Why Did Washington County’s Wages Decline in 2022?
June 26, 2023Washington County’s average weekly wage fell by $74 over the year in the fourth quarter of 2022, according to recently released data by the federal Bureau of Labor Statistics. This translates into a decline of 4.4%, which ranks 326th-steepest among the nation’s 355 largest counties. Across the nation as a whole, weekly wages dropped 2.3% (-$33).
Washington County is far from alone: over two-thirds (245) of the nation’s largest counties also experienced wage declines, led by three Bay Area counties: San Francisco (‑20.8%); San Mateo (‑18.6%); and Santa Clara (‑16.9%). A June 5, 2023 article in The Wall Street Journal (WSJ) attributes the decline to the region’s struggling tech industry and the ripple effect across the rest of the economy.
Unlike the Bay Area, despite a large tech presence, and contrary to the WSJ’s insinuation, Washington County’s wage decline was not driven by the industries commonly considered ‘tech’: computer and electronic product manufacturing, software publishers, and computer systems design. Although weekly wages in this cluster of industries fell by 3.0% ($92), it accounted for roughly 15% of the county’s net wage decline. In comparison, tech wages fell by 23.2% in the three Bay Area counties combined (‑$1,769), accounting for roughly 41% of the region’s average wage decline.
Instead, wage declines in the professional and business services industry, a large and predominantly white-collar sector, pulled down overall pay more than any other broad industry. Average weekly wages declined sharply between the fourth quarters of 2021 and 2022 (‑$377; -15.8%). Had wages held steady at 2021 levels, average pay in the county overall would have declined by just 0.3% instead of 4.4%.
Within professional and business services, wages in management of companies plummeted by 26.8%; professional, scientific, and technical services (e.g. architecture, engineering, accounting, legal firms) fell 7.1%; and administrative and support and waste services (e.g. temp help, building services) dropped by 2.2%.
However, declines weren’t limited to just professional and business services. Six out of 10 broad industries paid less at the end of 2022 compared with 2021. Again, Washington County isn’t unique: Nationally, six out of 10 broad industries also saw wages decline.
There are undoubtedly many reasons for Washington County’s (and the nation’s) relatively broad-based wage declines. Some theories include:
- Stock market: Markets were down over the year. The Dow was 8% below fourth quarter 2021 levels on average, and the tech-heavy NASDAQ faired far worse, down nearly 30%. Consequentially, the value of stock options (which is included in the wage data) declined.
- Bonuses: With the decline in stock values and increasing fears of recession, companies could have paid out less in bonuses.
- Incentive pay: The labor market was still tight in 2022 but cooling. According to the Oregon Employment Department’s Job Vacancy Surveys, the number of vacancies declined by about 15% in the Fall of 2022 compared with a year earlier. Employers might not have been scrambling for workers to the extent they were in 2021 when the economy was still re-opening after COVID lockdowns, and perhaps less likely to offer incentive pay.
- Retirements: The workforce is aging and people are retiring. Older workers with experience and seniority likely earn more than younger, less experienced hires who might replace them.
Technical notes:
- The original publication listed Washington County’s decline at -4.3%, ranking 319th. This article uses revised data.
- Payroll and wages aren’t adjusted for inflation.
- The largest counties are defined as those with employment levels of 75,000 or more (2021 annual average).
