OLMIS

by Pat O'Connor
Published Jan-23-2007

Introduction Slow Employment Growth At the Industry Level Low Unemployment Rate High Per Capita Personal Income Conclusion

Benton County, also called the Corvallis metropolitan statistical area (MSA), is Oregon's smallest metropolitan area. The county's seasonally adjusted nonfarm employment total was 38,280 in November 2006. The second smallest metropolitan area in Oregon is the Bend MSA (Deschutes County), which has nearly 30,000 more jobs than Benton County. In addition to being the state's smallest metropolitan area, Benton County has some other quite unique economic characteristics.

Benton County has been Oregon's slowest-growing metropolitan area in recent years. Its total nonfarm employment grew only 1.6 percent from 2001 to 2005, gaining 600 jobs. Meanwhile, Deschutes County gained nearly 11,000 jobs or 20 percent.

Something that might come as a bit of a surprise is that the second slowest-growing metropolitan area in Oregon from 2001-2005 was the Portland PMSA. Portland just barely edged out Benton County, showing employment growth of 1.7 percent from 2001 to 2005. However, the two areas followed quite different paths to end up with a very similar pace of job growth. Benton County had a small employment decline in both 2002 and 2003 due to the recession. In 2004 and 2005 Benton County gained employment, but not at a particularly rapid pace. On the other hand, Portland was hard-hit by the recession that began in 2001 and showed large job losses in 2002 and 2003; from 2001 to 2003 the Portland area's employment declined over 3 percent. The Portland area then showed healthy employment growth in 2004 and 2005 as the area recovered from the recession. Both areas have shown employment growth in 2006, but Portland has grown faster.

Graph 1 shows that Benton County's employment growth has not always been slow. In the early 1990s Benton County's job growth rate was similar to the state's, and in the mid 1990s the county grew faster than the state, largely due to rapid job growth in the county's manufacturing sector. Since 1997, the county's manufacturing employment has been declining.

The employment decline in manufacturing since 1997 has been a significant factor in explaining the county's slow employment growth since 1997. From 2001 to 2005, Benton County's manufacturing sector declined 17 percent, or 1,120 jobs. The county's information sector also showed a 17 percent employment decline from 2001 to 2005, but that resulted in only 180 jobs lost.

There are industries in Benton County that have grown to help offset the employment loss in manufacturing and information. Some of the fastest growing industries since 2001 include natural resources, mining, and construction, which expanded employment nearly 20 percent from 2001 to 2005. Financial activities added 230 jobs from 2001 to 2005 to grow by nearly 19 percent. Educational and health services also showed healthy job growth from 2001 to 2005, gaining 650 jobs to expand nearly 15 percent.

Despite relatively slow job growth, Benton County had the lowest annual unemployment rate in Oregon from 1993 through 2005. A 13-year run of having the state's lowest unemployment rate is not exactly the sign of a struggling economy.

There are a number of factors that cause Benton County to have such a low unemployment rate, but one of the biggest factors is the education level of Benton County's labor force. Looking at data from the 2000 Census, nearly half (47.4%) of Benton County's population age 25 and older had a bachelor's degree or higher degree. In Oregon, only one in four (25.1%) had a bachelor's or higher. National data from the Bureau of Labor Statistics (Graph 2) indicate workers with higher levels of education are less likely to be unemployed. The high education level of Benton County's population is a significant factor in explaining the county's low unemployment rate.

Benton County's per capita personal income in 2004 was $33,988, third highest of Oregon's 36 counties. This statistic says a lot about the economic health of Benton County. In particular when we consider that Benton County has a very large student population attending Oregon State University, many of whom are in temporary college-induced poverty, it makes the county's high per capita income figure that much more impressive.

Once again, the education level of Benton County's residents helps provide an explanation of why Benton County's income level is higher than most of Oregon's counties. We see looking at Graph 2 that a higher level of education doesn't just lead to lower unemployment rates; it also leads to higher wages. On average in the U.S., a worker with a bachelor's degree has a weekly salary 66 percent higher than that of a worker with only a high school diploma; this is strong evidence that Benton County's high level of education in its labor force contributes to its high personal income.

Benton County's economy illustrates that employment growth is not the only way to judge the health of an economy. Despite a slow growing economy since 1997, Benton County's consistently low unemployment rate and high per capita income show that an economy can be healthy and successful even in the absence of rapid employment growth.

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