OLMIS

by Erik A Knoder
Published May-23-2012

Education and Earnings

Wages are increasing in Lincoln County, but growth is slow due to inflation. From 2000 through 2011, the average wage - including full and part-time jobs - increased 33 percent in Lincoln County. That seems pretty good until we remember that inflation increased also. After adjusting for inflation, the real average wage rose only 2 percent over the 11 years. This contrasts with the fact that output per worker probably increased by much more. There is no data for productivity in the county, but nationally the output per hour for workers increased 29 percent from 2000 through 2011 - much more than the change in real wages.

The average wage in the county is less than the statewide average wage and the county lost ground against the state in 2011. Wages in the county got closer to the statewide average for a few years after 2000, but lost ground for the past couple years. One probable reason is that the county has few of the high-tech manufacturing jobs that fueled wage growth in the Portland metro area and few large companies. In fact, usually only a handful of counties, primarily in the metro areas, manage to keep up with the statewide growth rate in average wages.

The county fares better when it comes to per capita personal income. Income includes rental income, dividends, interest, and transfer payments in addition to earnings. Total income is divided by the total population to get per capita income. Per capita personal income from 2000 through 2010 (the latest year available) grew by 34 percent in Lincoln County. After adjusting for inflation, however, this growth rate fell to 5.6 percent. Oregon's inflation-adjusted per capita income fell by 0.1 percent over the period. Although the county's per capita income is less than the statewide per capita income, it is closer than the county's average wage is to the statewide average wage. Said another way, an average residents in the county is more like the average state resident in income than in wages. Also, the differences in average incomes between the county and the state have been generally shrinking since 2000.

Two trends in income work to offset the lower wages found in the county: the first is the increase in transfer income coming into the county, the second is demographic change. Transfer income includes pensions, Social Security and Medicare payments. Inflation-adjusted per capita transfer income grew by 44 percent in Lincoln County from 2000 through 2010. The demographic reason is that the county tends to gain workers and lose children - who usually don't work. So even though jobs may not be high paying, if a higher percentage of the population is working or receiving retirement income then the average income per person will go up. The county had nearly 1,400 fewer children ages 0 to 17 in 2011 than in 2000 and nearly 1,300 more people ages 18 to 64.

In short, the average wage describes the quality of jobs in an area and per capita income describes how financially well off a population is. Jobs in Lincoln County pay considerably less than average in Oregon, but its population is closer to average financially because many people are working or receive money from pensions and government social security programs.

Two major influences on a person's income and wages are their occupation and their education. Occupational wages are the subject of another full article on www.QualityInfo.org. The effect of education on earnings and unemployment is shown in the accompanying chart.

Many of the skills in demand by employers are acquired through education, an observation confirmed by data compiled by the U.S. Bureau of Labor Statistics. In general, the more education a person acquires the more skills they attain and less competition they have in the labor market. As the chart shows, someone with a professional degree, e.g. law or medicine, earns more than three times as much on average as a person without a high school diploma. The large relative jumps in earnings occur in attaining a high school diploma (+41%) and a bachelor's degree (+37%).

Also note that the unemployment rate varies dramatically when educational attainment is considered. In 2011, the overall U.S. unemployment rate for those ages 25 and older was 7.6 percent. For those with a bachelor's degree, however, the unemployment rate was 4.9 percent. Those holding advanced degrees saw even lower rates - about 2.4 percent for professional or doctoral degree holders. At the other end of the scale, jobseekers who had not completed high school faced tougher job prospects; their jobless rate was 14.1 percent in 2011.