“Spokane is a great place….Things are good in Spokane.”

We wish it were true!

But back in the reality-based world and this last post on this blog … by the numbers, Spokane is not getting better, it continues its long downward slide.

Spokane’s Economy In Easy to Read Charts

For decades, wages in Spokane have grown at half the rate of the rest of the state, falling further behind every year. Spokane wages average about 20% behind the rest of the state. Government and health care workers make close to King County wages – but everyone else here earns much less than the -20% wage  differential implies.

Every year, Spokane residents fall further and further behind their counterparts in the rest of Washington and in the nation. This chart shows that Spokane per capita income was at 90% of the State’s level in the 1970s, but has declined to less than 80% of the State’s level by 2008 (the orange line). In 2010, average wages rose 2.7% nationwide, but rose only 2.3% in Spokane County. Stated another way, average wages rose 17% faster everywhere else while and Spokane residents’ income fell relative to everyone else.

The next chart highlights the wage differential for those working in higher skilled jobs in Spokane.  Education and health care, which are shown, are similar to King County. (Government wage data was not available for this specific comparison). As we move to the right into higher skilled jobs like manufacturing, finance and engineering, the wage differentials are enormous. Spokane will never attract a national or world class high skilled workforce when wages in Spokane are up to 50% less than across the state. Which is why the State and local power brokers have identified Spokane as the low wage, low skilled industry cluster for the state.

 

Tons more data after the break …

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Boeing to build new 737MAX airliner – but where? Not in Spokane.

Business & Technology | Boeing says new 737Max has nearly 500 commitments | Seattle Times Newspaper.

Boeing has not yet selected the manufacturing location for the new plane but says it will not be South Carolina and is considering sites other than Renton, Wa.

Boeing once had a sub assembly facility in Spokane, opening in about 1990 but sold it in 2004. The buyer cut existing pay by up to 15%, with new hires making half of what Boeing had paid. GSI would like Boeing to consider Spokane because of our low wages and cheap land.

Update Nov 30th, 2011: Boeing has selected Renton. I read the Accenture consultant’s report and while Spokane’s bid was okay, it was missing key elements, such as a strong engineering force, university R&D and graduate programs in engineering (Spokane has zero). The main advantage for Spokane was – low wages and cheap land.

Greater Spokane Inc (GSI) and some of the media got way ahead with the hype. KXLY ran a story over the weekend saying that Spokane was the “top spot“.

The hype said Spokane was a top contender but then after the Renton announcement, the spin is that Spokane was never bidding for the plant, but only for supplier opportunities. May be in the distant future, if 737MAX production expands, would they consider other locations for a 737 factory.

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Back in Spokane, the County’s Engineering and Roads Department has a sizable layoff. There’s not much work for them to do around here now that the sewer lines have been installed.

Low demand for highly educated, high skilled workers in Spokane

As shown in the post, below, pay for high skilled private sector workers in Spokane County (law, business, science and technology) is surprisingly low.

What It Means

  • The demand for high skilled workers in Spokane County is low.
  • There are about twice as many people with a 4-year degree as there are job openings needing a 4-year degree qualified worker*.
  • There are about three times as many people with graduate degrees as there are job openings needing a graduate degree qualified worker*.
  • The low demand for highly educated workers in Spokane is a likely reason wages for the highly skilled are so low.
  • About 2/3ds of the job openings require a high school diploma or less.

Chart comes from the Community Indicators of Spokane.

Besides the “Recommendations” posted in the right most column of this web site, what else might be done to create an ecosystem demanding higher skilled workers in Spokane?

Update: Local PR news article refers to Spokane as a “blue collar city”, which helps to explain the low wage issue. This article is part of a lobbying effort to continue receiving a 30% taxpayer funded subsidy to movie makers in Washington. For amusement, see how the local TV news hacked this story down to a few meaningless sentences. Funny.

* About 25% of adults here have a 4-year degree but the demand is about 12% to 15% of job openings. About 10% have a graduate degree but the demand is about 2% to 4% of job openings. Spikes in 4-year degree job openings in 2007-2009 have to do with the recession when lower skilled workers were typically the first to get fired and higher skilled workers were the first to be hired.

Comparison of average wages between Spokane and King Counties

A sample of job categories was selected from the Workforce Explorer web site for Industry Trends. A few were dropped out because the job category did not exist in both counties.

  • Most Spokane County workers are paid less and professional high skilled private sector workers are paid a lot less.
  • While we have come to expect lower pay in Spokane, some of the differences are shocking.
Table of average wages in $s in Spokane versus King County. The difference is shown in the right most column. Bright green is higher. Dark green is “close”. Bright red is -24% or worse difference.
Occupation Spokane King County Spokane Pay
Public Schools/Education
Teacher 33207 36051 -8%
Elementary Teacher 58227 55921 4%
Education administrator 100703 102037 -1%
Government workers
Firefighter 61987 72591 -15%
Police and Sheriff 64560 72205 -11%
Zoologists and wildlife biologists 57261 62254 -8%
Health Care
Pharmacist 107792 95782 13%
Registered Nurse 65735 77800 -16%
Physician assistant 88684 100508 -12%
Dentist 147660 159630 -7%
Nursing aides 24342 30917 -21%
Private Sector Jobs
Science and Technology
Industrial engineer 69391 83122 -17%
Mechanical engineer 62946 82890 -24%
Software engineer, apps 70504 94071 -25%
Software engineer, systems 74135 99318 -25%
Computer programmer 54288 95782 -43%
Chemist 50917 73321 -31%
Chemical technician 38653 35160 10%
Law & Business
Lawyer 90215 118674 -24%
Paralegal 35344 53588 -34%
Marketing manager 108781 125807 -14%
Sales manager 82235 119374 -31%
Advertising/promotions manager 48198 101550 -53%
Architect 83145 72237 15%
Editors 58218 61492 -5%
Reporters and correspondents 40346 54105 -25%
Labor
Roofer 35953 46263 -22%
Truck Driver 39584 43626 -9%
Sheet metal worker 35946 57792 -38%
Cooks, all other 23731 29322 -19%
Retail sales 21486 24151 -11%
Bus and truck mechanic 42489 51252 -17%
Hairdresser, stylist, cosmetologist 33459 32702 2%
Mobile heavy equip. mechanic 41968 59303 -29%

Wage data from the State’s Workforce Explorer Industry Trends section.

What It Means
  • Education sector pays about the same.
  • Government and health care pay some what less.
  • Private sector highly educated workers are paid remarkably less.
  • Those considering moving to Spokane need to consider the income ramifications of their career sector.
  • At present pay levels, there will not be a science or technology cluster in Spokane. With extraordinarily low pay, Spokane will have difficulty attracting high quality scientists and engineers needed to create a regionally or nationally competitive science and technology cluster.
  • At present pay levels, the same issue impacts creation of national classes businesses.
  • “Editors” average is about the same in both counties. This may account for why there is little news coverage of the chronic low wage problem in Spokane – low wages do not affect them!  But reporters’ pay – ick!
Would be interesting to compare pay scales to Benton-Franklin counties, and to Clark County (Vancouver, Wa) area.

Related articles

Inflation Adjusted Average Wages in Spokane County

Good news – inflation adjusted average wages in Spokane County have gone up from 1990 to 2010.

Bad news – wage growth from 2001 to 2000 was 13.7% but wage growth from 2001 to 2009 was 5.5%.

  • The second period was selected to start from the lowest post 2000 wage (the bottom in 2001) to the end of the series in 2010.
  • The first period was selected to start in 1991 and run to 2000 (local peak) so that the same number of years would be in both groups.

What it means:  Wage growth in Spokane was much lower after the peak in 2000 and is now growing less than half as fast as prior years.

Oddity: Why did average wages shoot up in 2008 and 2009 in the midst of the worst recession since The Great Depression? Lower wage earners were laid off their jobs. Eliminating lower wage workers causes the average to rise.

Bottom line: Since 2000, average pay in Spokane has risen at a slower rate than prior to 2000. That’s unfortunate.

Reminder: The “average” is not the same as the “median”.

Spokane Median Income Trend versus State of Washington Median Income Trend

This chart shows Spokane median household incomes versus the state of Washington’s household median income, with both adjusted for inflation in to 2010 $s.

  • Compare the red line with the green line. Green is the State of Washington and red is Spokane.
  • Compare the yellow/orange line with the blue line, where yellow/orange is the state of Washington and the blue line is Spokane.

If the data series are correct, and the inflation adjustments are correct, household median income in Washington has also fallen but remains just above the 1989 figure.

Data sources – see previous post.

I have government data for average wages per job (which is not the same as household median income). I have not yet had time to make the inflation adjustments to that data, and draw a chart, but it appears that average wages per job have gone up, which is good news.

Update: Funny quote from Taleb, paraphrasing McCluhan… “The median is not the message“. We hope!

Spokane’s economic plan du jour

Picture of the Duncan Garden at Manito Park an...

Image via Wikipedia

Spokane’s future industry clusters:

  1. Retirees and transfer payments
  2. Health care services and health care academics
  3. Government, including education
  4. Manufacturing
  5. Low skill, low wage categories including retail, restaurants, hotels, recreation, trucking, warehousing.
  6. Various small categories including low skilled and high skilled workers.

Categories 1, 2 and 3 will account for 60+% of the local economy. Here’s the number of workers, per category, flipped from horizontal to vertical to present the relative size differences.  Retirees and transfer payments are not shown in the chart but would be in the top 3.

Here is the impact of transfer payments. As you can see, transfer payments are a large component of the local economy. For more information on transfer payments please see “Trend of Transfer Payments into Spokane County“.

Data Data from washington.reaproject.org

Retirees

Previously, many people retired from Southern California and took their large real estate capital gains to low cost Spokane. That source of retirees is diminished due to the housing collapse and its return in the future is not predictable. This is an important driver for health care, housing and service sectors.  Inbound migration may be at reduced levels for a long time.

Clusters

The State adopted an industrial clustering policy where the state selects the industry clusters to be supported in each region. The primary clusters for Spokane are health care, education, and trucking and warehouse operations. Manufacturing has been in a slow national decline for 30 years.

Health care is on a growth streak due to retirees, a doubling in individual use of medical services over the past 30 years, and more recently by expectations of “ObamaCare” leading to an expectation of increased demand for services primarily paid for by someone else.

Risks

The loss of retirees from Southern California produces risks to the area’s current strategy and may be why the 2011’s local economy continues to remain stuck well below 2007 levels. On the plus side, the nation’s overall large “baby boom” approaches retirement years. However, where they choose to settle in their retirement years will have a big impact – and some think relocating as part of retirement may be thing of the past, not of the future.

There is a risk that the health care act might not play out as expected. It is possible that court challenges may limit the growth in the health business sector.

There is a risk that shifting more money into health care services without addressing the exorbitant prices charged and excess consumer demand for health services paid for by other people means less money for the production side of the economy. This is not a sustainable path.

Spokane’s future is based on retirees and health care – but that future has risks. And a big risk is there is no plan B.

Low Wages Are By Design

Greater Spokane says our region’s primary competitive advantage is low wages and low land and housing costs (or stated another way, poverty). Per Greater Spokane, our region’s competitive advantage is low prices. And no one in power wants that to change.

Spokane will be the state’s low wage, low cost housing and low cost land destination. This appears to be by design.

Outside of the key clusters, wages and opportunities will be limited.

The substantial quantity of data collected on this web site, and reviews of all the economic plans going back to the 1980s show that the chronic low wages and limited opportunities are endemic to Spokane. Every one of the plans mentions these problems. These problems remain because not many people want to embrace change – low wages are a feature and are by design.  The area is settling into a future as a comfortable government-funded enclave of government and health care workers, and retirees collecting benefits.

Everything on this website has been mentioned before, often many times, in prior economic studies about Spokane. What I present on this website is not my opinion but is backed by data and numerous studies. This view is shared by business leaders of the past, by various politicians, current and former academic administrators and many more. The data tell this story, not me.

Why?

See the recommendations links at the right of this page. Lots of bad decisions were made in the past.

Hiatus

It’s been an interesting experience to go from wondering why so many businesses disappeared to finding out what really happened. The answer was not at all what was expected.

Unfortunately, no one cares. It’s always been this way in Spokane. As a friend said to us in the 90s, “It’s just a big small town, only bigger.” So true. (Well, at least one other person gets it…)

And nothing will change.

This web site will now be updated primarily for major events or changes.