Oregon’s Nonresident WorkersAugust 22, 2017 Oregon’s open beaches, rugged mountains, and grape-filled hillsides make it a popular destination for visitors. But there’s something else about Oregon that attracted nearly 111,000 people from out of state in 2014 – jobs. Roughly 7 percent of people who make their living in Oregon, make their home in some other state. Not surprising to anyone driving the bridges over the Columbia River during rush hour, four out of five of these nonresident workers come from Washington.
Traveling in the other direction are Oregonians who work for employers in other states. There were nearly 58,000 people who lived in Oregon, but worked out of state in 2014. This resulted in a net inflow of about 53,000 workers to Oregon – up from a net inflow of more than 43,000 in 2004. Workers crossing state boundaries influence the economy in a variety of ways. This article focuses on where nonresident workers live, their contribution to Oregon’s General Fund, and their effect on Oregon’s per capita personal income.
Growing Number of Nonresident Workers
The number of nonresident workers grew rapidly over the last decade, from 75,415 in 2004 to 110,696 in 2014. That impressive 47 percent increase in nonresident workers was surpassed by the 80 percent rise in Oregonians working in other states, which grew from 31,928 in 2004 to 57,629 in 2014. Since the number of nonresident workers employed in Oregon started from a larger base, the net inflow of workers continued to grow from 43,487 in 2004 to 53,067 in 2014.
Home Is Where the Tax Form Is
The 88,106 Washingtonians working in Oregon in 2014 accounted for almost 6 percent of all workers with jobs in Oregon. Among Oregon’s other neighbors, there were 7,776 Californians; 7,062 Idahoans; and 523 Nevadans working in Oregon.
The fact that people live in neighboring states and work in Oregon isn’t surprising. But what about workers living in Texas, New York, Florida, and other far away states? Their numbers more than quadrupled between 2004 and 2014, but they’re not likely crossing the Snake River on I-84 each morning to get to work. Nonresident workers may live in both states but maintain their primary residence outside Oregon, or work in Oregon on temporary assignment, or they may have moved during the year and their residency status wasn’t updated yet. Residency is assigned by the U.S. Census Bureau based on data from federal agencies such as the Internal Revenue Service and the Social Security Administration, so basically where the worker files their taxes is considered home.
One possible explanation for the growing number of nonresident workers is the rise in teleworking – regular employees working outside the conventional workplace and interacting with others via communication technologies. According to the U.S. Census Bureau, the number of people working from home in Oregon increased by 18,142 from 2007 to 2014. There’s a good chance that teleworkers are driving some of the increase in Oregon’s nonresident workers.
Taxed By Where the Work Takes Place
Regardless of where they claim residency, income earned from services performed in Oregon by nonresidents is subject to Oregon income tax. According to the Oregon Department of Revenue, the total Oregon personal income tax liability of nonresidents was nearly $490 million in 2014, or 7 percent of the total tax liability. Personal income tax is the largest source of revenue for Oregon’s General Fund.
The Oregon personal income tax liability of Washington residents was $271 million in 2014, with nearly two-thirds coming from Clark County residents. In fact, Clark County would rank eighth among Oregon counties for Oregon personal income liability (if it were in Oregon). The Oregon personal income tax liability of Californians was $62 million, Idaho residents were responsible for $20 million, and $137 million came from residents of other areas outside Oregon.
Inflow of Workers Lowers Oregon’s PCPI
Nonresidents working jobs in Oregon lowers one closely followed measure of regional income. The U.S. Bureau of Economic Analysis (BEA) estimate of per capita personal income (PCPI) is the annual sum of all resident income in a geographic area divided by the number of residents in the area. The BEA adjusts for residency by counting work income in the worker’s state of residence. A net outflow of workers adds to a state’s PCPI, while a net inflow of workers, such as Oregon has, subtracts from a state’s PCPI.
With a net $3.5 billion in earnings by the inflow of nonresident workers in 2014, Oregon had the fifth-largest net out-adjustment for residency of any state in the BEA’s calculation of PCPI. The large adjustment is a result of Oregon’s major employment center – Portland, with about half of the state’s jobs – being right on the border with Washington. If Oregon had no net inflow of workers in 2014, Oregon’s PCPI would have been about $872 higher and would have stood at 92 percent relative to the nation’s PCPI, instead of 90 percent. In other words, nonresident workers account for roughly one-fifth of the gap between Oregon’s PCPI and the nation’s.
Nonresident Workers Data
Information about Oregon’s nonresident workers is from the U.S. Census Bureau’s OnTheMap data, part of the Local Employment Dynamics (LED) partnership with the states. OnTheMap provides the most comprehensive data available for worker flows by residency and place of work. The data is for workers during the second quarter of the year. This analysis only considers a worker’s primary job – the job with the most earnings during the quarter – to avoid double counting of workers with two jobs.
To explore and use the data available from OnTheMap, visit http://onthemap.ces.census.gov.