Northwest Oregon’s Wages and IncomeJuly 7, 2020 Wages and income are increasing in Northwest Oregon – and by more than enough to keep up with inflation.
From 2009 through 2019, the average wage – including full and part-time jobs – increased 25 percent in Benton County, 27 percent in Clatsop County, 25 percent in Columbia County, 33 percent in Lincoln County, and 34 percent in Tillamook County. That seems great, until we remember that inflation increased also during that time. After adjusting for inflation, real wages rose 5 percent in Benton County, 6 percent in Clatsop County, 5 percent in Columbia County, 12 percent in Lincoln County, and 12 percent in Tillamook County over the 10 years. Unfortunately, none of the counties in Northwest Oregon kept up with the state as a whole, for which inflation-adjusted wages increased 13 percent.
Much of the growth was in more recent years and probably resulted from the booming economy and tight labor market as well as legislated increases in the state’s minimum wage. The growth in inflation-adjusted wages 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 13 percent from 2009 through 2019 – more than the change in real wages for the counties.
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 2009 to 2019. Tillamook County lost the least ground compared with the state but remained with an average wage $14,246 less than the statewide average in 2019. Clatsop County fell behind the state by more than $4,000 over the 10 years and by 2019 had an average wage that was $15,946 below the state average.
In recent years, fewer and fewer counties have had average wages that exceeded the statewide average. In 2019, only two counties – Multnomah, and Washington – had average wages that were more than the statewide average. The two metro counties have many high-tech, executive, and finance jobs that pay well. The result is a reverse Lake Wobegon effect; 34 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 2008 through 2018 (the latest year available) grew by 28 percent in Benton County, 36 percent in Clatsop, 32 percent in Columbia County, 34 percent in Lincoln County, and 42 percent in Tillamook County. After adjusting for inflation, however, these growth rates fell to 10 percent for Benton County, 16 for Clatsop County, 13 percent for Columbia County, 15 percent for Lincoln County, and 22 percent for Tillamook County. Oregon’s inflation-adjusted per capita income grew 18 percent 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 the 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 $3,824 below the statewide average in 2019, but its average wage was only $1,669 below the statewide average that year.
Two trends in per capita income work to offset the lower wages found in the rural counties. The first is the 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 22 percent in Benton County, 38 percent in Clatsop County, 42 percent in Columbia County, 30 percent in Lincoln County, and 29 percent in Tillamook County from 2008 through 2018. Growth in transfer income is much faster than in most other types of income.
In rural counties per capita income is relatively higher than wages because they tend to have more working-age 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 receive 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 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 and by earning a bachelor’s degree.
The gains from education have changed over time. In 2015 the increase in median wage was 38 percent for being a high school graduate compared to having less than a diploma; by 2019 that gain had dropped to 28 percent. The gain in 2015 from having a bachelor’s degree compared to just some college or an associate degree was 49 percent; by 2019 the increase in earnings was down to 46 percent. Having more education still pays, but 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 2019, the U.S. unemployment rate for those ages 25 and older with a bachelor’s degree was 2.2 percent. At the other end of the scale, jobseekers who had not completed high school faced tougher job prospects; their jobless rate was 5.4 percent in 2019.