Oregon’s income growth is not what it seems

Dr. Eric Fruits, Ph.D.
Oregon economist

There seems to be a bit of back slapping here and there about last year’s personal income growth in Oregon. Oregon was ranked 15th in personal income growth among the United States and the District of Columbia. That ranking just barely puts the state in the top third in terms of personal income growth last year. As shown in the table below, Oregon’s personal income growth per person was 4.4 percent while the US as a whole saw growth of 4.3 percent.

On the one hand, it’s easy to laugh at those who get overly excited about one-tenth of one percentage point. On the other hand, as Robert Barro points out, “increases in growth rates by a few tenths of a percentage point matter a lot in the long run and are surely worth the trouble.”

The key qualifier is “in the long run.”

Over the long run, Oregon’s personal income growth per person has lagged the rest of the US by two to four tenths of a percentage point. It’s not enough to notice from year-to-year, but the impacts compound over time.

At the end of World War II, Oregon’s per capita personal income was 8.5 percent higher than the US as a whole.

In the 1950s, Oregon’s personal income growth could not keep pace with the rest of the US and by 1960, the state’s per capital personal income was the same as the US as a whole. The recession of the early 1980s hit Oregon particularly hard, and income growth never seemed to recover. Even during the dot-com boom, Oregon’s personal income did not keep pace with the rest of the US.

Last year—even with the one-tenth of one percentage point advantage—Oregon’s personal income per person was 9.0 percent lower than the US as a whole.

Even the tiniest drags on the economy can compound over time such that a state that begins almost nine percent richer than the rest of the country can end up decades later being nine percent poorer than the rest of the country.

Per Capita Personal Income Growth, Oregon vs. US

(Average Annual Growth Rate)

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