Economist on state budget

6/6/2010: UO Economist Tim Duy has a sobering Op-Ed in the Oregonian on the state’s budget:

… Another lesser known trend is battering the state — the steady decline in average wages relative to the rest of the nation. From 1987 to 1997, average wages increased from 88.9 percent to 94.3 percent of the U.S. average for the brief period Oregon rode the tech boom. Unfortunately, that trend ended even before the 2001 recession, and wages fell back to 89.4 percent of the U.S. average by 2008. Interestingly, this trend occurred even as development officials convinced themselves that young “creatives” are flocking to the state, fueling growth in high wage jobs. The data suggests otherwise — relative job quality is declining.

To be sure, one can wax poetic about the value of the “second paycheck,” the nonmonetary benefit of Oregon’s quality of life. But like it or not, money is important. State coffers certainly could use the boost a 5 percent increase in wages would provide. Meanwhile, even as job growth stalls and relative wages decline, Oregon’s population keeps increasing. Note that the employment-to-population ratio — the proportion of the 16-and-older population that is employed — peaked at 65.2 percent in 1998 and has since reverted to 57.8 percent, a level not seen since the 1970s. More people simply require more services: more health care for the poor, more schools for our children, more prisons for our criminals. But without job growth, how can we pay for these services? Perhaps we should rethink the wisdom of basing our economic strategy on attracting people and instead attract jobs.