Recent Walla Walla income trends underperforming

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The forces that steer the Walla Walla economy have largely smiled on the Valley’s residents over the past two years. Unemployment rates have been far lower than those of Washington and the U.S. growth rates in taxable sales exceeded the Washington state average in both 2011 and 2012. Tourism, as well as it can be measured, continues to expand, with its attractions adding to the quality of life for residents and visitors alike.

Among the smiles over Walla Walla’s recent economic performance, however, some frowns are unmistakable.

This column addresses one of them: personal income, a metric many economists regard as the broadest measure of economic well-being. It is listed as the first indicator of economic vitality in the Walla Walla Trends site for good reason. When one wants to know how the average Walla Walla resident is faring monetarily, this measure gives a quick assessment. The current assessment: below average progress over the last two years.

Personal income is composed of three broad streams. The largest is made up of earnings from one’s job, including benefits. The two other are investment income and transfer payments from the federal government. Currently, earned income by residents makes up 57 percent of total county income, with investment income 22 percent and transfer payments 21 percent of the total.

Transfer payments consist of many different flows of funds coming to the county from Washington, D.C. Listed in order of size, they are: payments from Social Security, including the federal Disability program; Medicare; Medicaid; higher education student aid programs such as Pell grants; income maintenance programs such as WIC and the earned income tax credit; veterans’ pensions and disability programs, Supplemental Nutrition Assistance Program (food stamps); and unemployment insurance benefits, among many others.

To arrive at a per capita number, the sum of earned income, investment income and transfer payments is divided by every resident in the County. Well, not quite.

For Walla Walla, the Trends site offers a modified version of the usual definition. Due to the outsized presence of an incarcerated population here, the Trends indicator offers a county average without the penitentiary population. It also shows the results with that population, but we usually report on the former definition. The choice of denominator is not trivial; in 2012, excluding the more than 2,100 residents at the Penitentiary raised per capita personal income by approximately $1,400, or 3.7 percent.

On that modified basis, Walla Walla County’s per capita personal income for 2012 was $38,780. Yet the increase from 2011 was a mere 0.6 percent. Contrast that growth with those of the benchmarks, average income expanded at a 3.4 percent clip in the U.S. And 3.7 percent in Washington state.

Over the past five years, Walla Walla’s per capita personal income didn’t take as big a dip as its benchmarks. The bad news is the county has struggled to match their recovery. For example, the cumulative growth in county average income, without the penitentiary, from the 2008 peak to 2012 was 3.8 percent. Contrast that result to that of Washington’s, at 4.3 percent, and to the U.S., at 7 percent.

The results naturally raise the question why Walla Walla’s income metric has recently underperformed. In light of all the moving parts in personal income’s calculation, that’s a topic for another column.

Over the longer run, the assessment is much sunnier. Walla Walla has closed the average income gap to its benchmarks. At the start of the series tracked by the Trends site, 1993, the county’s per capita personal income amounted to about 83 percent of the U.S. And 81 percent of Washington averages. Twenty years later, those shares had risen substantially, to nearly 89 percent of the U.S. And 84 percent of Washington. Among the three other metropolitan areas now recognized by the federal government — Spokane, Tri-Cities and Wenatchee — Walla Walla now shows the highest ranking of average income to the U.S. and the state.

The release of new income numbers later this year will tell whether Walla Walla’s recent experience is an aberration or the start of new inflection point.

As soon as the data are out, you will find them on the Trends site. The site, a project maintained by Eastern Washington University and funded by the Port of Walla Walla, can be found at www.wallawallatrends.com.

D. Patrick Jones, Ph.D., is executive director of the Institute for Public Policy & Economic Analysis at Eastern Washington University

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