by Brian Kennedy and Dr. Patrick Jones
The Quarterly Census of Employment and Wages (QCEW) tracks data exactly as its name states, the employment and wages of all individuals in industries covered by unemployment insurance. From this series we can observe the upward trend of the average annual wage of workers at Chelan and Douglas County firms. And while trend is upward, it is happening at slow rate. Once adjusted for inflation, the trend has started to slow even more. What is more concerning is the rate at which home values and rents are increasing alongside wages.
As Indicator 2.1.3 shows, the overall average annual wage in Chelan and Douglas Counties stood at $41,970 in 2019. This represents a nominal of gain of about $16,000 since 2003 when it was $26,075. After adjusted for inflation, the gain was just about $4,500. This equates to a compound annual growth rate of 2.8% nominally and just 0.7% once accounting for inflation.
That growth falls short of what has occurred statewide and the gap is widening. In 2003, the combined counties’ average annual wage was about $18,500 lower than the state in real terms. By 2019 this had grown to a difference of about $27,500. This is evident in state’s real compounded annual growth rate of 1.3%, 0.6 percentage points higher than observed here locally.
However, it’s not just a difference between the state the metro area that is changing; the gap between Chelan and Douglas Counties is starting to shift as well. In 2003, Douglas County showed an average annual wage of $32,835, $5,728 short of Chelan County’s, at $38,563. By 2019 that gap had fallen by 35% to just $3,762, when Douglas County posted a wage of $39,038 and Chelan at $42,800. So, while Chelan is still leading the two counties, Douglas County has narrowed that lead.
While the overall average annual wage gives us the big picture view of how wages have been changing over time across the entire labor force, Indicator 2.1.4 shows the average annual wage in the top five employing sectors within the counties. Here we see that of the top employing industries, only two of them are paying over the overall annual average wage. These are healthcare and social assistance at $60,907 and government at $58,882.
In fact, of all twenty-one sectors tracked by the QCEW classified at the two-digit NAISC code level, only nine pay an average wage higher than the overall average annual wage here. The list is topped by management of companies and enterprises (usually financial companies) at a little over $71,000 a year. While the nine sectors account for 48% of the entire workforce, they make up 65% of all the wages paid across the labor force. This disproportionality is true in the state as well. Nine sectors paid higher than the state average annual wage, accounting for just 27% of the entire workforce but 43% of all earned wages.
Don Meseck, Washington State Employment Security Department’s Regional Labor Economist for Central Washington, notes the sectors generating the most payroll growth in recent years (cumulative growth from 2009 to 2019), for Chelan County have been Health Services ($165.7 million), Local Government ($97.7 million), Agriculture ($88.8 million) Accommodation and Food Services ($60.6 million), and Construction ($52 million). These five sectors accounted for nearly three quarters (72.7%) of all wage growth in Chelan County over the last ten years.
Douglas County showed the largest wage growth, over the same time, in Local Government ($31.2 million), Agriculture, ($28.9 million), Retail Trade ($32.1 million), Wholesale Trade ($18.1 million), and Manufacturing ($14.9 million). Here, these five sections accounted for nearly two-thirds (64.1%) of all wage growth over the last ten years.
The three industries that showed the largest growth in terms of employment over the last ten years in the two counties were Accommodation and Food Services (1,798 additional jobs), Healthcare (1,793), Administrative and Waste Services (706). Of these, only healthcare paid a wage higher the overall average. Accommodation and food services fell short of that average by nearly $20,000, with an average annual wage of just $22,394; administration and waste services lagged by nearly $10,000 sitting at $32,749.
The same relative experience of job growth was true in the state, with one exception - the retail trade sector. This sector posted the 2nd highest number of jobs added in the last ten years and accounted for about 11% of all employment in 2019 in Washington. While neither local nor state retail trade wages surpass the overall average annual wage, the trend shows a notable diverge between the two locations.
As observed in the graph on Indicator 2.1.4, the state retail trade wage posted modest growth until around 2015, where it really started to take off. However, the local retail sectors hasn’t seen that kind of wage growth, increasing about $10,000 since 2002 and only $3,500 since 2015.
According to Ajsa Suljic, another State Regional Labor Economist, the divergence is a result of the changes in the minimum wages across the state and specifically within the Seattle and Tacoma metro areas starting in 2014 and 2015. According to Suljic, “overall, this has driven the state’s average annual wages up faster, while the rest of the state is following the state’s minimum wage increases and changes that were implemented starting 2017.” With King and Pierce County representing roughly 50% of all retail trade workers in the state, it is easy to see how the wage increases in King and Pierce County can impact the state averages.
While the data from trends 2.1.1 and 2.1.4 show that wage growth, nominal or inflation-adjusted, has been fairly stagnant, what are the implications for families here? If wage growth has been slow, does that matter if the cost of living hasn’t increased either? Because shelter typically is the biggest budget item, a look the trend of home prices and rents will give us sense of economic well-being.
Looking at the median resale values of homes (most household here own their own home), we see in Indicator 6.3.1 how home prices here have changed over time. While the graph only starts at the first quarter of 2010, the download data tab pulls home values back to 2003. In 2003 the median home price was $138,800; by the end of 2019 home prices had increased by nearly $225,000 to about $360,000. This is a compounded average growth rate of 5.8% in the combined counties. This outpaced the state average, which showed a rate of 4.3% over the same period. More importantly, locally the home prices outpaced real wage growth by a substantial 5.1 percentage points.
A comparison to other Eastern Washington metro areas, such as Benton-Franklin and Walla Walla Counties, shows home prices are outpacing wages there, too
As we can see from the Trends, wages are increasing locally. However, once we adjust for inflation that increase has been quite small since the early 2000s. This low growth compared to the state is largely a result of the makeup of the local economy. The sectors that added a substantial numbers of jobs aren’t typically the highest paying. And while slow wage growth isn’t ideal, as long as the cost of living fallows a similar path, residents won’t feel any worse off. Unfortunately, in Chelan and Douglas Counties, along with most of Eastern Washington metros, that doesn’t seem to be the case when it comes to purchasing a home.