History of Spokane Economic Plans – Part 2 – The issues of 1995 and 1999

Monroe St. Bridge, Spokane (LOC)

Image by The Library of Congress via Flickr

A 1995 economic study produced by the “PACE Group” made the following findings about wages in Spokane (Source:  Taken from page 29 of SpokaneStudy1999-1.pdf).

Quick summary:

  • Spokane has long suffered from “enduring” low wages and high poverty rates – except in health services (and today also government/education)
  • Wages are low but costs are not commensurately low
  • Spokane has become a service-based economy  (more so than then as most of the technology manufacturers they mentioned, then, are now gone, Kaiser Mead Smelter, Agilent, Itronix and others.)

Note: This is a continuation of posts about what we knew “back then” about Spokane’s economy. I am showing that the situation we find ourselves in today, with  low wages and over reliance on government (including education) and health care has been here for a long time and that real progress towards meaningful solutions has not emerged in perhaps 20 years time. This is a look at the historical perspective.

The following is quoted from the 1999 report summarizing the 1995 PACE Group study:

  • Low annual wage levels in services other than health services ($14,734) and retail trade ($13,918) results in 45% of the workforce earning less than $15,000 per year;
  • 12.5% of Spokane County families live at or below the poverty level, as compared to just 7.8% statewide and 10.0% nationally;  21.7% of Spokane County children live in poverty compared to 14.0% statewide and 17.9% nationally;
  • From a marketing perspective, Spokane may not be seen as a very good market because the region’s Effective Buying Income ranks 128th out of 316 metropolitan areas in the U.S., next to last among communities judged competitive with Spokane by the PACE Group; and
  • While Spokane may be able to market itself as a low labor cost area, it is not a low living cost area;  the cost of living index for Spokane is 106.7, that is, 6.7% higher than the average of all areas included in the index;  the index for housing costs in Spokane stands at 131.9; housing costs rose 46.7% between 1991 and 1994, contributing to the high housing index and the above average overall index.
  • The PACE findings about low wages in services and retail, and high incidence of poverty became key issues in public discussions about economic development strategy.  ….  a new strategic plan called the “New Century Plan” identifies several key benchmarks for progress including bringing average private sector earnings per job up to or beyond the national level and reducing the incidence poverty to below national and statewide levels (New Century Plan, p. 2).

    ….

    Current advantages include low energy costs, a high quality of life, strong health care services, and a regional service center serving a variety of business needs.

On page 30 of that report, they summarize findings of Shaun O’L. Higgins, the director of marketing of the Spokesman-Review newspaper:

  • a lower percentage of minority population;
  • lower median household income and wage levels;
  • fewer adults employed full-time;
  • fewer working women; and
  • more adults who have taken at least some college level courses.

Next, they summarize several studies about Spokane’s economy:

Examining all of these studies, several relatively consistent findings emerge, describing enduring  trends of the Spokane area economy.  These findings include:

  • low wages and high poverty rates
  • a service oriented economy serving a broad, multi-state, inland region;
  • low overall contributions of manufacturing to total employment and income, but some outstanding manufacturing companies in both mature and emerging high tech sectors; [[ many of the outstanding ones have left since this report was written ]]
  • a relatively large health care sector given the size of the urban area in which it is located;
  • workforce skill deficits in both advanced technical occupations and low skill entry-level positions;
  • a high quality of life, based on utilization of the scenic qualities of the natural environment and its capacity to support recreational activities; and
  • slightly higher than average cost of living, which coupled with low wages, presents a challenge to the many area workers with quite low earnings.

Given the overall purpose of this study, examining the potential contribution of higher education to the future development of the Spokane area, several of these key features of the Spokane economy can be seen as problems that should be remedied, and problems that higher education is a key to resolving:

  • skill deficiencies in the workforce, especially for technical positions;
  • support for a strong and growing health care sector; and potential to build a stronger high tech sector.

However, another enduring characteristic of the region is low wage levels compared to other major metropolitan areas in the U.S.  While these low wage levels can be seen as an advantage to local businesses, they may contribute both to low skill levels in the workforce and they may inhibit the willingness of local people to invest in higher education.

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