One chapter of the ongoing narrative about Washington’s economy can be told in two words: Manufacturing down.

But a second chapter would show jobs in education and health care, business services, information technology and construction all up.

So as a whole, how are we doing in our state?

At best, we are treading water. We have more than 140,000 more jobs now than in 2001. The problem is that our population has grown by more than 400,000 people. So there are more workers looking for work and not finding it or dropping out of the work force.

The North American Free Trade Agreement (NAFTA) has made this problem even worse in our state. The latest analysis shows that Washington gained almost 15,000 jobs between 1993 and 2004 thanks to exports stimulated by NAFTA. The catch is that we lost more than 31,000 jobs thanks to NAFTA imports. The net result is 16,500 jobs lost.

Another problem is that the jobs that we have lost in manufacturing paid well – more than $1,000 a month more than average job earnings. And another brake on economic growth is the growing gap between increases in productivity and wages. Productivity has soared in the past five years, while wages have stagnated.

This isn’t a story about the rich and the poor. It is a story about divvying up state income between corporate profits and the middle class. The middle class is losing.

In 2005, the average household in our state had $4,000 less in income than in 1997. Over the past 25 years, men’s average wages have fallen more than 8 percent. A typical 25-year-old man in our state made about $4,100 a month in 1999. A typical 25-year-old man made a little less than $3,700 a month in 2004.

That is a $4,000 drop in annual income. Add on top of that the shift in health care costs to workers and the drop in pension coverage, and we have a recipe for diminishing expectations and opportunities for middle-class workers.

There is some good news for our state, thanks to public policy approved by initiative in 1998. The bottom 10 percent of workers are holding their own in inflation-adjusted wages at a little less than $8 an hour. This is because our state has the best minimum wage in the country. It mimics Social Security, with its annual automatic COLA to keep pace with inflation.

Not only does the state’s minimum wage provide a reasonable base for wages, it appears that it is a job creator. The restaurant industry, which has a concentration of low-income workers, has added more than 15,000 jobs in the last two years in our state.

Our minimum wage also helps to keep workers’ families out of poverty. While it is nothing to brag about, Washington state’s poverty rate of 10 percent runs well below the national average of 12.5 percent.

Of course, our economy is pretty lumpy around the state. Pierce County has had steady growth for the past six years, accruing 20,000 more jobs, which help to sustain a median household income of $50,000. The Tri-Cities, largely thanks to federal government expenditures to cleanup the Hanford Nuclear Reservation, gained more than 11,000 new jobs between 2000 and 2005.

Yakima has lost one-fifth of its manufacturing jobs and is now even more dependent on agriculture, which generates about 20,000 jobs. Its average household income is only $34,000. More than 30 percent of kids in Yakima live in poverty. In Grays Harbor County, jobs continue to hemorrhage, median income has fallen below $40,000, and one out of every six adults lives in poverty.

We live in one of the most prosperous and productive states in our country. Our engine of economic growth keeps chugging along. We have economies of scale other countries drool over. While some industries are receding, such as timber and manufacturing, others, such as software and biotech, are accelerating both jobs and income.

So we can do two things – appreciate the jobs, income and economic advancement that have brought us thus far, and figure out how to manage this economy for economic security and opportunity for all citizens as we are integrated into the global economy.

This does not require remaking our economy. It will take some political will and leadership to adjust our economic infrastructure for the greater good.

John Burbank, executive director of the Economic Opportunity Institute (www. eoionline.org), writes every other Wednesday. Write to him in care of the institute at 1900 Northlake Way, Suite 237, Seattle, WA 98103. His e-mail address is john@eoionline.org.