Is Oregon Making Progress?

January 23, 2001

by Jeff Thompson and Michael Leachman

The Oregon Population Survey, recently released by the Oregon Progress Board, paints an odd picture of the state's economy between 1997 and 1999. The report maintains that the typical Oregon household saw declining incomes over those two years, even though the state was in the seventh and eighth years of uninterrupted economic expansion, and labor markets were very tight. Hunger and poverty, on the other hand, are reported to have improved.

Policy makers trying to make sense of these results are likely to be confused. We suggest they pause and look at the other evidence available before accepting the Progress Board's assessment. A balanced review of the available data suggests that real incomes rose in the late 1990s, but the state's most vulnerable residents continued to struggle to feed their families.

Although job growth slowed from the hectic pace of the mid-1990s, population growth slowed even more, resulting in tight labor markets and rising wages. According to the Oregon Employment Department, real average annual earnings and per-capita income both grew more than three percent between 1997 and 1999. The Census Bureau's monthly and annual surveys found solid median income and wage gains, as well. These and other sources of wage and income data find real gains in the late 1990s. Why would the Progress Board's estimates be different?

The Progress Board's estimate of income is less precise than other studies'. The Board does not record exact incomes; it simply asks households to place their incomes in broad income categories. As a result, the Board must predict which category is most likely to contain the median and then estimate where the median falls within that category. All surveys provide estimates. The OPS, in this instance, provides estimates of estimates.

The Board's median income calculation is also influenced by the measure of inflation it chose to apply. If the US consumer price index is used, median income seems to grow between 1997 and 1999. If the Portland-area index is applied, income seems to fall. It is not clear which is best for Oregon, but findings so sensitive to the inflation measure should be treated cautiously.

There are similar problems with the Board's conclusion that hunger has lessened in Oregon. The hunger questions used in the survey were not asked previously, making it inappropriate to draw conclusions about changes over time. In addition, because the Board's survey reaches only households with telephones, and because the survey did not ask the necessary questions of all households likely to go hungry at times, the findings underestimate hunger. Five surveys by the US Census Bureau suggest that hunger in Oregon averages about 5.9 percent and has not changed recently. In fact, all of the available evidence besides the Progress Board's survey suggests that hunger remains a serious problem in the state. No evidence, not even the Progress Board's, suggests that hunger has improved.

Any snapshot of the Oregon economy will be dependent upon the equipment used. That's why policy makers should consider the full picture before making decisions that will shape Oregon's reality for years to come.

Jeff Thompson and Michael Leachman are policy analysts at the Oregon Center for Public Policy.