Southwestern Oregon’s Economic Well-Being: Per Capita Personal Income and Gross Domestic ProductJanuary 10, 2019 Given the wide range of economic-related data available, it is no surprise to find a variety of statistics to tell the story of local well-being. Per capita personal income is frequently cited as a measure of an area’s overall economic health; it is the total income in an area divided by the population. Additionally, gross domestic product, which up until very recently was only available on a national and statewide basis, is a measure of the value of goods and services produced in an area.
Per Capita Personal Income and Measuring Prosperity – a Moving Target!
The Bureau of Economic Analysis annually publishes county-level personal income data. Personal income has three main components: net earnings (wages, salaries, employer contributions); dividends, interest, and rent (income generated from the ownership of financial assets); and personal current transfer receipts (funds from government and business, e.g., retirement, Medicare, unemployment insurance benefits). A county’s total personal income is the sum of all income generated by each resident of the county. Dividing total personal income by the total population produces per capita personal income (PCPI), the average income per resident regardless of age. Since this is a standard method of measurement, it is a useful metric for making comparisons across counties.
Statewide, Oregon’s 2017 per capita personal income was $48,137. Coos County’s ranked first among the three southwestern counties at $41,802. Curry’s PCPI was $41,099. Douglas County’s was $38,752.
As a measuring stick, the basic PCPI figure is somewhat limited. It does not take into account the percentage of the population that actually receives income, rather it is simply a total income figure divided by everybody living in the county. Thus, counties with many children and fewer working adults will report lower PCPI. For example, Malheur County in eastern Oregon, where nearly 24 percent of the population is under the age of 18, has a PCPI of $30,231. Curry County, on the other hand, has only 13 percent of its population under 18 and a much higher per capita personal income.
The three components of this statistic vary depending on an area’s age demographics, employment levels, and investment activity. Curry County’s older population, often retirees not active in the workforce, is reflected in the higher percentage of income originating from dividends, interest, and rent (25%). Both Coos and Douglas counties’ residents average only 19 percent of their PCPI from investment-related ventures. The fluctuation between net earnings (jobs) and personal current transfer receipts (which includes retirement, Medicare, and unemployment insurance benefits, etc.) provides insight into the area’s employment base and age demographics. Income associated with earnings typically increases as the economy improves and the number of jobs increases. As the economy slows, income from earnings tends to decline while that from transfer receipts, such as unemployment insurance, increases.
In 2007, pre-recession, Douglas County’s PCPI was 53 percent from net earnings by place of residence; 21 percent from dividends, interest, and rent; and 26 percent from transfer payments. By 2017, Douglas PCPI was 48 percent from net earnings; 19 percent from dividends, interest, and rent; and 33 percent from transfer payments. The job-associated moneys have shifted downward, whereas those from such sources as retirement, Medicare, and unemployment insurance benefits have increased. This same 10 years saw the same shift in Coos County. Coos earnings dropped from 53 percent to 48 percent; dividend and similar investment-related funds shifted from 21 percent to 19 percent; and personal current transfer payments noticeably increased from 26 percent to 33 percent. Retiree-centered Curry County already had a smaller net earnings component in 2007 – it dropped from 44 percent to 40 percent. The investment-related component also declined from 29 percent to 25 percent; and following the regional pattern, the personal current transfer receipts component increased from 27 percent to 35 percent.
Gross Domestic Product Measures the Value of Goods and Services
In mid-December, the U.S. Bureau of Economic Analysis released its new Prototype Gross Domestic Product by County for 2012 through 2015. Combined with county estimates of personal income, this new measure of business-related production will provide a more complete picture of county economic conditions. As a result, local decision-makers will have additional tools to inform resource allocation decisions, support economic development strategies, and refine analysis of strengths and weaknesses in their local marketplace.
The gross domestic product (GDP) is reported in terms of chained dollar values, which is a method of adjusting real dollar amounts for inflation over time. As a result, figures from different years can be directly compared.
Coos County’s GDP changed very little between 2012 and 2015. Curry County’s declined from 2012 to 2013, reflecting the slow recovery from the Great Recession. Since then, Curry’s economy has grown. Douglas County also shows slow emergence from the recessionary years, with a notable boost in GDP between 2014 and 2015.
As the demographic makeup of these three counties continues to evolve and the labor force shifts in response to an aging population, the distribution of per capita personal income among the three sources of income can be expected to change. Additionally, the newly available gross domestic product statistic will likely improve analysis of these local economies.