116 



QUESTION 2 



Have counties reliant on federal wood supplies faced a 

 greater challenge in revitalizing their local economies? 



Annual population estimates from 1988 and 1992 provided by Wilbur Maki and 

 Associates show that none of the 72 owl region counties lost population during this period. 

 All but four (Skamemia, Wa, Douglas and Lake, Ore., and Glenn, Cal.) of the 72 counties 

 in the owl region experienced employment growth from 1988 to 1992. However, this 

 apparent robustness of county economies clouds a significant decline in average county 

 employment earnings (as well as yet unmeasured employment and eeunings losses for 

 individuals, families, and communities that had relied on wood products employment). 

 Counties with employment growth, but a decline in average wage and salary earnings, 

 illustrated that family wage jobs in the wood products industry are being replaced by sub- 

 family wage jobs in the service sector. As a result, many counties are faced with the 

 challenge of revitalizing local economies to reduce economic depravation and its associated 

 social costs. 



To complicate this challenge, the industries providing new jobs generally have 

 much lower employment multipliers and average earnings per job than tihe wood products 

 manufacturing industries that are lost The Washington State Input-Output 1987 Study 

 prepared for the Office of Financial Management in 1993 estimated employment multipliers 

 for logging and sawmilling (excluding management overtiead and associated services 

 internal to a company) of 5.8 and 4.2, respectively. Corresponding multipliers for service 

 industries were all substantially lower retail trade- 1.9, finance, insurance and real estate- 

 2.5, business services- 1.7, and health services-2.0. 



In 1988, earnings (including benefits) from wood products jobs averaged about 

 $30,000 (See Table 1). Table 2 shows growth in jobs, average earnings per job, and 

 percent average earnings growth by selected economic sector and county type from 1988 to 

 1992. Table 2 shows that health and social services was the economic sector in which 

 most jobs were created during this period, with an overall growth rate of 25 percent and 

 average earnings growth of 1 1 percent. Producer services (services that provide inputs to 

 service or manufacturing industries) and retail services ranked second and third, 

 respectively, with 23 percent and 18 percent. Slate and local government ranked fourth 

 with 15 percent However, producer services exhibited a decline in overall average 

 earnings growth of five percent. Wood-producing counties exhibited negative average 

 earnings growth for four of the five industries in which job growth was greatest. 



The counties most reliant on federal wood supplies have experienced the lowest rate 

 of growth in both number of jobs and in average earnings per job (See Table 2). Job 

 growth has occurred in consumer service industries with the lowest employment multipliers 

 and lowest average earnings per job. Forest products dominant counties, when compared 

 to those reliant on federal wood supplies, are similar to other rural counties in showing 

 greater rates of growth in producer services and lower rates in health and social services 

 and retail services. These estimates suggest that counties most reliant on federal wood 

 supplies face the toughest challenges in revitalizing their economies. 



An index was developed to rate the challenge of economic revitalization facing 

 counties impacted by loss of wood products employment and earnings. Four categories 

 were developed by adapting and modifying the Oregon State Economic Development 

 Department's "Distressed Area Analysis" rating system developed for communities: 



