History of Spokane Economic Plans – Part 1 – 1970s into the 1990s

Monroe St. Bridge, Spokane (LOC)

Image by The Library of Congress via Flickr

This post will be one of several that look at various reports that have come out over the years. They are remarkably similar from year to year except that the most recent reports focus on the need for an “innovation economy”. I agree with that need and hope you do too!

This first post does not address what the economic strategy ought to be but continues to lay the background in terms of defining the challenges within the Spokane economy. This post is intended to be about what was known about our economy “way back when” – this is historical background.

Below is what Gary Smith of Washington State University wrote in the 1990s about Spokane’s recent economic history (Source: Spokanestudy1-1999.pdf). As you read this, note the similarities of the issues from Spokane in the 1980s, 1990s up to the present.

The term “transfer payments” refers to payments that come in to Spokane and are issued to people without any requirement that they deliver a current product or service.

For example, unemployment benefits, retirement benefits, disability benefits, Medicare benefits, food stamps, veteran’s benefits, and so on, are example of transfer payments.  Wages paid to government employees or armed service personnel are not considered transfer payments because these workers provide a service in return. (Preceding 2 paragraphs revised on Oct 19, 2010 to better describe transfer payments.)

Spokane did better than the nation in the 1970s, but lagged the national pace in the 1980s.  In per capita terms, Spokane saw a real net gain of 32.1% from 1969 to 1991, a pace of income growth that lagged both the nation and the statewide average.  The level of income per capita in Spokane exceeded that in Whatcom and Yakima Counties in 1991, but was lower than the level in the remaining metropolitan counties of the state.  Much of the increase in both total and per capita income took place during the 1970s, a period of relatively strong economic performance in Spokane.
….
Personal income comes from three sources: net industry earnings, property income, and transfer payments.  Spokane County’s real total personal income rose 17.4% from 1979-91, but the three components grew at quite different rates: transfer payments accounted for 50.9 % of the growth of personal income between 1969 and 1991.  As a result, the county gained 20.7% of all personal income from transfer payments as of 1991, as compared to 16% for the state and the nation as a wholeSpokane ranked higher in dependence on transfer payments than any other metropolitan county in Washington in 1991, and was relatively high on five of six components within the transfer payments category (retirement, medical, income maintenance, veteran’s benefits, and “other”) and relatively low on one category (unemployment benefits).  Medical related transfers grew more rapidly than any other type over the 22 year period from 1969-91.

In 1991, the dominant source of earnings came from sales of goods, federal, military, state and local governments, and then the health services industry.

With expansion of government, health care, education (which are also the highest wage earning occupations in Spokane) and an increasing number of retirees, Spokane appears to be more reliant on transfer payments rather than income from building things. See top ten employers in Spokane.

The source of income may effect whether or not an area has a culture fostering ambition an inventiveness -when needs are satisfied people might not rock the boat, so to speak. Just a guess. See this previous item about whether or not Spokane has a “vibrant, entrepreneurial culture”.

Can Spokane break out of this pattern? As we will see in other reports, the same issues are cited over and over again.

Update: A commenter asks if there is newer transfer payment data than up to 1991? Yes, there is. Please see the comments for more on that and data source and also see this newer post that displays a chart up to almost the present. It appears  transfer payments increased through 2001 (most recent data) and due to increases in the unemployment rate since then, transfer payments have likely increased up to the present. Transfer payments actually exceed the total Federal tax and Social Security tax collected in Spokane County!

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2 Responses to History of Spokane Economic Plans – Part 1 – 1970s into the 1990s

  1. In another year the 1991 data will be 20 years old. Do you have updated data about today’s level of transfer payments?

    @BarbChamberlain

  2. inlandnw says:

    Yes I do but only up to 2001:
    http://web.ewu.edu/groups/institutepubpol/Monograph6.pdf

    From that report, which indicated that by 2001 the situation was starting to moderate:

    The balance between transfer payments received and tax payments made for years 1991 and 1998 reveals that Spokane and Kootenai Counties both received more in Federal individual transfer payments than paid in personal income tax and social security contributions.

    I would guess that transfer payments have increased to the present because unemployment benefits are considered transfer payments and unemployment is much greater than in 2000-2001 which was a local peak in employment and low unemployment.

    Additionally, health care as a sector of the economy has grown as a percentage of the local economy as well. Much of the health care category falls under government transfer payments either as Medicare, Medicaid, or government employee benefit programs.

    Finally, from the above report through 2001:

    The ratio for Spokane shows a clear, upward trend diverging from Kootenai County’s ratio over the past two decades. One explanation for this divergence is that transfer payments grew at virtually the same rate as personal income in Kootenai County since 1985, while transfer payments grew faster than personal income in Spokane County for most of the 31-year period.

    Of interest, the EWU report acknowledges the significant contribution of Gary W. Smith of Washington State University Cooperative Extension.

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