Per Capita Personal Income in Southwestern OregonDecember 19, 2017 As business conversations turn to the economic differences between rural and urban areas, it is common to hear about one county’s per capita personal income (PCPI) compared with that of neighboring counties. This indicator measures income from all sources in a given area, divided by the area’s population.
Although Oregon’s PCPI is noticeably higher than Southwestern Oregon’s three counties, the trends follow the same general pattern: peaking around 2007, declining during the Great Recession, slight growth in 2010 through 2012, and a short-lived drop-off before easing into sustained growth since 2013.
The U.S. Department of Commerce, Bureau of Economic Analysis released its 2016 estimates of personal income for sub-state areas (counties and townships) in late November 2017. Oregon ranked 28th in the nation (92% of national average) at $49,246. This reflected an increase of 2.4 percent from 2015.
In 2016, Coos County’s per capita personal income was $39,769. This level ranked 17th out of 36 counties in Oregon and was 88 percent of Oregon’s average. This reflected a 2.3 percent increase since 2015 – very close to that of the state. Curry County’s PCPI was $39,555; this ranked 19th in the state, and reflected a 1.0 percent increase since the previous year. Although Douglas County’s PCPI was the lowest of the three counties, its 3.0 percent increase since 2015 was the highest in this region. At $37,077, Douglas County ranked 29th in the state. As useful as rankings and PCPI dollar values are, the components of personal income provide different and helpful insights into each county’s overall economy. Some components are more influenced by availability of local jobs; others by dynamics of local populations, such as having relatively more youth or retirees in a given area, or faster (or slower) population growth.
The Sum Totals Reveal Less than the Individual Components
Personal income includes all forms of income: net earnings by place of residence; dividends, interest, and rent; and personal current transfer receipts. These components encompass income from work, from owning a home or unincorporated business, ownership of financial assets, and transfer payments from business and government (retirements, Social Security, Medicare, etc.). Per capita personal income is the net personal income of the county’s residents divided by the population. Hence, it reflects the amount of total income per person.
Areas with large numbers of non-working residents (e.g., youth or retirees) will have per capita values that are smaller than areas where more residents are in the workforce. Additionally, if jobs in an area are in industries that tend to pay lower than average wages, e.g., leisure and hospitality, this will also affect the value of the PCPI indicator. Southwestern Oregon, like most rural areas, not only has a lower average annual wage than more populated counties, it also has an older population and is a retiree and tourist destination.
Although net earnings by place of residence (wages) contribute the most to per capita person income, the percentage has shifted over the past 10 years. In 2006, net earnings by place of residence accounted for 65 percent of Oregon’s PCPI; 55 percent of Douglas County’s; 54 percent of Coos County’s; and 45 percent of Curry County’s. By 2016, the shares of PCPI attributed to net earnings were: 60 percent of Oregon’s PCPI; 48 percent of Douglas County’s; 47 percent of Coos County’s; and 41 percent of Curry County’s. Income from workplace earnings is influenced by educational attainment and occupation choice as well as industry mix. Its overall share of income also varies depending on the share of the population that is working.
Dividends, interest, and rent contributions have remained quite stable with the exception of retiree-dominated Curry County, which saw a decline from 28 to 24 percent of its PCPI income attributed to investment-related returns. This component is often influenced, if not dependent, on factors outside the immediate vicinity.
On the other hand, the percentage contribution of personal current transfer payments, e.g., Social Security, Medicare, unemployment and related benefit payments has shifted noticeably. In 2006, this component accounted for 15 percent of Oregon’s PCPI; 25 percent of Douglas County’s; 26 percent of Coos County’s; and 27 percent of Curry County’s. By 2016, Oregon’s transfer-related payments accounted for 20 percent of the PCPI; Douglas County’s payments for 34 percent; Coos County’s for 34 percent; and Curry County’s for 35 percent. Today, one-third of the region’s per capita personal income is attributable to transfer payments, while less than half is associated with wages and related earnings. This is fairly typical for a rural area with a high share of retirees in the local population.