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Wages in Bellingham remain below the state average. Why is that the case?

A registered nurse cleans up after one procedure and prepares for the next in the Ambulatory Surgery Center on Cordata Parkway. The Employment Security Department ranked the top 25 job postings online for Whatcom County in August and listings for registered nurses topped the list.
A registered nurse cleans up after one procedure and prepares for the next in the Ambulatory Surgery Center on Cordata Parkway. The Employment Security Department ranked the top 25 job postings online for Whatcom County in August and listings for registered nurses topped the list. The Bellingham Herald file

This area has a reputation for not having enough high-wage jobs, and a new report sheds light on where Bellingham comes up short.

The Peer Cities Report, released by the Center for Economic and Business Research at Western Washington University, compares Bellingham to five similar U.S. cities. The similarities include population, being a college town, recreation opportunities and being near major metro areas. The author of the study is Isabel Vassiliadis, a Western student who is currently in the MBA program. The study was overseen by CEBR’s directors, James McCafferty and Hart Hodges.

The five cities used in the study were Flagstaff, Ariz.; Santa Cruz, Calif.; Fort Collins, Colo.; Asheville, N.C. and Burlington Vt. The data comes from the U.S. Census American Community Survey between 2011 and 2015.

The report found that Bellingham was not doing as well as those cities in a couple of key economic indicators: Income and poverty. According to the report, Bellingham had a per capita income of $25,496, lower than the peer city average of $27,629. Taken individually, Bellingham was slightly higher than Flagstaff ($25,179) and Burlington ($24,706).

In annual median household income, Bellingham ($43,536) also ranked lower than the peer average of $50,899. Bellingham was higher than Asheville ($43,334), while Santa Cruz topped the list at $62,164.

bellingham sign
Welcome to Bellingham sign on Boulevard Street. Philip A. Dwyer pdwyer@bhamherald.com

In terms of poverty, Bellingham had an estimated 13.2 percent of households with income below the poverty level, while the peer city average came in at 11 percent – the national average was 11.3 percent. In Seattle, 7 percent of households were making income below the poverty level.

Vassiliadis said the report is meant to show what is happening in Bellingham compared to similar cities – a starting point for the community to answer the more difficult question: Why it is happening?

ARE COLLEGE GRADS LEAVING THE AREA?

The report does provide some clues for the community to look into further. One example is in the data about college degrees. In Bellingham, 40.7 percent of the population over the age of 18 have a bachelor’s degree, significantly lower than the peer city average of 48.9 percent and Seattle’s average of 58.9 percent. That difference “may indicate that the peer cities provide more attractive job opportunities for their local college graduates, retaining them at a higher rate than Bellingham,” according to the report.

western grads
Commencement services for graduating Western Washington University students in Carver Gymnasium at Western in 2014. According to a new report, one factor college grads are leaving Bellingham is that they are seeing more opportunities for job advancement in other places like Seattle. Paul Conrad For The Bellingham Herald

One possible reason could be the job mix in Bellingham. The area has a smaller proportion of jobs in management, business and professional services compared to the peer cities. It has a higher proportion of sales, construction and manufacturing. The difference in the professional/scientific/management industry sector is particularly stark: In Bellingham, 9.9 percent of the jobs are in that sector, while the peer city average was 20.2 percent. Jobs in that sector include accounting, engineering, architecture and computer services, all of which tend to pay higher salaries than the median wage.

Other factors could be in play that aren’t directly related to current jobs, Hodges said. For example, it could be that a higher percentage of retirees in this area don’t have bachelor degrees, skewing the percentages.

The area has a long history of manufacturing and jobs in natural resources that didn’t require a college degree, and many of those workers could have retired here.

“It is interesting that Bellingham is a little low in terms of that mix compared to the other peer cities,” Hodges said.

Vassiliadis added that another factor could be college graduates seeing more opportunities for job advancement in places like Seattle.

st. joseph hospital
An aerial view of St. Joseph hospital. The Employment Security Department ranked the top 25 job postings online for Whatcom County in August and listings for registered nurses topped the list. Staff The Bellingham Herald file

Whether Whatcom County workers in a specific job is paid less than in other parts of the U.S. is complicated and dependent on which industry that is studied. In May 2016 a lawyer in Whatcom County made an average hourly rate of $35.29, well below the national average of $50.95, according to the U.S. Bureau of Labor Statistics. A construction worker in Whatcom County averaged $28.60 an hour, nearly 22 percent more than the national average of $23.51.

THE ECONOMY CAN ALSO BE A FACTOR

While job mix could be a factor in this area, the ebb and flow of the local economy also influences wages. During that uncertain period of a recession, people who are not being laid off tend to stay put in their positions – that’s what happened during the most recent recession, and it has taken longer than usual for many workers to feel confident enough to pursue other job opportunities, said Anneliese Vance-Sherman, a regional labor economist for the state.

Increased turnover in a region is an important spark to wage growth, and it is something that is finally starting to rise in places like Whatcom County, she added.

“Employees that stay with an employer will see wage growth only through raises,” Vance-Sherman said, adding that someone who leaves one job for another usually makes the jump based on the incentive of higher pay. “When I see higher turnover rates, I read this as optimism on the part of job seekers.”

construction jobs
Patrick Daniels installs window blinds in the new Fisher Elementary School on Aug. 22, 2017, in Lynden. Bellingham has a higher proportion of jobs in construction, manufacturing and sales compared to other vocations, according to a new report. Philip A. Dwyer pdwyer@bhamherald.com

The state Employment Security Department pegged Whatcom’s mean hourly wage at $20.36 in 2016. That’s a 2.3 percent increase compared to the year before. Between 2009 and 2010 – in the midst of the recession – the mean hourly wage rose 0.6 percent.

Government regulations can also play a role.

Bellingham Mayor Kelli Linville said the city continues to look at the regulations put in place on business and eliminate the old ones that no longer make sense. It remains an ongoing task of communicating with other officials about rules that are bogging things down.

“We don’t have a lot of influence on wages, but we can make it easier or harder,” Linville said.

Bellingham City and Whatcom County councils need to be more proactive toward business, said Jack Petree, a longtime local resident and author of many articles on public policy and urban planning issues. He believes much of the available land in Bellingham is improperly zoned, making it a very long process for companies thinking about coming to the area.

“A business looking at relocation usually will not wait and will not invest in a years-long process,” Petree said, adding that the properties surrounding the airport should be made available for commercial development.

Even if that and other measures are done, he doesn’t expect much change in the short term.

“An economy is like a large ship, once up to a certain speed it takes time to slow and reverse course,” he said.

In taking an overall look at the report, Hodges said he wasn’t surprised by the results. In many ways Bellingham looks like a typical, smaller college town, he said. The fewer management jobs in the area compared to the peer cities is something that jumps out.

“I think the report helps us ask more focused and meaningful questions,” Hodges said.

The complete peer cities report is on the CEBR website.

Dave Gallagher: 360-715-2269, @BhamHeraldBiz

MEDIAN HOURLY WAGE A STEADY, SLOWER CLIMB

At $20.36, Whatcom County’s median hourly wage last year was below the state average of $23.91 and lower than Skagit County, which was at $20.86. When it comes to comparisons to the state average, Whatcom has a history of being lower than the state average.

The data from the Washington State Employment Security Department indicates the county has remained around $1-$3 an hour below the state average since at least 1990, back when Georgia-Pacific tissue mill dominated the Bellingham labor market with its waterfront operations. Whatcom’s mean hourly wage was $9.99 an hour in 1990 and has steadily climbed since them – but at a slower rate than the state average.

Between 1990 and 2005, Whatcom’s hourly rate was slightly higher than Skagit County. That changed in 2006, when Skagit pulled ahead. Both counties in 2006 were experiencing strong hourly wage growth in the 4 percent range, but Skagit’s was slightly stronger. Whatcom County pulled ahead in 2011, but since 2014 Skagit has had a higher median average.

There were signs of strong wage growth in the first three months of 2017 for Whatcom County, when the average weekly wage rose 7 percent, according to the U.S. Department of Labor’s Bureau of Labor Statistics. Wages jumped throughout Washington state as the hourly minimum wage rose 16 percent from $9.47 to $11.

WHICH JOBS ARE MOST IN DEMAND?

The unemployment rate in Whatcom County has remained below 5 percent for five straight months through August, according to the Employment Security Department.

A rate that low usually means jobs are available. But which industries have the strongest demand?

It depends where you look. The ESD ranked the top 25 job postings online for Whatcom County in August, and listings for registered nurses topped the list. Those jobs have median annual wages of $70,224, according to the data.

Others at the top of the list include retail sales, with a median annual salary of $22,918; retail supervisors with a median salary of $44,518 and truck drivers with a median salary of $45,870.

While a good list to spot some trends, it’s not one to take at face value, said Anneliese Vance-Sherman, a regional labor economist for the state. Some industries rely on other methods to find workers. In the construction industry, for example, employers tend to go through union procedures or by word-of-mouth, she said. Large companies and government agencies tend to advertise online as part of a hiring procedure, which could also skew the data.

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