New Economy) Small business credit access “Valley of death” funding for tech start-ups Education Fourth grade reading (27th, Climate Study) High school graduation rates (33rd, Manhattan Institute) Engineering & science degrees, 18-24 yr olds (37th, WA Tech Alliance) 17

18. Improving our competitiveness (cont.) Regulation and law Regulatory streamlining for small business Workforce Unemployment insurance (43rd, Climate Study) Worker’s compensation premiums (25th, Climate Study) Retiring aerospace workers/Staying globally competitive Infrastructure Interstate miles in poor condition (33rd, Climate Study) Urban Roadway Travel Time, Seattle-Everett-Tacoma (68th of 90, Climate Study) Extending broadband to underserved areas Local infrastructure financing tools Quality of Life Housing affordability, Seattle area (204th out of 225, Climate Study) 18

19. Competitiveness Summary Strengths Growing jobs and income, high wage/high skill workforce Strong technology/innovation performance; globally competitive companies Low-cost power Areas to improve Education Transportation infrastructure Sector/cluster support - e.g. aerospace workforce 19

20. What is the state doing about jobs?Short-term (next 6-12 months) Capital budget spending Implementing Federal Recovery Act spend Business climate reform

22. 2011 Governor-proposed budget request - program total with select mega-projects highlighted 74% of highway program dollars are contracted to the private sector. $6 B of the $15.5 B in Nickel and TPA will be delivered through our design-build program. 54% of the design effort for Nickel and TPA was delivered by consultants. 21 Source: WSDOT Capital Program Development and Management Office WSDOT highway construction program

23. State Capital Budget and Estimated Jobs12-year history Dollars in Millions 43,032 Jobs

24. Commerce Capital ProgramsNew Appropriations 2009-11 vs. 2011-13

25. ARRA: 10,970 jobs created/saved Over $7.9 billion to Washington Click to pop up investments by County

26. Workers’ compensation reformA more sustainable program for employers and workers Statewide provider network Focus on highest quality care, treatment options, FY12-15 savings $164 million Centers of occupational health & education Expands number of specialized treatment facilities, FY12-15 savings $55 million Washington Stay-at-Work program Subsidies for immediate transition or light-duty work, FY12-15 savings $111M Prior disability awards Prior awards deducted from pension award, FY12-15 savings $133M Cost of Living adjustments frozen for one year Reduces premiums to employers & workers, FY12-15 savings $124M Rainy Day Fund Protects employers from huge swings in economy, no fiscal impact Structured settlement option Choices for eligible workers, reduces future rate increases, FY12-15 savings $545M

27. Unemployment Insurance Tax Reduction Reduces and caps the shared-cost portion of unemployment taxes in 2011 by drawing down our UI Trust Fund…one of the healthiest in the nation Reduces 2011 unemployment taxes paid by businesses by $300 million Frees up needed cash to retain and hire workers Provides temporary increase in unemployment benefits for out-of-work Washingtonians and flexibility to workers who train for a new job Changes qualify WA to receive $98 million in federal incentive funds for modernizing our UI system

28. What is the state doing about jobs?Medium-term (~12-36 months) Higher-Ed/CC Investments Washington State Export Initiative ADOs/Business Development Washington Technology Center + SIRTI, now Innovate Washington STARS Program Innovation Partnership Zones (IPZ) Leaning Government State Small Business Credit Initiative

29. What is the state doing about jobs?Long-term (36+ Months) Early Learning and K-12 Investments Washington Economic Development Commission innovation strategy Targeting broad trends in WA’s favor Rise of Asia Clean energy transition Increasing role of software

30. WEDC Innovation Strategy Goal: Make Washington the most attractive, creative and fertile environment for innovation in the world by 2020 Public Impact Business Performance World’s Greatest Innovation Ecosystem Investment & Entrepreneurship Infrastructure Talent & Workforce

31. Thank You

32. High, Medium, and Low Wage JobsBiggest year-over-year gains and losses, 3-mma, April 2011 Data source: Washington State Employment Security Department

33. Rise of AsiaShare of global GDP, current international dollar IMF Forecast, 2011-2016 Difference of 39.6 per points Difference of 71.7 per points Data source: International Monetary Fund (IMF), World Economic Outlook database, April 2011.

34. The Economist on Asia-Pacific Since 1995, Asia’s economy (real GDP) has grown more than twice as fast as that of America or Western Europe Adjusting for currency differences, three of the world’s four biggest economies (China, Japan and India) are in Asia Asian stock markets now account for 34% of global market capitalization, ahead of the US (33%) and Europe (27%) Asia was the world’s biggest market for automobiles (35%) and mobile phones (43%) last year Asia has accounted for 2/3 of world increase in energy demand since 2000 In 2009, 40% of global capital investment took place in Asia, more than in the US and Europe combined 8 of the top 10 IPOs in 2009 were Asian firms – more than twice as much IPO capital was raised in China/Hong Kong last year as in the US Asia accounted for over half of world output in 18 of the last 20 centuries.

35. Transition to Clean EnergyBillions KW hours, Estimated (2009) and Forecast *Municipal solid waste and landfill gas Data source: U.S. Energy Information Administration, Annual Energy Outlook, 2011

36. Potential Growth in Clean Energy InvestmentsG-20 Countries, 2010 to 2020 The Pew Charitable Trust (2010) forecasts more than $2.3 trillion will be invested in clean energy projects in the G-20 between 2010 and 2020. In 2010, China invested a record $243 billion in new clean energy projects. Source: Pew Charitable Trust, Global Clean Power: A $2.3 Trillion Opportunity

37. U.S. Venture Capital Investment in Clean Technology Source: National Venture Capital Association

38. Increasing relevance of software 37 Aerospace: lines of software code in aircraft: Boeing 777: about 2 million lines of code 787 Dreamliner: more than 8 million lines of code Software x manufacturing = CAD + CNC machining Software x agriculture = image scanning to select fruit Software x clean technology = smart grid Software x life sciences = bioinformatics Software x movies = video games Software x investing = program trading/hedge funds

39. Broadband Investment 38 Building out more education opportunity and economic development in rural communities Federal Government, through ARRA, is investing more than $243 million in Washington for broadband infrastructure, adoption and education Statewide, private providers have committed another more than $500 million in network investment in past few years

40. Average (Nominal) Private Earnings per Hour, Q2 2009 and Q2 2010 Data source: U.S. Bureau of Labor Statistics, Current Employment Statistics (CES); calculations by Washington State Department of Commerce

41. State Fiscal Health Rankings – Top 15 Legend: 1 = Best 2 = Neutral 3 = Negative Source: “The Tragedy of the Commons,” Meredith Whitney Advisory Group