OLMIS

by Nick Beleiciks
Published Jan-15-2013

Growing Number of Out-of-State Workers Home Is Where the Tax Form Is Taxed By Where the Work Takes Place Inflow of Workers Lowers Oregon's PCPI Out-of-State Workers Data

Oregon's open beaches, rugged mountains, and grape-filled hillsides make it a popular destination for visitors. But there's something else about Oregon that attracts 92,000 people from out of state - jobs. Roughly 6 percent of people who make their living in Oregon, make their home in some other state. Not surprising to anyone driving the bridges over the Columbia River during rush hour, two-thirds of these out-of-state workers come from Washington to work in the Portland area.

Oregonians also work for employers in other states. More than 45,000 people live in Oregon, but work out of state. The net "inflow" of nearly 47,000 workers to Oregon influences the economy in a variety of ways. This article focuses on where out-of-state workers live, their contribution to Oregon's General Fund, and their effect on Oregon's per capita personal income.

The number of out-of-state workers grew rapidly over the last decade, from 72,244 in 2002 to 91,997 in 2010 (Graph 1). That impressive 27 percent increase in out-of-state workers was surpassed by the 48 percent rise in Oregonians working in other states, which grew from 30,369 in 2002 to 45,089 in 2010. Since the number of out-of-state workers employed in Oregon is much larger, the net inflow of workers (the number employed in Oregon but living outside Oregon, minus the number living in Oregon but employed outside of Oregon) continued to grow from 41,875 in 2002 to 46,908 in 2010.

Two-thirds of out-of-state workers are Washington residents who work in the Portland tri-county area (Clackamas, Multnomah, and Washington counties). Although the number of these workers grew last decade from 54,739 in 2002 to 60,669 in 2010, the number peaked at 61,042 in 2007 and their share of out-of-state workers peaked at 76 percent in 2005. Washington is still responsible for providing most of Oregon's out-of-state workers, but the number of workers from Washington holding jobs outside the Portland area grew from 9,276 in 2002 to 14,485 in 2010.

The 75,154 Washingtonians working in Oregon in 2010 accounted for nearly 82 percent of Oregon's out-of-state workers and more than 5 percent of all workers with jobs Oregon (Table 1). Among Oregon's other neighbors, there were 6,303 Idahoans, 5,336 Californians, and 226 Nevadans working in Oregon.

The fact that people live in neighboring states and work in Oregon isn't surprising. But what about workers living in Texas, New York, Florida, and other far away states? Their numbers more than tripled between 2002 and 2010, but they're not likely crossing the Snake River on I-84 each morning to get to work. Out-of-state workers may live in both states but maintain their primary residence outside Oregon, or were working in Oregon on temporary assignment, or they may have moved during the year and their residency status wasn't updated yet. Residency of out-of-state workers is assigned by the U.S. Census Bureau based on data from federal agencies like the Internal Revenue Service and the Social Security Administration, so basically where the worker files their taxes is considered home.

One explanation for the growing number of out-of-state workers is the rise in teleworking - regular employees working outside the conventional workplace and interacting with others via communication technologies. According to a national report from The Conference Board, more than 2 percent of full-time employees worked primarily from home in 2010, double the share that worked from home in 2000. There's a good chance that teleworkers are driving the increase in Oregon's out-of-state workers.

Regardless of where they claim residency, income earned from services performed in Oregon by a nonresident is subject to Oregon income tax. According to the Oregon Department of Revenue, the total Oregon personal income tax liability of out-of-state residents was about $336 million in 2010, or 6.7 percent of the total tax liability. Personal income tax is the largest source of revenue for Oregon's General Fund.

The Oregon personal income tax liability of Washington residents was $201 million in 2010, with nearly two-thirds coming from Clark County residents. In fact, Clark County would rank eighth among Oregon counties for Oregon personal income liability (if it were in Oregon). The Oregon personal income tax liability of Californians was $30 million, Idaho residents were responsible for $17 million, and $88 million came from residents in other areas outside Oregon.

One closely followed measure of regional income is the U.S. Bureau of Economic Analysis (BEA) estimate of per capita personal income (PCPI), which is the annual sum of all resident income in a geographic area divided by the number of residents in the area. The BEA adjusts for residency by counting work income in a worker's state of residence. A net outflow of workers adds to a state's PCPI, while a net inflow of workers subtracts from a state's PCPI.

With a net $2.3 billion in earnings by the inflow of out-of-state workers in 2010, Oregon had the sixth largest net adjustment for residency of any state in the BEA's calculation of PCPI. That's an average of over $25,000 per out-of-state worker that is not counted as personal income in Oregon. The large adjustment is a function of Oregon's major employment center - Portland, with about half of the state's jobs - being right on the border with Washington. The adjustment does not directly affect the wellbeing of Oregonians, but it does directly lower Oregon's estimated PCPI. If Oregon had no net inflow of workers in 2010, Oregon's PCPI would have been about $600 higher and would have stood at 91.8 percent relative to the nation's PCPI, instead of 90.2 percent. In other words, out-of-state workers account for roughly one-sixth of the gap between Oregon's PCPI and the nation's.

Information about Oregon's out-of-state workers is from the U.S. Census Bureau's OnTheMap data, part of the Local Employment Dynamics (LED) partnership with the states. OnTheMap provides the most comprehensive data available for worker flows by residency and place of work. The data is for workers during the second quarter of the year. This analysis only considers a worker's primary job - the job with the most earnings during the quarter - to avoid double counting of workers with two jobs.

To explore and use the data available from OnTheMap, visit  http://onthemap.ces.census.gov/.