Northwest Oregon’s Wages and IncomeJune 15, 2021 Wages and income are increasing in Northwest Oregon – and by more than enough to keep up with inflation.
From 2010 through 2020 the average wage – including full and part-time jobs – increased 35% in Benton County, 36% in Clatsop County, 39% in Columbia County, 41% in Lincoln County, and 44% in Tillamook County. That seems great, until we remember that inflation increased also during that time. After adjusting for inflation, real wages rose 14% in Benton County, 15% in Clatsop County, 17% in Columbia County, 19% in Lincoln County, and 21% in Tillamook County over the 10 years. Unfortunately, only Tillamook County in Northwest Oregon kept up with the state as a whole, for which inflation-adjusted wages also increased 21%.
Some of the growth in recent years probably resulted from the booming economy and tight labor market that occurred before the pandemic recession. There have also been legislated increases in the state’s minimum wage. But unfortunately much of the very recent increase in average wages is due to the loss of lower-wage jobs during the pandemic recession. The growth in inflation-adjusted wages also may be due to changes in output per worker, which has probably increased considerably over the time period. There is no data for productivity in these counties, but nationally the output per hour for nonfarm businesses’ workers increased 12% from 2010 through 2020. The tight labor market after the pandemic recession will probably spur further wage hikes, although recent increases in inflation will work to reduce any real increase for workers.
Reverse Lake Wobegon Effect
Average wages in all five counties are less than the statewide average wage and all the counties lost ground in comparison with the state from 2010 to 2020. Tillamook County lost the least ground compared with the state but the county’s average wage was still $15,326 less than the statewide average in 2020. Clatsop County fell further behind the state by nearly $5,000 over the 10 years, and in 2020 had an average wage that was $17,227 below the state average.
In recent years, fewer and fewer counties have had average wages that exceeded the statewide average. In 2020 only three counties, Morrow, Multnomah, and Washington, had average wages that were more than the statewide average. The two metro counties, Multnomah and Washington, have many high-tech, executive, and finance jobs that pay well. The result is a reverse Lake Wobegon effect; 33 of Oregon’s 36 counties are below average when measuring wages.
The Brighter Income Picture
Northwest Oregon typically fares better when it comes to per capita personal income. Income includes rental income, dividends, interest, and transfer payments in addition to earnings. Total income is divided by the total population to get per capita income. These additions to earnings tend to level the playing field a bit between Oregon’s counties.
Per capita personal income from 2009 through 2019 (the latest year available) grew by 40% in Benton County, 43% in Clatsop and Columbia counties, 41% in Lincoln County, and 51% in Tillamook County. After adjusting for inflation, however, these growth rates fell to 17% for Benton County, 20% for Clatsop and Columbia counties, 18% for Lincoln County, and 27% for Tillamook County. Oregon’s inflation-adjusted per capita income grew 26% over the period.
Although all five of the counties had per capita incomes that were less than the statewide per capita income, all of the counties except Benton County had incomes that were closer to the statewide per capita income than their wages were to the statewide average wage. Said another way, average residents in Clatsop, Columbia, Lincoln, and Tillamook counties are more like the average state resident in income than in wages.
Benton County is the exception when it comes to per capita income. Benton County’s per capita income was $4,466 below the statewide average in 2020, but its average wage was only $1,882 below the statewide average that year.
Two trends in per capita income work to offset the lower wages found in the rural counties, especially those with large leisure and hospitality sectors. The first is an increase in transfer income coming into the counties, the second is demographic change. Transfer income includes Social Security, disability, veterans’, and Medicare payments. Inflation-adjusted per capita transfer income grew by 14% in Benton County, 25% in Clatsop County, 26% in Columbia County, 24% in Lincoln County, and 25% in Tillamook County from 2009 through 2019. Growth in transfer income is often faster than in most other types of income.
The second reason for relatively higher per capita income in rural counties is because they tend to have more adults than children – who usually don’t work. So even though jobs may not be high paying, if a higher percentage of the population is working or receiving retirement income then the average income per person will go up. This trend of increasing per capita income may change as baby boomers retire from the workforce and their grandchildren are born, but so far it is holding.
In short, the two measures of financial well-being describe slightly different things. Average wage describes the quality of jobs in an area, and per capita income describes how financially well off a population is. Jobs in Northwest Oregon pay considerably less than average in Oregon, but Northwest Oregon’s population is closer to average financially because many people are working or receiving money from government social security programs.
Education and Earnings
Two major influences on people’s income and wages are their occupation and their education. Occupational wages are the subject of another article on www.qualityinfo.org. The effect of education on earnings and unemployment for workers in the U.S. over the age of 25 is shown in the accompanying chart.
Many of the skills in demand by employers are acquired through education, an observation confirmed by data compiled by the U.S. Bureau of Labor Statistics. In general, the more education a person acquires the more skills they attain and less competition they have in the labor market. As the chart shows, someone with a bachelor’s degree earns more than twice as much on average as a person without a high school diploma. The large relative jumps in earnings occur in attaining a high school diploma (+26%) and a bachelor’s degree (+39%).
The gains from education have changed over time. In 2015 the increase in median wage was 38% for being a high school graduate compared with having less than a diploma. The gain from having a bachelor’s degree compared with just some college or an associate degree was 49%. In recent years, having an advanced degree has led to the larger increases in median earnings.
Also note that the unemployment rate varies dramatically when educational attainment is considered. In 2020, the U.S. unemployment rate for those ages 25 and older with a bachelor’s degree was 5.5%. At the other end of the scale, jobseekers who had not completed high school faced tougher job prospects; their jobless rate was 11.7% in 2020.