Oregon wage growth dominated by higher income

First Quarter 2013: Higher Wage Workers Saw Faster Wage Growth Over the Past Decade
by Barbara E Peniston
Oregon Employment Department

Have your wages been keeping up with inflation? An inspection of year-to-year changes in median quintile wages might lead you to believe that this is not the case – unless your wages have been in the top two-fifths of all of Oregon’s wages. Graph 1 shows the median quarterly pay of those working 350 hours or more per quarter, indexed to the first quarter of 2002. Simply put, the five wage quintiles are the lowest, second lowest, middle, second highest, and highest fifth of everyone’s wages, ordered from smallest to largest. For a more detailed explanation of wage quintiles please refer to the first quarter of 2008 quarterly wage report at www.qualityinfo.org/pubs/wage/qwage2008_1.pdf. The median of each wage quintile is the wage in the middle; half of the wages in a quintile are lower and half are higher than the median wage.

For this analysis, the median quintile wages were inflation-adjusted to 2013 (converted to “real” dollars) and indexed, showing their values relative to the first quarter 2002 quintile median. Thus, the index is 1.00 for every first quarter 2002 quintile. If, for example, in a successive quarter the indexed value were 1.03, it would indicate that the median quintile wage in that quarter was 3 percent higher than its value in the first quarter of 2002.

The median wage of the top quintile, the fifth of Oregon workers with the highest incomes, has grown fairly steadily since the first quarter of 2002. The median wage of the second highest quintile has also increased, although at a slower pace. As of the first quarter of 2013, the median wage of the highest quintile had risen by 11.4 percent, from $22,385 to $24,936 (Graph 2). The median wage of the second highest quintile rose 4.3 percent, from $13,989 to $14,588.

One of the breaks in this growth trend was the decrease in median wages that occurred following the recent recession, in the first quarter of 2010. Although the trough of the recession, in terms of number of jobs, was in the third quarter of 2009, there were fewer jobs in the first quarter of 2010 than in any other first quarter from 2002 to 2013. Additionally, the number of workers with two or more jobs was only 7.9 percent, down from a high of 10.3 percent in the first quarter of 2006. The median hourly wage (inflation-adjusted) dropped from $18.39 to $18.20 in the first quarter of 2010. 2010 was the only year since 2002 that there was no increase in the minimum wage. All of these changes were likely related to the first quarter 2010 decline in the median wage of all the quintiles.

The median wages of the two lowest quintiles have gradually declined since the first quarter of 2002. After the first quarter of 2003, there were three increases, but they were not enough to offset the decreases in other year-over-year periods. From the first quarter of 2002 to the first quarter of 2013, the median wage of the lowest quintile dropped 2.9 percent, for a loss of $142 in real wages. The second lowest quintile declined by $180, or 2.4 percent.

How has the wage earner in the middle been doing? This worker’s wages are represented by the median wage of the middle quintile. Half of all wage earners make more than this worker; half make less. Although the median wage of the middle quintile has not declined over the last decade, neither has it increased. It has remained basically unchanged, largely invariant to the level of economic activity. It just barely kept up with inflation, averaging about $10,150 in real dollars over the time period. One measure of the increasing disparity between the stagnant median wage of the middle quintile and the rising median wage of highest quintile is the ratio between the two. Between the first quarters of 2002 and 2013, the value of the middle quintile median wage, relative to the highest quintile, shrank from .46 to .41.

Graph 1

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