Jackson County Industries with Diverse Wage Growth

by Guy Tauer

November 1, 2018

Looking back to the depths of the employment downturn during the Great Recession, there was carnage across many industries in Jackson County. Not only were many jobs lost, but those lucky enough to hold on to their jobs may have had hours or shifts cut from their regular schedules. Since then, payroll employment has recovered and now exceeds the pre-recession peak from 2006. As employment recovered over the subsequent years, average wages have been rising. The private sector all-industry average wage gain from the second quarter of 2011 to the second quarter of 2018 was 19.5 percent. During that same period, the consumer price index (CPI) rose by 12.2 percent. This means that inflation-adjusted, or real average pay, rose by about 7 percent.

Average weekly hours for private-sector employees show a modest uptick from about 32 hours per week in 2011 to an average workweek of about 35 hours during the second quarter of 2018. A longer workweek will have a positive impact on average earnings, contributing to the rise in average pay since 2011.
While the average change in earnings was about 20 percent from second quarter 2011 to second quarter 2018, many industries had substantially faster wage growth. Since we do not have average weekly hours by detailed industry, we don’t know how much of the earnings growth was due to longer average workweeks. But presumably that is part of the story of these shining star industries with fast wage growth.

There are a myriad of factors that could result in wages rising faster than average in some industries. A change in the composition of what occupations are employed within an industry could result in faster wage growth. If lower paying occupations are being replaced with higher paying occupations, that would have a positive impact on average industry pay.

Industry pay is also affected by Oregon’s recent minimum wage increases, especially if the industry has a significant share of workers earning minimum wage or just more than minimum wage. Two industries that possibly fall into this category would be gasoline stations and food services and drinking places. Both of these industries have many low wage or minimum wage jobs and had above average wage growth from second quarter 2011 to second quarter 2018, 27.4 percent and 25.3 percent, respectively.

Industries with Faster Wage Growth

Larger industries, those with 500 or more jobs, had wage growth that was faster than the all-industry average in Jackson County. Agriculture and forestry support activity had the largest average wage increase by far. This could be a result of more year-round work, increasing average hours in the workweek, or wage increases to attract and retain workers.

Many of the industries with faster growing pay are related to the resurgence of the construction sector. Credit intermediation and related activity; heavy and civil engineering construction; specialty trade contractors; and construction of buildings all had above average wage growth. The faster-rising wage in the crop production industry might be associated with the rapidly growing cannabis and hemp growing operations now dotting the Rogue Valley.

Another factor giving rise to faster wage growth may be due to tight labor markets and the lack of available and skilled job applicants. With unemployment rates hovering at historical lows, businesses may be willing to increase compensation to retain current workers or be offering higher starting pay to attract prospective new employees. It’s challenging to decipher if these perceived labor shortages, or imbalances between available workers and job openings is a factor in faster-rising wages in some industries. We don’t have real-time data on all available job seekers or information about every potential job vacancy by occupation and industry. So trying to determine if lack of supply of available labor has resulted in higher wages is not an easy task.

In lieu of an exact answer to this question, we can look at the rate of job growth by industry and compare that to wage growth over the same period. Are fast-growing industries ones which also have faster-rising wages? A simple linear regression was done comparing job growth against wage growth by industry. The analysis showed there was very little correlation or association between job growth rates and wage growth rates among Jackson County industries between second quarter 2011 and second quarter 2018. In other words, just because an industry has experienced faster job growth, this doesn’t mean that it is more likely to have faster wage growth as well.

Industries with Slower Wage Growth

This group of industries all lagged the industry-wide wage gain of about 20 percent from second quarter 2011 to second quarter 2018. The top two on the list, food and beverage product manufacturing both saw fast job growth, 36 percent and 173 percent, respectively. So it’s clear both of those industries added many jobs, but did not raise average pay to do so. Other fast growing industries where employment rose by 35 percent or more included machinery manufacturing; fabricated metal manufacturing; couriers and messengers; and wood product manufacturing. Clearly, faster employment growth can occur without above-average pay increases.
One common factor among a number of these industries with slower average pay growth is that wages tend to be higher than the private-sector average. The average private-sector annual wage in Jackson County during the second quarter of 2018 was slightly more than $40,000. Industries with average wages exceeding $40,000, and that also had below-average wage gains included machinery manufacturing ($44,280); motor vehicle and parts dealers ($45,508); waste management and remediation ($46,000); wood product manufacturing ($47,824); electronic markets, agents and brokers ($76,348); utilities ($88.960); and financial investment and related activity ($97,656). It’s likely that some industries that already paid well didn’t need to raise wages to attract and retain workers as the economic expansion brought job growth to many diverse industries. Certainly for some occupations within those industries where labor shortages may be occurring, wages might be rising faster. But on a whole this group of industries has experienced slower than average wage growth during the past seven or so years. More research within these specific industries is needed to parse out the reasons why some industries’ pay has risen faster than others. If you’re curious about a specific industry or occupations within an industry, just ask!

 


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