Harney County’s Inflation Adjusted Annual Average WageNovember 21, 2017 In a recent article Erik Knoder (Northwest Oregon Regional Economist) highlights the effect of inflation on the growth or decline of annual average wages in Oregon and its 36 counties. After adjusting for inflation, seven Oregon counties showed a decrease in their overall annual average wage from 2006 to 2016. Harney County was the only Eastern Oregon County in the group.
Nominally speaking, Harney County’s total combined wages gained roughly $12 million from 2006 to 2016 and the annual average wage grew by $6,156; however, adjusting for inflation tells a slightly different story. Adjusting for inflation reveals a drop of roughly $4 million in total wages and a decrease of $227 for the county’s annual average wage.
A drop of $227 could seem like a non-event. Since wages were adjusted for inflation, the relatively small drop means that the annual average wage remained roughly the same when measured in 2006 and again in 2016. This could signal stability in wages; wages almost kept pace with inflation. If all other things remained constant over the 10-year period, then wage stability would undoubtedly be the story. But all other things did not remain constant, so what the loss of $227 actually means is a little more nuanced. In order to see how other things play into annual average wages, let’s look at some details.
Growing Business, Shrinking Employment
Harney County saw an increase in the number of firms doing business in the county from 2006 to 2016. There were 27 business units added to the county’s economy, which brought the total number of firms to 292. This meant the addition of 20 units overall in the private sector and seven in the public sector. In the major sectors of private industry, business growth was seen most in other services (+24 units) and natural resources and mining (+9 units). Loss was seen primarily in financial activities (-10 units) and leisure and hospitality (-6 units). Over in the public sector, nine units cropped up in local government and two were pruned back in state government.
Along with the influx of new firms came a decrease in total employment. Total private employment scaled back by 79 jobs over the decade and the public sector scaled back by 20. Loss of employment was not contained to just one industry or spread out evenly. At the same time as loss occurred, growth was also taking place. Loss and growth were sporadic and seen at the business level in every industry. Overall, loss outweighed growth from 2006 to 2016.
Where private employment grew the most was in natural resources and mining (+71 jobs); education and health services (+50 jobs); and trade, transportation, and utilities (+41 jobs). Where private employment withdrew the most was in manufacturing (although the specific amount can’t be disclosed due to confidentiality), leisure and hospitality (-24 jobs), and financial activities (-19 jobs). In the public sector, while local government was adding nine business units it was also dropping 43 jobs, and while state government was dropping two business units it was adding 32 jobs. For both the private and the public sector, the employment landscape from 2006 to 2016 was on shifting sand.
Shifting Business Dynamics
Two stories help to see through the dust and give a clearer understanding of how changes at the industry and firm level affect the annual average wage. At first glance, the massive drop in the annual average wage for private ambulatory health care is startling. This industry’s average wage saw the steepest decrease among all industries in Harney County. In 2006, the wage was $59,743 (adjusting for inflation). The wage plummeted to $35,730 in 2016: a drop of $24,013. But that’s far from the whole story. Harney County Health District acquired the High Desert Medical Center in 2012, and also acquired Harney District Hospital and Sports Therapy in 2014. The employees that came along with these acquisitions are no longer counted in private ambulatory health care. These employees and their wages are now counted in local government hospitals. Six other small medical firms closed or relocated during the 10-year span as well.
Along with loss came gain. Two new medical firms entered the market and private ambulatory health care actually saw a gain of 32 jobs overall by 2016. While the overall job growth was large for the industry in Harney, the occupations that were added were different from the occupations that were removed. These new occupations brought wages that were in line with similar medical occupations; however, these wages were lower than wages paid to occupations that previously puffed up the annual average wage in the industry. The effect this had on the appearance of the industry’s annual average wage was of a sudden drop and a massive cut in wages. The reality is that the wages for the occupations that were reclassified didn’t necessarily decrease and they still remained within the county. The new annual average wage for private ambulatory health care signals a change in the occupations in the industry in Harney County.
Another chapter in the annual average wage story is employment in agriculture, forestry, fishing, and hunting: a subsector of natural resources and mining, which saw the second largest business growth and the largest employment growth. Employment grew from 143 to 214 in this subsector from 2006 to 2016. The majority of growth came in crop production (+53 jobs) and animal production (+32 jobs). Crop production added roughly $2 million in total wages and the annual average wage increased by $882. Animal production added roughly $1 million in total wages and the annual average wage increased by $2,436. Of the firms that operated in both 2006 and 2016, all but one had an increase in their annual average wage. The one firm that didn’t saw only a slight decrease. Each of these firms saw an increase of $2,000 to $4,500 in their annual average wage and most of them also added employees over the decade. But the annual average wage for crop production was $35,738 in 2016 and for animal production the annual average wage was $26,245. The industry with the highest annual average wage was transportation, warehousing, and utilities at $66,376; this industry added only four employees over the 10-year period.
As crop and animal production added more employees this put downward pressure on the annual average wage. So why didn’t the wage fall more than $227? One reason is the addition of 66 employees in local government hospitals. Total wages grew by roughly $4 million for this industry from 2006 to 2016, and the industry had the third highest annual average wage in Harney County. Local government hospitals put a lot of upward pressure on annual average wages.
The Same and Yet Different
While each industry tells a story, there are far too many stories for this article to tell. The details above help to illustrate the nuances that underlie the county’s total annual average wage. The increase in firms from 2006 to 2016 did not mean more jobs for Harney County. Overall employment dropped by roughly 100 jobs, but individual industries and individual firms saw a very mixed bag of job loss and job growth. Along with loss and growth in specific industries came loss and growth of specific occupations. An increase of occupations in one industry can dilute that industry’s annual average wage even when the occupations pay a decent wage. Since the annual average wage is calculated by dividing total wages by total employment, it’s difficult to get a feel for whether the drop of $227 is meaningful, without reading every story. That’s a lot of stories; so I’ll get to work. In the meantime, if you have a question about a specific industry’s story, give me a call or send me an email.