Writings and observations

Practical economy

As the governors talk about the wonderful economies in their states – and in their state of the state speeches, both the governors of Washington and Idaho talked about them – the relevant numbers were those of business and job creation.

Those are reasonable numbers, but they tell only a part of the story, and not the part of the story that most people in those states directly experience. For most people, a more relevant measure would be the growth, or not, of personal income, and how that compares to the national picture. And here, the tales of the states diverge.

According to the federal studies of per capita income, Washington state in 1990 ranked 15th highest for income ($19,268 per person, compared with a national $18,667). In 1995 it slipped a little, but still barely beat the national average ($23,878 per person to the national $23,562). By 2000, with the dot-com boom well under way, Washington rose to 12th place, and stayed there in 2004 – substantially beating the national average both times(in 2004: Washington $35,299, national $32,937). Over those 14 years, per capita income in Washington rose 83% – a very strong record. Taken as a whole, Washingtonians can be said to be prosperous – maybe the most useful measure of an economy’s results overall.

The state of the state speech by Idaho Governor Dirk Kempthorne emphasized the state’s economic growth even more than Christine Gregoire’s did in Washington. But Kempthorne had to be more selective in how he defined his prosperity. In a fact-check today, the Idaho Statesman noted, “Kempthorne said Idaho led the nation out of the recession earlier this decade. He noted that unemployment was at a record low of 3.4 percent and business growth and job growth were each ‘ahead of 46 other states.’ What he didn’t say was that income levels were ahead of only four other states.”

True: In fact, Idaho per capita wage rates have been a story of diminishment for a long time. Back in 1980 Idaho’s per capital income was 37th among the states. By 1990 it had fallen to 40th, stayed there in 1995, then dropped to 42nd in 2000 and 45th in 2004. (At this rate, is it headed to 49th by 2010?) By way of comparison with Washington’s wage growth: Idaho’s per capita in 1990 was $15,304, and in 2004 it was $27,098 – a growth of 77%, not enough to keep up with the national averages. The number of jobs in Idaho has been growing, all right, but the wages have not to a comparable degree.

The Statesman quoted economist John Church: “We are attracting jobs at a strong pace, and we are seen as a good place to start a business. But so far at least, we aren’t attracting enough of the high-paying jobs that would bring our per capita income ranking up.”

For most actual people, as opposed to statisticians, that’s probably the key measure.

Oregon, by the way, has had a middle path. Its per capita wage rankings among the states bounced from 27th in 1990 up to 23rd in 1995, slipped marginally in 2000 to 26th, then fell during the peak of the downturn in 2004 to 37th; it is probably on its way gently back up.

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