At the start of the year, most workers of Spokane-based employers should have felt a bit flush. Based on preliminary data from the Department of Employment Security, we now know that earnings for the average worker in the county went up by about $3,000 over 2023’s average.

This is the third-highest increase over the past decade. Only pandemic years 2020 and 2021 led to higher bumps. The decadal average annual increase prior to last year was slightly above $2,000.

What might have caused this move up?  Quite simply, supply and demand forces in the labor market, with an emphasis on the former. To understand demand, ideally, we would consider the number of jobs posted last year versus 2023. But we don’t have those data, and might consider Metro GDP, the broadest measure for economic activity. The logic: A jump in economic activity leads to a greater demand for labor. But 2024 Metro GDP data haven’t yet been released.

A related measure, population growth, allows some demand insights. As a community adds people, the demand for goods and services also grows, feeding a need for additional workers. Yet 2024 was a less-than-average year of population growth: the county added about 5,000 residents. Compare that to the most recent 10-year average of nearly 7,000.

Stronger clues to the rise in earnings come from the supply side. It is stating the obvious that it hasn’t been easy for most employers to fill openings. Two measures back up this anecdotal evidence.

First, the Spokane County pool of workers known as the civilian labor force shrunk in 2024. This is the sum of those working and those unemployed but looking for work. It dropped by about 1,800 between 2024 and 2023, or by nearly 1%. Typically, a growing economy, and it seems likely that the county’s economy grew last year, requires more, not less, labor. (AI didn’t make much of a dent in staffing in 2024.)

The size of the labor force gives the potential number who can be quickly employed. That is, unless local companies draw significant number of workers from outside the county. That phenomenon certainly exists here. Since we don’t know the numbers, however, we aren’t able to factor this effect into any calculations.

A related measure expresses the number in the labor force as a share of the population.  Ideally, we would limit the ages to, say, 25-64. While population data allow an age-related breakdown at the county level, local labor force numbers do not. So, the Institute uses a ratio of the civilian labor force to the entire population over 16 years.

The result is known as the labor force participation rate. For Spokane County, the rate has declined from a recent peak in 2019 of 62.5% to 57.7% in 2024. This represents a significant drop over five years, one undoubtedly influenced by the pandemic. The rate also represents a slight drop from 2023. An interpretation of the ratio for 2024: among all adults in the county, 58% were working or wanted to.

This all-age ratio will be lower than measures of smaller populations, since it includes all those who have retired. Nationally, the recent, all-age rate was 62.3%. Contrast this to the group considered “prime working age,” 25-54 years. Its national participation rate was 83.5%. Based on the all-age ratio, it is likely that Spokane’s rate for the “prime” age group is a bit lower than the national rate.

Suffice to say, a lower participation rate makes it more difficult for employers to find workers.

Not surprisingly, the dip in the supply of workers showed up as a very weak gain in the average number of people working at Spokane-based employers.  In 2024, the count increased by about 1,600. In the half-decade before the pandemic, the average total number employed in the county went up by 6,000 to 10,000 per year.

With such paltry gains in employment and with an economy that was growing, it is no surprise that wages were bid up.

Patrick Jones is the executive director of the Institute for Public Policy and Economic Analysis at Eastern Washington University.