Are Wages Rising for Deschutes County Workers? It’s Complicated…November 21, 2017 A lot of attention is being paid to wages in Deschutes County. The current economic expansion is well documented, but many in the workforce don’t feel like they are benefiting during these “good times.” Have workers in Deschutes County seen substantive wage gains over the past several years?
There are a variety of wage measures that we can dig into to see how worker pay has changed through time. However, we will stick with the average annual wage, which is probably the best available data, although slightly dated. The average annual wage is calculated by taking all payroll for a particular year and dividing it by the average annual employment for the same year. It is important to remember that these are broad aggregations of worker compensation and say nothing about individual workers. We are not tracking the same workers over time; instead it is an average of all workers.
Between 2006 and 2016 the average annual wage rose by more than 25 percent, a gain of $8,400. However, those are nominal wages (not adjusted for inflation). When we account for increases in cost of goods and services, do we see the same gains? The answer is a resounding “no.” Wage gains are more subdued when adjusting to the West-urban consumer price index from the Bureau of Labor Statistics. The real average annual wage in Deschutes County increased 4.5 percent over the past decade, a gain of around $1,750.
However, the vast majority of real wage gains that we have seen over the past decade were concentrated over the past three years (2014, 2015, and 2016). The compound annual growth rate over the past three years was 2.14 percent, very fast growth. Wages are notoriously sticky, meaning that individual worker earnings don’t adjust quickly to changes in the labor market. As a result, the gain in average annual wage is likely due to the nature of the recent job growth.
The following industries added the most jobs in Deschutes County over the past three years: professional and business services; construction; and private education and health services. Wages in all three of these industries are significantly higher than the countywide average. Construction wages are 10 percent higher than the countywide average; professional and business services nearly 13 percent higher; and education and health services around 28 percent higher. Higher paying industries are seeing fast job growth, which is helping to drive up the countywide average annual wage. Someone who has worked the same job over the past three years likely hasn’t experienced a 2.1 percent jump in their wages each of the last three years.
Compared with other similar metro areas in the west, our rate of wage growth over the past decade is lagging places like Spokane, Yakima, Portland, and Medford. However, the narrative flips if we look at the trend over the past three years where the Bend-Redmond metro area posted very fast rates of job and wage growth. Once again, the explanation is based in employment trends. During the recession Central Oregon lost a large number of high- and middle-wage jobs. When jobs started being added back into the economy in 2011 they were primarily lower paying tourism-based jobs. We didn’t start seeing large numbers of higher paying jobs being added into the economy until 2013. As a result our wage gains are concentrated in just the past several years.
Strong job growth in higher paying industries is driving up this broad measure of wages. This doesn’t mean that incumbent workers, those who have stayed employed in the same job over the past several years, have enjoyed the same level of wage gains. Stay tuned for an upcoming article that tracks the same workers over time, those employed from the depths of the recession until today, to see if individuals employed with the same establishment have seen comparable wage gains.