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Oregon Saw Greatest Median Income Rise In Last Decade

From 2010 to 2019, the state’s median household income rose 44 percent, from about $47,000 to $67,000, the most of any state. Experts are not yet sure what caused the large increase.

(TNS) — Oregonians’ typical incomes grew more in the last decade than in any other state, and one of the state’s chief economists isn’t sure if there’s a root cause.

“That’s one we don’t fully understand,” said Josh Lehner, an analyst with the state’s Office of Economic Analysis.

But the numbers are clear as day.

Oregon’s median household incomes rose from about $47,000 to $67,000, not adjusted for inflation, from 2010, the year after the Great Recession, to 2019, the peak of the recovery.

At 44 percent, that’s the greatest increase in median household income of any state, followed by Colorado, at 43 percent, and Washington, with 41 percent.

Of course, there are the usual suspects – and it starts with the economy.

As Oregon recovered over the course of the 2010s, more people worked, raising household incomes, and more people who wanted jobs had them. As economies improve, wages rise, Lehner said, and that’s what fuels most Oregonians’ incomes.

“Our wage growth is just phenomenal,” Lehner said.

But as Lehner’s analysis showed Oregon’s 2018 median incomes going past the U.S. median for the first time since the 1960s, he wondered if there was something else that could explain the growth.

But beyond pointing to an improving economy, there’s a chance he won’t know if there’s a specific, root cause behind the growth. That’s because the COVID-19 pandemic and the attendant economic upheaval will likely present entirely different puzzles for Lehner and his colleagues to solve.

“We’ve moved on to different things in the last two years,” Lehner said.

For Lehner, understanding what’s been driving Oregon’s median income growth isn’t a case of idle curiosity. The state uses his office’s forecasts to set the two-year budget and, if the state raises more than expected from personal income taxes, the surplus goes back to taxpayers.

Since 2016, the state has had multiple record surplus “kickers” refunded to taxpayers. With accurate forecasts, policymakers have more money to conduct the state’s business.

“Our goal is to not have a kicker,” Lehner said.

The 2020 rebate paid out to taxpayers was a record $1.6 billion at the time, and the one to be paid out next year will be about $1.9 billion, another record.

Lehner isn’t the only one without clear answers about Oregon’s rising income, which includes a household’s wages, salaries and tips for anyone 15 and older in the household.

Gail Krumenauer of the Oregon Employment Department said she doesn’t know exactly why Oregon has fared so well.

As a general rule, Oregon does worse when there’s a recession and then does better when there’s a recovery, she said. And, also as a rule, recoveries last longer than recessions, potentially putting Oregon ahead of the rest of the country.

One possible reason Oregon does better during recoveries, Krumenauer said, is because unlike many other states, people keep moving to Oregon, providing a consistent labor pool when jobs become available again.

Another key reason Oregon’s economy overall has fared well post-Great Recession could boil down to industry diversity and quality of life, said University of Oregon economics academic expert Tim Duy.

The state has a lot of different industries, including forestry, technology, agriculture, wine and marijuana, Duy said, making its recovery stronger.

“Anything you want done, you can probably find a firm in Oregon that does it,” Duy said. “If you have a broad-based recovery, that’s going to lift a lot of boats.”

Then, there’s the fact that Oregon has a steady stream of migrants that Duy said could be attracted by Oregon’s quality of life. People move in from expensive states like California, he said, and there’s a national trend of people moving to coastal areas.

But when asked why wages and incomes have been growing more in Oregon than elsewhere, both Duy and Krumenauer suggested asking Lehner, the state economist.

“I don’t have a good answer for what, specifically, was happening,” Duy said.

Lehner isn’t satisfied with the bigger-picture answers that connect incomes to an improving economy.

As he tried to figure out why median incomes have been growing, Lehner sliced and diced state employment and U.S. Census data to try to get an answer, ruling out hypothesis after hypothesis that arose from “all these little anecdotes and theories” that ultimately came up short.

Lehner considered whether lower-income Oregonians moved out of the state, driving average incomes up. He looked at income growth in different industries and different parts of the state. None of those factors explained the statewide income growth, he found, with incomes growing across industries and in all parts of the state.

The results were encouraging, pointing to a broad recovery that lifted up all Oregonians.

“That’s what you would want to see,” Lehner said.

Lehner also looked at the impact of the minimum wage, which was raised incrementally starting in 2016. But that doesn’t explain the statewide trend, he said, because employers were often offering higher pay than even increased minimum wage rates. Moreover, incomes grew across income brackets, not just for the lowest-paid workers.

Neither was the increase due to an influx of high-paying tech jobs in the Portland area. Those account for some tens of thousands of jobs, he said, but “don’t move the statewide needle that much.”

“They matter, but that does not explain very much the statewide movement,” Lehner said.

It’s unclear, at this point, if Lehner will ever know the answer. And the question could even be moot, given the social and economic upheaval from the pandemic.

To complicate things even more, the data Lehner used to track income growth through 2019 won’t be available for 2020. The data are part of the American Community Survey, a detailed questionnaire the U.S. Census Bureau administers to a sample of Americans throughout the year. In 2020, far fewer people filled out the surveys than normal, meaning the federal government most likely won’t be releasing reliable data for that year, ever.

That means that when it comes to detailed information on poverty, jobs and incomes, neither Lehner nor other economists have much to go on.

“We’ve got nothing on 2020,” Lehner said. “We don’t know what happened.”

If data for 2021 are complete and accurate, he will try to see if past trends held through the pandemic. So far, state incomes appear to have matched national trends, and there’s no reason to expect them to be that different when the detailed data come out next year.

Whatever the cause, Lehner said rising incomes are reason for celebration.

“Unequivocally, this is great news,” Lehner said. “We went from noticeable lower incomes to above the U.S. That’s amazing.”

©2021 Advance Local Media LLC. Distributed by Tribune Content Agency, LLC.

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