Josephine County Industries with Diverse Wage Growth

by Guy Tauer

November 20, 2018

Looking back to the depths of the employment downturn during the Great Recession, there was carnage across many industries in Josephine 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 back in 2006 by 950 jobs as of September 2018. 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 16.5 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 4 percent during the seven years.

Average weekly hours for private-sector employees show a modest uptick from about 30 hours per week in 2011 to reach an average workweek of about 34 hours during the second quarter of 2018. A longer workweek will have a positive impact on average earning, contributing to the rise in average pay since 2011.

While the average change in earnings was about 17 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 workweek. But presumably that is part of the story of these shining star industries with faster 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, if the industry has a significant share of workers earning minimum wage or earning just more than minimum wage. Two industries that possibly fall into this category would be accommodation and food services/drinking places. Both of these industries have many lower wage or minimum wage jobs and had above average wage growth from second quarter 2011 to second quarter 2018, 46 percent and 34 percent, respectively.

Industries with Faster Wage Growth

Printing and related support activities had the largest average wage increase by far in Josephine County. But this industry employs less than 40 people in the county. The resurgence of the construction sector could be boosting average pay in the specialty trade contractor industry. With more work and employment rising more than 45 percent in the past seven years, a tighter labor supply could be boosting average pay. Wood product manufacturing also had above average wage growth. Faster-rising wages in the crop production industry might be associated with the rapidly growing cannabis and hemp growing operations now dotting the county.
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 recent 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 and 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 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 Josephine 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 17 percent from second quarter 2011 to second quarter 2018. The top two on the list, food and chemical product manufacturing both saw fast and very fast job growth, 74.8 percent and 47.1 percent, respectively. So it’s clear both of those industries added many jobs, but did not have to raise average pay to do so. Other faster growing industries where employment rose by 33 percent or more but wage growth lagged the average included building material and garden supply stores; administrative and support services; and clothing and accessory stores. 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 Josephine County during the second quarter of 2018 was $34,864. Industries with wages exceeding this average, and that also had below-average wage gains included utilities ($81,392); forestry and logging ($60,784); chemical manufacturing ($51,788); and heavy and civil engineering ($50,308). It’s likely that some industries that already pay 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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