Median household income increase in Spokane County outpaces U.S., state
Analyst says gain is due to increase in jobs, not wagesOctober 12th, 2017
Household income in Spokane County has increased at a faster pace than statewide and national incomes, data compiled by the Community Indicators of Spokane Initiative show.
Countywide annual median household income rose 9.3 percent last year, according to the figures released earlier this month, up to $53,043 for 2016 from $48,525 the previous year. Median income was also up both statewide and nationally, increasing 4.6 percent and 3.3 percent, respectively.
Patrick Jones, executive director of Eastern Washington University’s Institute for Public Policy and Economic Analysis, says the increase is statistically significant, and much of the increase is likely due to new jobs created in Spokane County rather than individual increases in wages.
Last year’s increases were large enough to be considered outside of Spokane County’s margin of error—plus or minus $1,500. Because median income is based on U.S. Census Bureau survey data, there is a certain margin of error, but it is still a preferred indicator of economic health, Jones says
“When we can see that people’s incomes are rising, we can begin to plan what that means for the community’s retail health, as well as its ability to reinvest in itself,” Jones says.
The Institute for Public Policy and Economic Analysis leads the Community Indicators of Spokane Initiative, a resource that collects data from various sources for community and economic trends, including income, economic activity, real estate, labor force, and poverty.
Median household income is the middle point of income for families in a geographical area, meaning half of the families in the area have income higher than the middle point, and half have income below the midpoint.
Jones says there are three factors to consider that can affect changes in median income data: wage income, transfer payments, and investment income.
Transfer payments include Social Security, government subsidies, and other federally funded benefits.
Investment income includes payments, dividends, capital gains, and other profit made through investments.
“The most important component of income is wages, which make up between 55 and 60 percent of total income,” he says.
Wage income was up 1.7 percent in Spokane County last year over 2015, Jones says, leading him to conclude that the rise in median income wasn’t due to increases in wages.
“From 2015 to 2016, we saw a modest increase in the average wage,” he says. “We don’t yet have data on transfer payments or investment income, but I suspect neither of those areas saw much increase either.”
With data pointing to only a modest increase in wages, says Jones, the rise in median household income is more likely due to the number of people now working.
Data show nearly 5,500 net jobs created between 2015 and 2016, roughly 1,600 more than were created during the year-earlier period.
“For 2016, we had nearly 220,000 people employed in Spokane County, which is about 8,000 more than the prior year,” he says. “So the driving factor behind the increase in median household income is likely due to the presence of more workers employed in each household.”
Data show the five top-earning employment sectors in Spokane County to be government, health care and social assistance, manufacturing, finance and insurance, and retail trade.
Jones says among the five largest sectors, the one that grew the most was accommodation and food service, while the sector that grew the least was manufacturing, which saw a slight decrease.
“We also saw some increased employment in higher paying job sectors like health care and professional and technical services last year,” he says. “But it would be nice to see further growth in both those sectors, as well as manufacturing this year.”
Jobs in some sectors pay more than jobs in other sectors, of course, so the percent of people employed in various sectors also gives insight into the total wage earnings.
“Wages are the largest part of income, so with that many more people working, total wages earned is impacted,” Jones says. “So even though some of the job growth we saw was in lower paying sectors, overall job growth and wages earned went up, contributing to that higher income reported.”
Doug Tweedy, Spokane-based regional economist with the Washington state Employment Security Department, says that since the recession, Spokane County has seen increases in both wages and the number of hours people are working, but the biggest change has been in the amount of new jobs created.
In recent years, with new jobs being created and older workers retiring, Tweedy says more job opportunities exist here.
“There were almost 6,000 new jobs created last year, most of those being in industries that pay a higher-than-average wage,” he says. “So we have more people working full-time hours, at above average wages, two factors that combine to create that increase in median income we’re seeing now.”
Tweedy says additional employment opportunities also helped to decrease unemployment rates in Spokane County last year.
Data show that the Spokane County’s annual average unemployment rate was 6.3 percent in 2016, down from 6.6 the prior year.
“Unemployment has been decreasing, in part because of the increase in job creation,” says Tweedy. “The first two quarters of 2017 already saw unemployment rates at historic lows, and I expect unemployment will continue to decrease this year.”
Data indicate median household income in the city of Spokane rose at a lower rate last year than the overall county. Median household income in the city of Spokane for 2016 was $45,676, up 2.9 percent from a year earlier.
Comparatively, median household income in the city of Spokane Valley rose 15.4 percent, to $49,966, in 2016.
Although this is the highest increase the city has seen in several years, Jones says the data may not be as significant due to wider margins of error.
“While I’d like to say the city of Spokane saw a modest increase, and Spokane Valley a large one, those results may not really be all that much different statistically,” he says. “Because the groups we survey for that data are much smaller, the margins of error are wider, making it harder to conclude that the year-over-year data has changed significantly.”
He adds, “We can’t always read too much into year to year, or quarterly changes for these smaller communities. Once we can compare this year’s data to the previous two years, a definitive pattern of increase might be more positively identified.”
Jones says Spokane County’s data has a large enough sample population that margins of error are less than those of the cities of Spokane and Spokane Valley.
The increase in Spokane County household income places it above the $50,000 mark, but still below the state and national median household incomes.
Statewide, annual median household income was $67,106 in 2016, while the U.S. median household income was $57,617.
“When we place Spokane County’s results in relation to that of the state and the U.S., our latest data puts us over 90 percent of the U.S. median value, which isn’t bad,” says Jones. “I think we can take some heart in that.”