Strong Travel & Tourism Boosts Accommodations Employment

by Dr. Kelley Cullen

Regional economies are often characterized by the types of work residents engage in, with the types of jobs reflecting the nature of revenue streams and wages that the community can expect. But local economies can transform themselves. In the combined counties of Chelan and Douglas, where the greatest employment has long been in agriculture, there are signs that declining ag employment is being replaced by healthcare and accommodation jobs, bringing higher wages and boosting a strong travel and tourism sector in the process.

Collectively, the top five sectors of employment continue to employ over 75% of all workers in the combined counties (a rate that is only up from 72% in 2004). The fastest growing sectors are Healthcare/Social Assistance and Accommodation/Food Services.

Chelan Douglas Trends 2.3.3 Share of Employment in Top 5 Employing Sectors presents data from the Quarterly Census of Employment & Wages (QCEW) compiled by the Washington State Employment Security Department (ESD). The indicator tracks total employment in the top 5 employing sectors as well as the relative share in Chelan & Douglas Counties, based on the two-digit North American Industry Classification System (NAICS). 

Not surprisingly, the combined counties of Chelan & Douglas continue to have a strong agricultural sector, with nearly one of every five workers employed. The share is, down from one in four workers two decades ago. While this sector continues to provide livelihoods for many residents, it is important to keep in mind that 80% of all workers are not employed in agriculture.

Government, which includes workers at the federal, state and local levels, is the second largest employing sector and is nearly as large as agriculture – one in six workers across the combined counties. Unlike agricultural employment which pays an average annual wage of about $36,000, government employees in the combined counties bring home around $70,000.

The two fastest growing sectors by employment are Healthcare/Social Assistance and Accommodations/Food Service. Over the past decade, healthcare employment has been increasing about 3% annually, adding over 1,900 jobs. Healthcare & Social Assistance currently employs roughly one in seven workers in the region (up from one of every 11 workers two decades ago) and averages an annual wage of around $70,000. Specifically, most of the new healthcare jobs over the past decade have been in hospitals. Not only is this an important sector for public health, it provides above-average earnings.

Employment in Accommodation/Food Service has been growing about 2.5% annually, adding close to 1,200 jobs in the past decade and accounting for one in nine workers across the combined counties. While these jobs offer the lowest annual wages at around $28,000, they help support a robust travel and tourism industry.

Retail Trade employment is also fueled by travel and tourism. As the third largest employing sector, retail accounts for about one of eight workers across the combined counties, but pays less than government or health with an average annual wage of around $36,000. Total retail employment (not the share) has been increasing at about 1% annually, slower than healthcare and accommodations.

While it is challenging to separate retail sales into local consumption versus visitor and tourist spending, accommodation revenues are almost wholly attributable to visitors. Chelan Douglas Trends 1.2.1 Total Accommodation Retail Sales and Annual Growth presents annual taxable retail sales data from the Washington State Department of Revenue’s Quarterly Business Review for the NAICS subsector code of 721 Accommodations.

Just last year, accommodation retail sales topped $163 million for the combined counties. Leavenworth brought in over $63 million or close to 40% of the total for the combined counties. Additionally, restaurants, food services and drinking places in Leavenworth posted taxable retail sales of another $60 million. Over the past decade, accommodation retail sales in Leavenworth have grown at a compounded annual rate of over 10%.

Clearly, Leavenworth is not the only visitor and tourist destination in the region. The cities of Wenatchee and East Wenatchee also bring in accommodation retail sales contributing close to $100 million annually and growing. This sector is proving to be an important part of the local GDP and employment will continue to grow. With relatively low rates of unemployment prevailing, this could put upward pressure on wages in this sector which are well below the average annual wage.

As policy makers plan for future economic growth, it will be important to continue to monitor changes in the shares of employment in the top five sectors. In particular, to the extent that the combined counties can continue to increase higher paying healthcare jobs and accommodation jobs that boost tourism dollars.