September 21, 2016
September 21, 2016
By Josh Lehner
Oregon Office of Economic Analysis Blog
The big economic news last week wasn’t our office’s forecast, but the big jump in median household incomes nationwide. Two separate reports showed two different numbers: the Current Population Survey gains were 5.2% and the American Community Survey gains were 3.8%. The big takeaway isn’t the differences but the strong growth seen in both. The recovery is finally translating into income gains for the majority of households. In fact, per the CPS data, the largest percentage increases in incomes were seen at the lower end of the income spectrum. This coincided with a relatively large decline in the poverty rate as well, as would be expected. Overall certainly good news and a welcome reprieve from lackluster to declining incomes in recent years. What is driving the results? I’ll let Jed Kolko, writing at Calculated Risk, explain:
Most of the jump in median household income, therefore, appears to be rising earnings, with rising employment playing an important supporting role. The labor market improved for workers on both of these fronts: the rise in median household income is indeed good news.
ACS data was also released for state and local jurisdictions* and the Oregon data looks even better. From 2014 to 2015, Oregon’s median household income grew by 6%, the third fastest rate in the nation behind Montana and Tennessee. The poverty rate dropped by more than a percentage point as well. However, from 2007 to 2015 Oregon’s median household income gains rank just 32nd best among the states and DC. And even with the poverty improvements, the state is only about halfway back down to pre-Great Recession poverty rates. Still, progress is being made and the gains are seen throughout most of the state as well.
Below is an update to our office’s graph comparing median household incomes for Oregon and the U.S. The 2015 gains mean Oregon’s median household income is 2.9% below the U.S. median, which is more in-line with the typical year where our incomes trail the nation by 2-3%. In inflation-adjusted terms, Oregon’s income in 2015 is about 1.5% below 2007 levels and 2% below 1999 levels, at least when using the PCE deflator. Using different deflators or measures of inflation will change those percentages, sometimes drastically so.
In recent years our office has been hitting on the major theme that robust job growth in Oregon has translated into solid wage gains as well. This is not the case nationally. It terms of the data, it was more a matter of time before the stronger Oregon labor market translated into median household income growth and lower poverty rates. 2015 is a start. Given the ongoing economic strength, 2016 is shaping up to be even better. A key question for the outlook is whether or not the economy can get fully healthy before the next recession. This did not happen in the housing boom. The cumulative progress made since 2009 or 2010 has actually been very significant even if year to year changes are muted. Full employment is now within sight, although not here yet. Broader gains across the board are now being seen, however incomplete they may be thus far.
* All of the 2015 ACS published tables are now available. Our office is working on dissecting the latest data and updating our records. The good news we have new data (yay!) the bad news is we have new data (have to update everything…). The microdata won’t be available for another few months. Then the real work begins when we can crunch the underlying sample data.
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