Chelan-Douglas Trends e-Newsletter

OVERALL ANNUAL WAGE IMPROVING -

In nearly all regional economies, wage and salary earnings form the largest component of personal income. Income levels serve as the prime barometer of economic well-being. Wages vary by many factors, including the education or training required of the job, the supply of job-seekers, regional demand for certain skills, experience of the job seeker, as well as the pull of other, not-too-distant labor markets. Wage variation by sector may guide job-seekers or students in their choice of educational specialization. It may also inform providers of education and work-force training about their program design and offerings.

Average wages are often used by economists and policy makers as a measure of health of the labor market. Increasing wages should reflect better times for employers. They should also reflect increased labor productivity in these businesses. Ideally, one would like wages to keep pace with inflation. This indicator offers both nominal and inflation-adjusted trends for the average wage in the area.

Average annual wage is calculated slightly differently than per capita personal income. Average annual wage takes the total annual wages paid to employees in Chelan and Douglas Counties and divides it by the average annual employment within these two counties. Reported wages are based on place of work, not place of residence.

So, the calculation only takes into consideration the residents who are employed during the year. This is different than the per capita personal income calculation. Per capita personal income divides all sources of income in Chelan and Douglas Counties by the total population of the county, including the entire working population - whether employed and unemployed, as well as children.

Taking a look at the Overall Average Annual Wage on the indicators site, we see that the nominal annual wage for the two counties 2016 was $36,983. This represented a 40% increase since 2004. (2017 data will not be available until mid-year.) The average annual nominal wage in Washington State in 2016 was $59,090, or just over $22,000 greater than the combined counties. Nominal wages do not include adjustments for inflation. Statewide, the average wage has increased 50% since 2004.

What has driven increases in the average in the two counties? Consider the Average annual wages in the 4 largest sectors, which are, in order of employment size: agriculture, government, healthcare and retail. The largest sector, agriculture, showed the greatest percentage increase, at 54% since 2004. However, the other three sectors posted lower rates of increase than the average since 2004. Clearly, the overall average increase depended more on other sectors than government, healthcare and retail for the two counties.

The most important other sectors by size and wages have been: Professional & Technical Services, Manufacturing on and Wholesale. All three sectors sport an annual average wage considerably greater than the overall, combined county average. And of these three, Professional & Technical Services, has shown remarkable wage growth, more than doubling over the period. For 2016, for example, the average annual wage in this sector in Douglas County was greater than $102,000! Don Meseck, Regional Labor Economist with the Washington State Employment Security Department, believes many of these earners are the people who are in the increasing new housing market in Douglas County.

Whether these three sectors can expand at a faster than rate than recent history provides a key in the ability of the regional economy to raise the overall wage. It remains highly unlikely that the regional economy will produce an annual average wage equal to the state anytime soon. However, on a percentage growth basis, perhaps the growth average annual wage of certain sectors can lift the regional economy to run at least at the same pace as the state.

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