2019 #4: Spokane Incomes Soared in 2018, at Four Times U.S. Rate

by Dr. Patrick Jones

Spokane has often carried a bit of chip on its shoulder when comparisons to larger metro areas in the Pacific Northwest are made. Our cultural offerings, the types of jobs and our incomes – to name a few aspects – have been viewed as lower than in Portland or Seattle. Perhaps those comparisons aren’t the best ones, due to size differences. Yet, it is true that we’ve lagged behind national averages in several measures. In one key comparison, however, perhaps no more.

A few weeks ago, the American Community Survey of the U.S. Census released its 2018 estimates of median household income (MHI). The median is a measure of the middle of a set of numbers; in the case of incomes it is usually seen as more representative of the middle than the calculation of an average. A median is simply that number that divides a string of values into two equal halves. While households often consist of a family, they may also be made up of unrelated individuals living together.

Financial analysts often view median household income as the measure that captures more about the economy than any other. Consequently, MHI underpins local government credit worthiness ratings. And it is a report card of how economic development efforts are succeeding, since most economic development strategies now target not just jobs but jobs that pay better than average.

The 2018 MHI estimates for this community? Nothing short of astonishing, compared to prior estimates. Median household income climbed 12% in the County overall, 16% in the City of Spokane, and 11% in City of Spokane Valley over 2017. These are unprecedented jumps. Contrast these increases to the growth rate of MHI in the state, one of the top performers in the country in 2018:  4%. And the Spokane experience far outstripped the increase in the U.S. of 2.7%. As a result, the County nearly reached parity with the U.S. for the first time since the 1970s. In particular, as Indicator 2.1.1 shows, County MHI was $59,783 versus $61,937 in 2018.

All indicators on Spokane Trends tell a story or stories. What is the story here? It undoubtedly consists of several threads. First, wages and salaries went up. The bulk of our income comes from wages and salaries. For 2018, the average annual wage of the County climbed  3.8% compared to 2017, as Indicator 2.1.4 shows. This was enjoyed the best year-over-year change in a while. But it doesn’t translate into an income gain of 12%.

Another thread shows more people working. One indicator, also based on a survey, shows an additional nearly 4,000 more. See Indicator 2.4.1. Many of the new job holders could represent second wage earners in a household.

Yet another thread lies in the movement of people into the County in 2018. The number, over 7,000, represents the highest on record, as Indicator 0.2.1 reveals. Some newcomers may not be searching for work here, but bringing jobs with them. For self-employed consultants who are escaping higher-priced and less amenity-rich metro areas, it is likely that that they are paid well.

And some of the newcomers could well be employed remotely. Census data from On the Map for 2017 show that 2.2% of residents of the county named Seattle as the geography of their work. Data are not yet available for 2018, but it could well be that that a higher percentage in 2018 called Seattle, or another metro area with wages higher than here, as their workplace.

Finally, it could be that some of these 7,000 new county residents are wealthy enough to count investment income as a significant part of their total income. On average, investment income makes up 23% of personal income here.  In general, Grant Forsyth, chief economist of Avista Corp, points to these newcomers to the county as a likely source of income gains above the wage increases.

Whatever the reasons may be, the consequences of rapidly growing MHI are all positive. One is increased retail spending. As seen in Indicator 2.2.4, retail spending climbed 8.8% county-wide in 2018. That in turn, leads to fuller local government coffers. Increasing MHI usually implies that some people in poverty have climbed over the Federal Poverty threshold. We see modest evidence of that in Indicator 2.5.1, where the all-age poverty rate in the county notched down from 14.1% to 13.1%.

Another consequence is wealth accumulation, that is, unless we spend all the additional income (unlikely, even for Americans).  A greater wealth base holds promise for greater philanthropy and support of public investments.

To the former, ever-so-modest slogan for Spokane as “near nature, near perfect,” we can now add “near to America’s financial middle.” When will Spokane’s incomes finally exceed those of the U.S.? If the trends of the past decade continue, that day is not too far away, likely by 2022. Stay tuned.