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Per Capita Personal Income in 2010 - A Cinderella Story
by Dallas Fridley
Published Jun-15-2012

One thing that definitely sticks out when looking at county level per capita personal income (PCPI) in Oregon is how little things have changed. High income counties from the last decade were still the top income counties in 2010 - with a few exceptions. Medium income counties remained medium and bottom tier counties stayed there - again with a few exceptions. And in real terms, Oregon's adjusted PCPI rose by just 2.2 percent between 2001 and 2010. That's definitely a trend and it means incomes in Oregon were stagnant on a per capita basis. Oregon's 2010 PCPI, at $36,317 trailed 2008 both in nominal (-$1,090 per capita) and inflation-adjusted terms (-$1,835).

Cinderella is Nothing Like Her Stepsisters
Over the 10-year period from 2001 through 2010, Clackamas County held the top per capita income ranking in Oregon more often than any other county; taking first position in all but two years. As a percent of Oregon's PCPI, Clackamas County ranged from a low of 121.9 percent in 2002 to a high of 126.5 percent in 2005, and ranked first in both years. In 2008 and again in 2010, Clackamas County maintained its relatively stable PCPI, but it wasn't enough to offset the impact of a volatile income source in a sparsely populated Oregon county. PCPI history shows us that one very good year for an Oregon agricultural commodity like grains can dramatically impact local PCPI, which is typically stable. Clackamas County maintained its advantage over Oregon in 2008 and 2010 but despite its steady performance, Sherman County came out on top of all counties.

Sherman County's fortunes in 2010, a follow up to its first place raking in 2008, didn't result from wind farm construction. Farm income and expenses were far more influential in Sherman County. Cash receipts from farming climbed to $21,727 per capita in 2010. Cash receipts for its closest rival, Morrow County, were actually higher on a per capita basis in 2010, at $36,550, but that county's farm production expenses were also much higher at $29,695 per capita.

Cutting through the chaff, the bottom line for farm income and expenses is represented by farm labor and proprietors' income or, more succinctly, farm earnings. Sherman County realized $16,387 per capita in total farm earnings, compared with Morrow County's $9,290. Oregon's total net farm income, at $309 per capita, more or less reflected the fact that 21 of Oregon's 36 counties produced negative net farm income in 2010. That might sound unusual but it's somewhat typical for BEA's farm income category. In a good year, like 2004, 27 counties were in the black with respect to net farm income. In 2009 and 2010, only 15 counties turned a profit.

Sherman County's net farm income represented 31 percent of its personal income total in 2010 and Morrow County ranked second at just over 30 percent. Only Sherman and Morrow counties credited such a large share of personal income to net farm income. In third position, Gilliam County's net farm income represented close to 9 percent of its total personal income, at $3,355 per capita.

The Shoe Drops
Although the share of income attributed to net farm income showed similarities in Morrow and Sherman counties, their respective PCPI rankings were quite far apart with Morrow ranking eighth at $35,021 and Sherman ranking first at $52,530. Which begs the question, where is all that extra income coming from? Not private earnings (nonfarm), which brought in $9,888 per capita for Sherman County in 2010 compared with Oregon's $20,955. With less than half of Oregon's private earnings per capita in 2010, Sherman County still managed a per capita $21,931 in total nonfarm earnings compared with Oregon's $25,664. Earnings by government and government enterprises made up the difference in 2010, actually eclipsing private earnings in Sherman County to bring in $12,042 per capita. Oregon's earnings from government reached $4,709 per capita in 2010. The primary difference was in federal government earnings, as Sherman County hosts the John Day Dam which is operated by the U.S. Army Corp of Engineers.

BEA farm income estimates appear complex simply due to the amount of detail provided for income sources, expenses and inventory changes. Government payments are listed as an "other income" source, while "cash receipts" from marketing represent gross receipts from commercial market sales as well as net Commodity Credit Corporation loans. Sherman County's cash receipts represented the lion's share of farm income sources, bringing in $21,727 per capita in 2010 - but government payments were substantial, at $10,995 per capita.

Sherman County's closest rival for government farm payments per capita in 2010 was its neighbor, Gilliam County at $7,768, with Morrow County third at $2,293. Even on a nominal basis, Sherman County ranked third in Oregon with $19.5 million in government farm payments. Umatilla County cultivated $43.1 million in government farm payments, with Morrow County's $25.7 million ranking second.

Table 1
PCPI Rankings in Oregon
2001-2010 PCPI Cumulative   2010 PCPI
Clackamas, OR 1   Sherman, OR 1
Multnomah, OR 2   Clackamas, OR 2
Washington, OR 3   Washington, OR 3
Benton, OR 4   Multnomah, OR 4
Deschutes, OR 5   Gilliam, OR 5
Jackson, OR 6   Benton, OR 6
Lincoln, OR 7   Deschutes, OR 7
Lane, OR 8   Morrow, OR 8
Clatsop, OR 9   Jackson, OR 9
Columbia, OR 9   Hood River, OR 10
Marion, OR 11   Clatsop, OR 11
Sherman, OR 11   Lincoln, OR 12
Yamhill, OR 13   Wallowa, OR 13
Tillamook, OR 14   Marion, OR 14
Hood River, OR 15   Columbia, OR 15
Wallowa, OR 16   Lane, OR 16
Polk, OR 17   Wasco, OR 17
Wasco, OR 18   Tillamook, OR 18
Union, OR 19   Yamhill, OR 19
Curry, OR 20   Curry, OR 20
Morrow, OR 21   Coos, OR 21
Coos, OR 22   Union, OR 22
Douglas, OR 23   Polk, OR 23
Linn, OR 24   Baker, OR 24
Grant, OR 25   Crook, OR 25
Gilliam, OR 26   Douglas, OR 26
Klamath, OR 27   Josephine, OR 27
Lake, OR 28   Umatilla, OR 28
Josephine, OR 29   Grant, OR 29
Crook, OR 30   Lake, OR 30
Umatilla, OR 31   Klamath, OR 31
Baker, OR 32   Linn, OR 32
Harney, OR 33   Harney, OR 33
Wheeler, OR 34   Jefferson, OR 34
Jefferson, OR 35   Wheeler, OR 35
Malheur, OR 36   Malheur, OR 36
Source: Bureau of Economic Analysis
The Pumpkin Ride
Clackamas County is a reliable performer, but even reliable performers can come up short once in a while. The top tier in 2010 welcomed three counties that failed to crack the list even once in the last decade. Gilliam County's PCPI ranking rose the furthest; its cumulative ranking was 26th over the last decade (2001-2010) - in the bottom third of counties - but in 2010 it cracked the top 12, landing in fifth position between Multnomah and Benton counties. Morrow County rose to the eighth position in 2010, while its cumulative ranking over the decade was 21st. Hood River County's status as a middle income county from 2001 to 2010 switched to the top-tier 10th position.

Gilliam and Morrow counties joined the top tier in 2010 and Sherman County led the state largely due to the impact of farm income but Hood River County didn't exactly fit that profile. What Sherman County lacked in 2010 private earnings, Hood River County counted in spades, ranking sixth in Oregon at $18,740 - just behind Deschutes County and just ahead of Benton County. Hood River has enjoyed high private earnings for many years, ranking 10th or 11th in Oregon from 2001 to 2007, then rising to sixth position over 2008 to 2010. Gilliam County also fits that bill - rising from 16th position in 2005 to third in 2010 ($21,622), behind Multnomah County ($33,270) and Washington County ($29,773).

Oregon's private earnings certainly took a beating during the recession, falling from $84.7 billion in 2008 to $80.4 billion in 2010. Private earnings in 2010 actually increased by more than $2 billion from the 2009 level, but remained below the 2006 level when earnings reached $80.7 billion.

An emerging industry known as professional, scientific, and technical services stood out for its growth since 2005 in Hood River County, having more than doubled its earnings. In 2005, professional, scientific, and technical services produced earnings of nearly $22 million or $1,044 per capita. By 2010 its impact rose to nearly $46 million and $2,029 per capita. Hood River County ranked third in Oregon for its professional, scientific, and technical services per capita earnings, behind Multnomah County ($4,461) and Clackamas County ($2,165) and just ahead of Benton County ($1,944).

Health care and social assistance was also hard to ignore, producing about $55 million in 2005 earnings or $2,631 per capita and rising to nearly $83 million or $3,678 per capita in 2010. Hood River County borders Washington State and has taken on the role of health care provider for the Columbia Gorge's west end. Likewise, Boeing's subsidiary, INSITU - located in Bingen, Washington - has produced a thriving relationship with professional, scientific, and technical service providers in Hood River County.

It should also be mentioned that while Hood River County was pulling in all these high earnings it was also shipping earnings out of town. Its 2010 residency adjustment pulled over $19 million from the county's personal income, cutting $850 per capita. That's far less than Multnomah County lost in 2010, sending out $9,804 per capita but high enough to rank fifth. Gilliam County actually ranked second in 2010, shipping out $6,655 per capita, amounting to more than $12 million. The residency adjustment attempts to account for people who commute into the county to work.

Gilliam County had fewer than 2,000 residents in 2010, but its construction industry earnings totaled nearly $15 million or $7,859 per capita. In 2003 construction produced $822 per capita, failed to meet disclosure requirements in 2004 and 2005, then emerged in 2006 at $2,196 per capita. Transportation and warehousing is another group with high earnings, emerging from non disclosure in 2008 to reach $4,266 per capita in 2010. Perhaps the most important private industry in Gilliam County, administrative and waste management services didn't pass disclosure requirements in 2010 although its earnings in 2006 (the last year reported) reached $7,187 per capita, up from $6,671 in 2001.

Of the three industries identified above, only one, administrative and waste management services has a history in Gilliam County. Both construction and transportation and warehousing primarily represent activities associated with wind farm construction. These projects produced a big bubble - and while the expansion of wind energy in Oregon continues, construction and transportation activities in Gilliam County will wane as new projects emerge in other regions of Oregon.

The Shoe Fits!
Farm income was definitely a winning strategy in 2010, boosting the fortunes of several small Oregon counties to the top tier of PCPI in Oregon. But the fortunes of farm income have also shown a downside. A repeat performance appears to be a risky bet for Morrow and Gilliam counties. But let's not be so fast to write off 2011 when agricultural sales might provide a clue. Grains sales rose by $112.6 million in 2010 according to the Oregon Agricultural Information Network (OAIN), an increase of 36.7 percent. Grains provided a huge lift for Oregon in 2010, representing less than 10 percent of Oregon's total agricultural sales but an amazing 46.5 percent of its sales growth. Sales gains in 2011 actually surpassed 2010 in scope, with grain sales rising to $635 million, an increase of $215 million or 51.3 percent in one year! Oregon's gain in 2011 was broad based, with grains leading the way, followed closely by hays and forage, where sales climbed by $146 million. Overall, crop sales rose by $583 million in 2011 and animal sales climbed by $250 million, pushing Oregon's agricultural sales total in 2011 to $5.2 billion.

Who knows what the future holds for agricultural sales. History suggests a correction is coming - but let's give credit where credit is due. It may be a little premature to reshuffle the PCPI deck, but earnings derived from farming in 2010 certainly looked more promising than private nonfarm earnings.

Sherman County has a backup plan thanks to federal government earnings, so its ranking in the top tier may change but it will remain a high income county. Hood River County is the one to watch, rising gradually over the past five years from the middle of the pack to rank in 10th position in 2010. A fast growing and high paying industry employing highly skilled engineering and technical workers is about as good as it gets in Oregon or anywhere in the country for that matter.

PCPI can be a difficult statistic to move upward. For most Oregon counties the makeup of personal incomes hasn't changed enough to boost per capita income rankings. There are exceptions of course - but volatile commodity prices and transitory construction projects represent the occasional blip on the screen and not a transformation likely to produce long-term results.