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Behind the numbers

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Graphic comparing per capita personal income from 1990-2012 in Chelan and Douglas counties and state average. Source: Chelan Douglas Trends. (Business World graphic by Jared Johnson)

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The Chelan-Douglas Trends web site, managed by Eastern Washington University, is filled with valuable information about economic and quality of life data trends in Chelan and Douglas counties. Patrick Jones, who heads the Institute for Public Policy and Economic Analysis, prepared comments on the per capita personal income indicator. We have additional local perspective from two players in economic development — port directors Lisa Parks of Douglas County and Mark Urdahl of Chelan County.

The questions we asked:

1) What key things jump out at you from the analysis?

2) Were you surprised by the growth of transfer payments as a percentage of overall income? What does that tell us about our economy?

— Rufus Woods, publisher

By Patrick Jones, Chelan Douglas Trends

2012 was not a blockbuster year for the economy of Chelan and Douglas counties. But it wasn’t a catastrophe either. The indicator for per capita personal income (3.1) shows the two-county average to be $34,974. This represented a 2.7 percent increase over 2011. The increase was lower than those for both the U.S., at 3.2 percent, and Washington state, at 3.5 percent.

For many economists, a key metric of a region’s scorecard is the growth of per capita personal income. Without healthy income growth by residents, people don’t make purchases — large or small. Without an increase in money coming in to family and households’ accounts, it is difficult to save. And without an uptick in spending, funding for local government stagnates.

Among all the indicators on Chelan Douglas Trends, per capita personal income is an important starting point to see how the local economy is faring. How is the indicator measured? All the income collected by residents in the two counties in any year is divided by the estimated population of that year.

Three components make up personal income. The largest consists of wages and salaries. The second is investment and real property income, while the third is made up of the various flows from federal programs, or transfer payments. This category includes payments for Social Security, Medicare, Medicaid, veterans’ benefits, food stamps, unemployment benefits, USDA payments to farmers, and welfare payments, among many others. It has been the fastest growing component of personal income in the two counties over the past three decades.

In 2011, the two counties recovered their pre-recession high of per capita personal income, as did the average resident in both the U.S. and Washington state. In fact, incomes in Chelan and Douglas counties combined have grown a little faster since 2008 than in the state, although a bit more slowly than in the U.S. Still, residents here can claim only 80 percent as much as income as that of the average U.S. resident. In 1990, the ratio was 83 percent. So over the past two decades, economic well-being of the average resident in the two counties has slipped, at least on a relative basis. Understanding why this slippage has occurred should be an agenda item of all those in the two counties who care about economic development.

Part of that discussion might include a look at the diverging paths of the two counties. In 1990, the average resident in Douglas County could claim 87 percent as much income as the average resident in Chelan County. Fast forward to 2012 and that ratio drops to 80 percent.

By Mark Urdahl, Chelan County Port District manager

I wasn’t surprised by Professor Jones’ findings. Agriculture and tourism continue to be prominent and major drivers of our local economy. Both tend to be relatively labor intensive, and unfortunately don’t command wages that are significantly above average, especially compared to the type of economic activity found along the Interstate 5 corridor.

Yet they are sectors that are productive and compatible with the character of our communities, which is why our local chambers of commerce and the Economic Development District have embraced and invested in increased promotion of tourism. It is also worth noting that some of the highest income areas of the state also have some of the worst traffic congestion and least affordable housing stock.

That said, these findings reinforce our need to continue to work to diversify the local economy, through the retention, expansion and recruitment of businesses that produce products and services that require higher skill levels and whose profit margins allow employers to pay for them.

Examples of these include but by no means are limited to advanced manufacturing, health care, technology and professional services. We also need to accept that the competition for highly desirable businesses is intense, and that when we are attempting to attract companies that can be anywhere, we might well be competing with everywhere. This means continued investment in keeping our communities the desirable places that they are, as well as enhancing them. The Pybus Public Market project is a good example of an investment in community enhancement.

Anecdotally, I think we’re seeing that NCW is becoming more widely known as a highly desirable place to retire, which might account for both an increased percentage of transfer payments as part of the personal income stream, and higher per capita income in Chelan County as compared to Douglas County. While both counties are great places to live, work, and recreate, Chelan County enjoys a higher profile in terms of amenities and destinations, both real and perceived.

By Lisa Parks, Douglas County Port manager

I would say first that this is one of many indicators that we need to use to benchmark where we are and to then develop strategies to build on the positives to overcome shortfalls. As such, we need to be careful not to view any one indicator in isolation. Secondly, it is important to note that we’re going up — just not as quickly as the state and nation, so one question for the community is, why is that? What are the factors that are preventing us from growing at a similar or even advanced rate (to “catch up” so to speak)? What are the potential assets we have to capitalize on to get us going upward faster?

On the question of the growth of transfer payments, that doesn’t surprise me, for a couple of reasons:

The economy itself over the past 5-plus years (recession), resulting in an increase in unemployment benefits; the increase in our median age, as a community, is higher than the state and national average, meaning we have higher numbers of older (retired) people in our communities that are likely receiving state and federal Medicare/Medicaid benefits. Considering potentially similar outcomes, we have regional medical facilities in the community that may result in higher income from transfer payment. It would be interesting to know if this increase in transfer payments as a portion of overall income is similar to and consistent with the state and national averages.

And, just generally, our area is still pretty “rural”, in the overall big picture, so it isn’t surprising that we’re not necessarily keeping pace with the state averages. I think all agree that, generally, there is a higher level of income in urban versus rural areas — there is also typically an increase in the cost of living, so one interesting question might be: How far does that income go to buy goods and services in our rural area versus in the urban areas?.

 

Reach Rufus Woods at 509-665-1162 or .

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