Chelan-Douglas Trends e-Newsletter


Statistics on new hires and job creation can offer insight into the health of any local or regional economy. Job creation is a major goal of economic policy at any level of government and obviously not all jobs are of the same quality. So while it is important to know the number of net jobs created, it is perhaps more important to know the quality of jobs being created based on the income they provide.

Information on new hires is used by both public and private sectors to negotiate labor contracts, forecast tax revenue, evaluate a region's economic health, and can even guide decisions on sales and inventories. But data on new hires alone, unfortunately, are not available at the county level. So the indicator looks at a net number, which includes job losses.

An approximation of job quality is to consider those new jobs that pay better than some benchmark. In this indicator, the benchmark is the average annual wage. And a premium of 25% to the average is considered "better."

Since this is a novel measure of the labor market, let's make a quick sketch of its construction. First, the overall average annual wage (AAW) from the previous year is multiplied by 125%. Next, the number of occupations paying more than 125% of the overall AAW from the previous year are determined. The net difference in the number of these jobs from the previous year to the current year is what is displayed in the graph. In sum, the net change from the previous year to the current year is what this indicator measures.

Looking at the Net Jobs Created at 25% Higher Earnings than Last Years' Average Annual Wage on the Trends site, we see the combined counties during the most recent half of the series fared better than the first half. The most recent half of the series produced a net increase of higher paying 2,162 jobs (from 2014-2015 to 2017-2018) while the first half of the series (2010-2011 through 2013-2014) produced a net decrease of 1,392 jobs.

Although titled "net jobs created", this indicator can simply be looked at as the growth or loss in the net number of jobs paying 25% more than the overall AAW of the previous year. It does not necessarily mean a job was eliminated if there was a decrease in this series from one year to the next. In theory, a job could be captured one year and not the next - even if the job doesn't experience any significant changes in wages.

For example, a job might be included one year and just barely exceeded the 25% margin. The following year, the overall AAW might have increased enough to push it below the 25% threshold. In this scenario, there was a net decrease captured in this series but without the actual loss of a job.

Another example could be that a particular industry didn't create or have any net growth in the number of jobs, but the wages in the industry grew at a rate that increased the net number of jobs paying above the 25% threshold.

While this indicator is based on occupation data, we do know growth of high paying jobs in Chelan and Douglas Counties have occurred within the following broad industry sectors: Healthcare (particularly in ambulatory health care services and at hospitals), Construction (heavy and civil engineering construction and specialty trade contractors), and Government (primarily at the local level, but due to an increase in the number of jobs and not drastic increases in pay).

Other industries paid 25% more than the overall AAW of the previous year, but lost employment. For example, Wholesale Trade (which includes merchant wholesalers of both durable and nondurable goods as well as electronic markets, agents, and brokers) experienced a net loss of 320 jobs from 2016 to 2017. The Finance and Insurance industry is similar. Wages in this industry have grown and consistently paid more than the 25% threshold but there has been a net growth of zero jobs from 2014 to 2017. So although this is a high paying sector, it has had little or no effect on this indicator because the net difference in the number of jobs paying 25% has not changed.

What does this mean for the two counties? Job creation and the "trading up" of existing jobs into higher pay ranges is not easy for most regional economies. Yet, a look at the graph and more accurately, the data behind it, reveals that compared to Washington State, the metro area is holding its own.

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