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”.

Why larger cities are seeing much higher wages

Larger cities drive growing wage gap between the rich and the poor, study shows.

These metropolitan areas have created “agglomeration” economies that have augmented productivity in dramatic ways, making workers more valuable and therefore able to command higher pay, says Pavan.

For example, he says, populous regions have been able to support advanced technologies and industries that would be impractical or impossible in smaller communities and rural areas and workers have more opportunities to learn advanced skills and are exposed to innovation more rapidly. As financial centers, larger cities also have easier and cheaper access to capital for bankrolling new ventures

Recommendations 2: Part 3 – Wages and pouring concrete

The Spokane Club at 1002 Riverside, in Spokane...

Image via Wikipedia

Local promoters and others present a chart showing that wages in Spokane have risen consistently over time.

That would be fine except it misses the full story. Unfortunately, Spokane wage growth lags the rest of the State.  By a lot.

As you can see in the following chart, while Spokane (red line) wages have increased, average wages in the state (blue line) have increased faster. Over several decades, wages in the State have increased at twice the rate of wages in Spokane. Stated another way, the longer we stay in Spokane the further behind we fall.


Average wages are about 80% of the rest of the State, yet our costs of living are closer to 100%. We have to spend close to the national average to live here (somethings, like health care, are priced higher than the national average).


From: Spokane’s Economy in Two charts

The above is still not the full picture. The distribution of wage income in Spokane County is odd as you can see in this chart:

Source: Relative Wage Distribution in Spokane County

Most of the wage income is produced by government and health care jobs. This is not a diversified economy, although plenty of reports and promoters claim it is.

Finally, we see that Spokane has a high poverty rate and it is getting worse – its about 50% higher than the rest of the state:

Source: Spokane Poverty Rates

A side effect is that increasing numbers of residents are dependent on the government (other taxpayers) to provide for them such that nearly $1 out of every $5 of income in this county is a check from the government (this does not include government worker wages). This trend is also occurring outside the Spokane area.

Source: Trend of Transfer Payments in to Spokane County.

This is not a short term problem.  Low wages and an elevated poverty rate are a chronic, long term problem, described in every economic study, report, and proposal going back at least 30 years.   Dr. Gary Livingston, former Chancellor of the Community Colleges of Spokane, and Whitworth University President Dr. Gary Beck both described this problem in the past year.

A side effect of low incomes and poverty is that less tax revenue is collected by local government.  Bringing up local wages would result in increased budgets for local government to fund the projects that citizens would like to have.

How do we solve this? I do not know but I do have an idea of a possible root cause that I explain below.

Since all of the past plans made the same findings and the same recommendations, should we do more plans? I doubt it.

Did anyone read the old plans and try to implement ideas from those plans? I doubt it, but if they did, then why have comparative wages continued to slide?

Why?

I do not know and can only make a stupid guess: Do we focus too much on real estate related projects?

This is just a guess – an idea to think about.

$3.7 billion has poured into downtown Spokane during the past decade (both public and private $s). Downtown is much nicer than it was. And we are not done yet – there’s big plans for even more spending in downtown.

  • Did this focus on downtown neglect other important improvements?
  • Has this distorted government spending and zoning changes to benefit a few landowners at the expense of many?
  • Buyers of luxury homes in Kendall Yards will not pay property taxes for 12 years. A nice little subsidy from the less well to do in Spokane who still have to pay taxes.  And a nice way to increase downtown land values.
  • Light rail, which was rejected by voters a few years ago, is back in the news again. Light rail projects would tremendously benefit landowners near proposed light rail stations.
  • We’ve built a $570 million dollar freeway to no where – called the North side freeway way up in north Spokane where it goes between who knows what and where ever. It won’t connect to I-90 for at least another 20 years; in the meantime its a great big piece of concrete that is not adding value comparable to its $570 million investment.  That is a big asset that will mostly be idle for 20 more years. When the full freeway does open, Division may turn into empty store fronts just like Sprague Ave did when I-90 was built. For now, this is a very expensive largely unused asset.
  • $191 million has gone in to recent airport improvements where usage has been roughly flat for 15 years.
  • We bought a $95 million remodel of the Convention Center in 2005 and now propose spending another $65 million. Convention center visitors help help create more (low wage) restaurant and hotel jobs  – and increase the value of downtown land.  After the last $95 million expansion, airport usage went down and a big local hotel went out of business.  Read what they are thinking about convention centers over in Tacoma… (I have no idea if this was a good project or not – I am just observing that the benefits might not be as envisioned.)
  • There’s a proposed $8 million bicycle bridge over the railway from WSU-Spokane to the “International district” on east Sprague.
  • And then there’s the proposal to build a new electric trolley car in downtown Spokane. Because downtown Spokane needs more investment funded by a general sales tax increase and possibly a property tax increase for those who actually benefit. Perhaps because so many buildings are empty or in foreclosure?

After all that spending, wages have fallen further behind. The poverty level has gone up.

May be this focus on mega real estate projects isn’t working out so well?

We pour lots of concrete partially because the Federal government hands out a lot of grants for pouring concrete. And we really like to spend money on downtown Spokane, delivering large benefits to a few.  When we spend money on X it means we are not spending money on Y – and around here, Y is everything else.

(Update: After this blog post went live, a reader passed along some information about “The Fancher Report”. My hypothesis turns out to be very old and was a fundamental finding in the Fancher thesis, written for a Harvard Masters degree in 1977. You can find a summary here and can download and read the whole thesis at the bottom of the page. He found that local interests, notably connected to the Cowles family, had successfully obtained taxpayer funding for programs that benefited a core group of downtown landholders by taxing everyone.  My idea was that our “no go” economy came from malinvestment. The Fancher report explains how that came to be.)

What if a little bit of this money had been spent on a medical school in Spokane? (I know, we can get grants for pouring concrete but not building medical schools.)

Or creating the comprehensive research university that local leaders have talked about over and over and over again for 20+ years?

Or setting up our own fund for local entrepreneurs?  VC money for Spokane area start ups is harder to come by than for start ups over on the coast. Because we don’t have the ecosystem here.

Perhaps we need to invest in people and ideas, not concrete.

The 21st century is about creative people building innovative solutions. But Spokane is pouring concrete to recreate a central down town core of a bygone era.

Pouring concrete creates (temporary) jobs often funded by some one else (taxpayers) and tends to provide big benefits to a small number of well connected locals – and I do not mean just the one landowner that everyone thinks of first around here – there’s more than a few that benefit. Apparently others have noticed this too – darn – I am late again. It is not a conspiracy as some suggest – it is just a well connected group that understandably does a good job of looking out for their own rational self interests.

Spokane will pour concrete to eternity rather than invest in people and ideas. Think about it.

Or I could be completely wrong and this idea is nothing more than a stupid guess. But at least it is a different idea than that presented in 30 years of local economic plans (more on this in Part 4.) Spokane is not the only town with these symptoms. A lot of small and mid-sized cities are dealing with this.

Part 4 – Plans – Aiming High – Seeking Excellence

  • Where “good enough” is no longer good enough.

All ideas are welcome, provided it does not involve writing yet another economics strategy study that no one reads, and does not involve pouring more concrete.

Latest State Wide Employment Data

Below is the table of data from the Washington Employment Security Department current through February 2011. WESD will release local area reports, including Spokane MSA, on March 24th. If I had time, I would try to convert this in to some sort of visual representation but alas, I do not have the time this week.

A summary of the statewide report is here.

In the table that follows, original report formatting is lost and this may lead to reader confusion. For example, “Manufacturing” is a summary of the next several sub sectors in manufacturing, shown below the row containing “Manufacturing”. Also, this chart shows all sectors tallied for the state. When we get to Spokane, there are significantly fewer sectors than those shown here.

So that this web site is easier to read, the data table appears after the break  – click on the Read more link to continue.

Read more of this post

Relative wage distribution in Spokane County

Notice anything unusual about the wage distribution in Spokane County?

What this chart shows

This chart is an attempt to capture the relative impact of industry wages, by sector. The normal way of looking at sectors is as a count of total employees in each sector, or sometimes as average wages by sector. This chart is a little different.

The data comes from the WorkForceExplorer. The average wage for each sector, from that data source, is multiplied by the percent of the workforce of each sector.  This weights each sector according to income (or if you prefer, weights income according to sector).

Government and health care combined are just over 40% of all wages in Spokane County. (WorkforceExplorer produces a similar chart as the above but sorts the columns and draws them as a horizontal bar chart. Our brain judges relative sizes in the vertical direction better than in the horizontal direction. When the columns are left unsorted, and drawn as vertical columns, the distribution of wage income is apparent.) The government category, as provided by WorkforceExplorer includes public schools and colleges.

Retail trade accounts for two-thirds the number of jobs found in health care and government but wages are very low. When the impact of retail trade is weighted by the low wages the importance of retail wages falls to a low level considering how many people work in retail.

If you squint at the chart for a bit, you can see that Spokane has two large clusters: government and health care. Plus three small clusters: manufacturing, retail trade and finance and insurance. The latter two are not really competitive advantage clusters – every comparable city has similar sized retail and finance industries.

What does it mean?

It means that the next time some one tells you that Spokane has a greatly diversified economy that its okay for you to ask them how much they have been drinking. There are several groups in town that incorrectly claim the local economy is highly diversified. Perhaps they drink too much 🙂

In seriousness, the chart shows that Spokane does not have a diversified economy. Related:  the incoherent cluster strategy that I have described elsewhere on this web site does not include government as a cluster even though it is the largest employer and produces the largest portion of wages.

Another component not shown is that transfer payments, primarily from government, for unemployment, disability, retirement and other benefits programs are not included. These total almost 20% of all local income. There is not an easy way to include this data in the above chart (we do not know how many recipients there are nor how to split out the portion of benefits that would end up being counted in health care).

If we could include the transfer payments, the top three clusters would be government, health care, and transfer payments. This is no way to run an economy.

What it does not mean – this chart does not directly reflect wages in each category. For example, Management shows up as a small column but the average wage in this category is very high – but has relatively few people working in that category.  Health care and government wages, on average, are slightly higher than the overall average (about 10%), but the relative size of the columns in the chart is due to how many people are employed in those categories.

Update: If the medical school is ever built in Spokane, the economy will become even less diverse as the proportion of income due to health care will rise much higher.

Questions

  • Should we have a diversified economy?
  • Do we want to have a diversified economy?
  • How do we develop a diversified economy?
  • What steps need to be undertaken to diversify the economy?
  • Are government policies enhancing diversity or limiting diversity?
  • What new policies are needed to improve diversity of income sources?
  • Is data, such as the above chart useful for decision making?

Related: