Oregon Office of Economic Analysis

1) Median Household Income

Just a quick follow-up on the 2012 ACS data that was released on Thursday. The data covers household income, poverty rates, health insurance and information on immigrant populations. In the press release the Census Bureau states that only four states saw an increase in median household income from 2011 to 2012 and Oregon was one of them with a gain of 3.3%. Given that the national median household income continues to fall, it was interesting to note that Oregon was one of the only ones to see a gain.

A few notes on this and they’re technical. First the national data on Tuesday comes from the CPS while the state data comes from the ACS; two different surveys and while their trends over time match, year to year specifics can vary. Second, 27 of the 51 states plus DC saw household gains however most the gains were within the margin of error, so not statistically different than zero. Oregon’s gain was 3.3% with a margin of error of 2.4% so it was statistically significant. Third, one year ACS estimates can be noisy, so our office tends to focus on the 3 year and 5 year estimates, which won’t be released until later this year. Fourth and most importantly, while one year of gains is encouraging, let’s string together a few of these in a row to show that real progress has been made.

Kanhaiya pulled the details on the new data and compares the household income distribution between 2011 and 2012. There is a clear difference in the households with incomes between $100,000 and $149,999. This distributional change raises the median.

Why did this occur? We don’t really know at the moment, to be honest. There are a number of theories and possibilities. Maybe there has been significant gains made across the state. Maybe a second spouse (or household member) went back to work or found work, so adding their income to the one already working spouse/partner pushed the distribution higher. Other options abound as well, however this second theory gains some more credibility when digging a bit further into the details, although this is not 100% conclusive. Portland married-couple families saw a large distributional change in the same income group that you see at the statewide level.

Again, a rising median household income is good and welcomed news but let’s see a few more of these gains and also the 3 and 5 year estimates before drawing too many conclusions.

2) Government Workers

Following up on the previous work on government workers, one additional thing to consider are the demographics of public employees. This was brought to our attention in the comments (thanks Phil) and related to some recent work last fall by Portland State (see The Oregonian article or PDF report). What is interesting is that public employees across all levels of government in Oregon are significantly older than their private sector counterparts. Even if you restrict to just employees 25 and older a similar pattern remains.

In fact, comparing the share of workforce that are effectively Baby Boomers, shows the stark difference. About 50% of public employees are Baby Boomers while about 37% of the private workforce are Boomers. And this difference is for both education workers (mainly teachers) and all other government workers.

Another interesting finding is that this age discrepancy has been long lasting; or at least as far back as this data set goes. Below I show the distribution for 1992 — the first full year of data — and 1999 — the last time the economy was really operating at or above full employment.

Finally, from time to time there is a big discussion on public employee pay and compensation. On average, public employees do receive higher pay than their private sector counterparts, or at least higher total compensation. However, most studies find that once you factor in the fact that public employees are older/have more experience as shown above, they also have a higher overall level of educational attainment, and the occupational mix is different, this compensation differential disappears. Now, whether or not one believes public employees should be compensated at the same rate as private sector workers, when directly comparing occupations and qualifications, is a different matter, and for a different day…