Demos OCPP Report

8/4/2019 Demos OCPP Report

1/13

Oregons strong and vibrant middle class didnt just hap-

pen. It was built brick by brick in the decades ater WorldWar II by hard work and workers strength in num-

bers that came rom the unions that represented them.

Unions made sure that the states prosperity was widely

shared. As Oregons wealth and productivity grew, so too

did the income and benets o the people who worked

hard to create that wealth wages increased and more

employers provided their workers with health insurance,

pensions, and paid time o. Te middle class was also

built by policies that invested in public inrastructure (rom schools and public universities to highways), supported home-

ownership and made a college education accessible to a new generation. Parents without higher education themselves were

able to send their kids to college with the help o aordable tuition at state universities and nancial aid.

The STaTe of oregonS Middle ClaSS

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T h e A m e r i c A n D r e A m used to mean that i you put in a hard days work, you could expect

good wages, benets, and a better lie or your kids. oday, the kinds o jobs that can provide

a solid middle-class lie in return or hard work are in short supply unemployment is high,

earnings are fat, and hard-won benets are being lost. Te uture o Oregons middle class, the

backbone o the states economy or more than hal a century, is at risk.

c o n n e c T wi T h D mo s A T :www.deMoS.org

f o l l o w u s A T : @deMoS_org

f aC e b o o k . C o M /de M o S i de aS aC T i o n

k e e p o n T o p o f T h e laT e S T T r e ndS and analy S i S

froM dMoS aT our new blog, poliCyShop.neT

This is a brieng paper in

Dmos Future Middle Class

series and is co-published with

TheOregonCenterfor

PublicPolicy

the fr aying oforegonSMiddle Cla SS

auguSt 30, 201


2/13

T h e f r A y i n g o f o r e g o n s mi D D l e c l A s s

page 2 of 11

But Oregons middle class is now threatened. Median income or Oregon workers is the same as it was a

decade ago and only workers with a post-secondary degree earn more than their counterparts a generation

ago. Teres also been a dramatic shit in costs or health coverage rom employers to employees as well

as a rapid decline in the number o employers who even oer health insurance. Rising out-o-pocket costs

mean that a amily illness can lead to substantial expenses and medical debt. And as employers replace

traditional pensions with 401(k)-type plans again shiting costs and risks to employees middle-class

workers can no longer count on a secure retirement.

Unions have helped mitigate growing inequality by securing higher wages and benets or their members

as well as by working or stronger labor protections that benet all workers. Unortunately, job growth has

predominated in the service sector, where unions are less prevalent, pay is lower, and employers are less

likely to oer health and retirement benets. Although Oregon unions have made some headway in the

service sector, employment in the more heavily unionized manuacturing sector has declined by 30 per-

cent in Oregon since the late 1990s. And the state continues to have a job gap as growth in the working-age

population outstrips job growth.

Oregons middle class has also been hit by trends outside the labor market as it has become more costly

to raise a amily. High-quality child care is expensive, yet parents ace these costs early in their working

years when their earnings are low. Housing is also more expensive relative to household income than it was

decades ago. Te need or most working parents to have their own vehicle and the high price o gas have

urther strained middle-class amily budgets. Te growing gap between incomes and expenses ueled sky-

rocketing amily debt in the two decades preceding the Great Recession.

Te threat to the uture o Oregons middle class can be seen most clearly in the economic prospects or

the states young people. Overall, young workers today are earning less than their parents did a generation

ago, with substantial wage declines among men. Skyrocketing college costs are making it hard or middle-class students to stay in school and graduate and 60 percent o Oregon graduates enter the labor market

with student debt averaging more than $20,000. Close to a third o young workers in Oregon do not have

employer-based health insurance, and most young people will pay or the lions share o their own uture

retirement benets i current trends continue.

Te raying o the social contract may have predated the Great Recession, but the economic crisis has sub-

stantially increased the pressure on Oregons middle class. As the state recovers rom the economic crisis,

now is the time or workers, employers, and policymakers to come together once again to rebuild pathways

to the middle class, create good jobs with air pay and decent benets, and ensure that prosperity is broadly

shared or the next generation.


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page 3 of 11

eaRNINgS1

Despite substantial gains in worker productivity in recent decades, todays typical Oregon worker2 (aged

18-64) earns just $40 more per week (ater infation) than their 1980 counterparts. Infation-adjusted median

earnings or Oregon workers have increased only 7 percent over the last 30 years compared to 20 percent

nationally. Tese wage increases pale in comparison to the nations overall growth over the same time period,

when per-capita GDP increased 61 percent.3

Wages in Oregon have fuctuated with changes in the economy and public policy and have oten moved

against national trends. For example, state median earnings grew in the late 1980s and early 1990s while wages

trended down nationally. But in the mid-1990s, median earnings in Oregon ell below the national median

and have remained there. Ater recovering and peaking at $34,488 in 2001-2002, median annual earnings in

Oregon have allen slightly to $32,960 in 2009-2010, leaving the typical Oregon worker earning just $477 more

a year than they were over 15 years ago in 1993-1994 (see Figure 1).

eduCaTion

In Oregon as elsewhere, a college degree is one o the surest paths to a middle-class income. Oregon

workers with at least a bachelors degree earn nearly twice as much as those with only a high school

diploma ($50,626 versus $26,180 in 2008-2010).4 Workers with a post-secondary degree have been the

only ones to experience wage gains in Oregon over the last 30 years: median wages o workers with bach-

elors and associates degrees increased by 30 and 23 percent, respectively. High school graduates saw

OREGON UNITED STATES

$25,000

$27,000

$29,000

$31,000

$33,000

$35,000

$37,000

$39,000

figure 1. Median annual earningS of workerS inoregon and The u.S., 1980-2010 (2011 dollarS)

s ource: Dmos analysis of Current Populaon Survey data using 2-year averages


4/13


page 4 of 11

their wages decline somewhat over the last

generation. While Oregon workers who ailed

to complete high school experienced stagnant

wages, their counterparts in other states expe-

rienced wage declines.5 Oregons higher than

average minimum wage may account or this

dierence (see Figure 2).

gender

Men typically earn more than women: in 2009-

2010, median annual earnings or men were

roughly $12,000 higher than those or women

in Oregon ($40,180 versus $28,250 when both

part- and ull-time workers are included). Butthe gender gap has steadily narrowed over the

last 30 years, in part because mens wages have

stagnated. In contrast, median earnings or

women have risen by 47 percent in Oregon

since 1980. Oregon women now earn 70 per-

cent o what men do.6

riSing inCoMe inequaliTy

On the eve o the Great Recession, the rich-

est 20 percent o Oregon amilies had average

incomes 2.7 times as large as the middle 20percent o amilies and 7 times as large as

the poorest 20 percent o amilies. he very

richest amilies top 5 percent had aver-

age incomes that were 12 times as large as

the poorest 20 percent. he gap between the

aluent and everybody else has grown over

time, with the top 20 percent o Oregon ami-

lies experiencing a 46 percent gain in income

between the late 1980s and mid-2000s com-

pared to an 8 percent increase or the middle

quintile o amilies (see Figure 3). Although the gap between rich and poor in Oregon alls right in the middleo the national range 24 states have a more equal distribution o income the rate o growth in inequality in

Oregon since the late 1980s is the 11th highest in the nation.7 O all the states, Oregon is expected to have the

third largest rate o growth in millionaire households rom 2010 to 2020.8

0

10%

20%

30%

40%

50%

60%

BOTTOM 20% MIDDLE 20% TOP 20%

figure 3. real inCoMe growTh of oregonfaMilieS, by quinTil e, laTe 1980s To Mid-2000s

s ource: Center on Budget and Policy Priories and Economic Policy Instute,Pulling Apart: A State By State Analysis of Income Trends, 2004-2006.

9.5% 8.3%

46.2%

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

BACHELORS DEGREE OR MOREASSOCIATES DEGREE

SOME COLLEGE, NO DEGREE

HIGH SCHOOL DIPLOMALESS THAN HIGH SCHOOLCOMPLETED

figure 2. Median annual earningS of oregon

workerS by eduCaTion, 1980-2010 (2011 doll arS)

s ource: Dmos analysis of Current Populaon Survey data using 3-year averages.Data not available for Some College, No Degree prior to 1992.


5/13


page 5 of 11

Access to well-paying jobs with good health and retirement benets is the cornerstone o a middle-class lie.

Unions play an important role in helping workers negotiate air pay and better benets.

JoBS aND BeNefITS

All workers, not just union members, ben-

et rom union gains. Despite higher than

average union strength in Oregon, work-

ers have nonetheless been orced to absorb

an increasing portion o previously-shared

costs and risks or health and retirement

benets.

union MeMberShip

Oregon historically has had and con-

tinues to have high union participation

rates compared with the rest o the nation.

Roughly one in six Oregon workers is

a union member, 16.2 percent in 2010

compared to 11.9 percent nationwide (see

Figure 4). Nationally, 36 percent o pub-

lic-sector workers (7.6 million) are union

members compared to only 7 percent o

private-sector workers (7.1 million).9 Con-trary to national trends, Oregon has experienced an uptick in union membership ater reaching a low in

2006. Oregon unions have successully reached out to workers in new industries, organizing workers in retail

trade, home health care and social services in recent years and winning collective bargaining rights or new

groups o workers.10

Research demonstrates the key role unions play in raising wages and benets, particularly or low-income

workers. Data or 2003-2007 show that the typical worker in Oregon got a wage boost o nearly 17 percent

by being in a union, while the lowest-paid workers got a 21 percent wage gain.11 But research also shows that

higher rates o unionization benet non-union workers as well and are associated with stronger state work-

ers compensation and unemployment insurance programs.12

healTh inSuranCe

High out-o-pocket medical expenses are one o the primary causes o bankruptcy among the middle class,

underscoring the importance o health insurance coverage.13 Te proportion o Oregon workers lacking

health insurance is 16 percent, comparable to the national rate o nearly 17 percent. Although employer-

sponsored health coverage has declined in Oregon, the state has not experienced the steady erosion o

employer coverage seen nationally. Te proportion o Oregon workers who lack access to health insurance

through an employer increased rom 21 percent in 1995-1996 to 26 percent a decade later but has since come

0

5%

10%

15%

20%

25%


figure 4. union MeMberS aS a perCenT ofworkerS in or egon and The u.S., 1990-2010

s ource: Bureau of Labor Stascs, U.S. Department of Labor. Includes both

public- and private-sector workers.


6/13


page 6 of 11

the vagaries o the stock market and high ees, which eat away at returns. Nationally, roughly 63 percent o

all employer-sponsored retirement plans are now 401(k)s or similar individual retirement plans.17 More than

11 percent o Oregon workers dont participate in their employer-sponsored plan either because they cant

aord to contribute or ail to opt in (see Figure 5).

uneMployMenT

As with other states, Oregons job market is still recovering rom the eects o the Great Recession. Oregons

unemployment rate peaked at 11.6 percent in May 2009 but by July 2011 it stood at 9.5 percent, close to and

not statistically signicantly dierent rom the national rate o 9.1 percent.18 For the past several decades,

Oregons unemployment rate has ollowed the same general pattern as unemployment nationally, although

Oregons rate has typically been somewhat higher. Te state has a lot o seasonal jobs in agriculture, natu-

ral resources, tourism, and construction, which increase the overall unemployment rate. But in contrast to

some states with higher than average unemployment, Oregons labor orce is growing, having expanded over

2 percent since the start o the recession.19

down to 23 percent.14 But even or workers

who are covered through their employers,

cost shiting to employees has decreased

disposable income. Workers contribu-

tions or amily health insurance coverage

increased almost 150 percent nationally

between 2000 and 2010 to close to $4,000.

Over hal o employees pay more than 25

percent o the total cost o their insurance

premiums.15

reTireMenT benefiTS

Several actors threaten the ability o Or-

egon workers to look orward to a secureretirement. In a rate that has changed little

over the past 30 years, only 62 percent o the

states workers currently have access to a re-

tirement plan at work.16 But such plans have

gradually shited rom pensions whose

costs and nancial risks are borne almost

exclusively by employers to 401(k)-type plans that rely on worker contributions and expose individuals to

20%

30%

40%

50%

60%

70%

ACCESS TO AN EMPLOYER PLAN

PARTICIPATES IN AN EMPLOYER PLAN

NO EMPLOYER PLAN

s ource: Dmos analysis of Current Populaon Survey data, using 2-year averages.

figure 5.oregon workerS aCCeSS To andparTiCipaTion in eMployer-SponSoredreTireMenT p lanS, 1980-2010


7/13


page 7 of 11

where The JobS are

Te past 30 years have brought impor-

tant changes to Oregons job market. Oneo the most signicant o these changes

is the relative position in the states econ-

omy accounted or by employment in the

manuacturing and service sectors. Manu-

acturing jobs have provided generations o

Oregon amilies with a consistent route to

middle class jobs, providing decent wages,

benets and economic stability. But manu-

acturing employment declined rom about

23 percent in 1979-1980 to about 13 percent

in 2009-2010, while service employment

increased rom 29 percent to 41 percent

(see Figure 6). Manuacturing jobs are ar

more likely than service jobs to be union-

ized, pay decent wages, and oer middle-class benets.

M AN UFA CT UR IN G S ER VI CE S

0

10%

20%

30%

40%

50%

19901980 2000 2010

figure 6.oregon eMployMenT in ManufaCTuringand ServiCeS aS a perCenT of The labor forCe

s ource: Dmos analysis of Current Populaon Survey data, using 2-year averages.


8/13


page 8 of 11

more o their income on housing.20

Child Care

Child care can be one o the largest expenses amilies ace, in some cases equaling or exceeding housing

costs. On average, ull-time care in a amily child care home in Oregon costs $6,000 a year or an inant and

$5,400 or a our-year-old. Center-based care costs considerably more (see Figure 8). For two preschool-age

children (an inant and a our-year-old), center care averages $19,020 a year or about 29 percent o amily

income or a couple earning median wages.

RaISINg a faMILYOregonians pride themselves on being able to pass on a better lie to their children, but over the last gen-

eration, this dream has become increasingly out o reach. Even with two parents in the labor orce, Oregon

amilies struggle to meet the high costs o housing and child care, let alone save or a rainy day or invest in

the uture.

hoMeownerShip

Over the last generation, home ownership

among Oregon workers declined rom a

high o 70 percent and then stayed within

a ew percentage points o 60 percent romthe mid-1980s through the 1990s beore

trending upward again. Te rate peaked at

68 percent in 2003-2004, prior to the height

o the housing bubble nationally. Ater all-

ing to 65 percent, homeownership among

Oregon workers is increasing again (see

Figure 7). Many Oregonians are devoting

a large share o their income to housing

costs: in 2008, two in ve Oregon home-

owners (41 percent) spent 30 percent or

50%

55%

60%

65%

70%

75%


figure 7. hoMeownerShip aMong oregonworkerS, 1980-2010

s ource: Dmos analysis of Current Populaon Survey data using 2-year averages

figure 8. average annual priCe of full-TiMeChild Care in oregon

ch i l D cA re cen T erfAmily

ch i l D cA re h om e

Ia,-m $10,740 $6,000

4ad,-m $8,280 $5,400

s ource: Naonal Associaon of Child Care Resource and Referral Agencies,2011 Child Care in the State of: Oregon.


9/13


page 9 of 11

THe fUTURe MIDDLe CLaSS:

a LooK aT YoUNg peopLeTe trends acing young Oregonians seeking to build and maintain a middle-class lie are worrisome. Over

the last generation, wages have been stagnant or have declined or all young workers in Oregon. While a

college degree provides higher earnings and greater protection against unemployment, college tuition costs

have soared and students are accumulating greater amounts o debt.

labor MarkeT

In 2008-10, median earnings or workers aged 25-34 with at least a bachelors degree were $40,802 in Oregon

74 percent higher than the earnings o a typical high school graduate in the same age range ($23,426). While

earning more, college graduates in Oregonhave experienced weak earnings gains over

the last generation. Ater peaking in the early

part o the decade, median earnings (adjusted

or infation) or college graduates have de-

clined, and a typical young college worker with

a bachelors degree or higher now earns just a

couple hundred dollars more than their coun-

terpart a generation ago ($40,802 in 2008-2010

vs. $40,174 in 1981-1983). But workers with

less education have actually lost ground. Me-

dian earnings or those with some college are

24 percent less compared to 30 years ago and

earnings or high school graduates are 26 per-

cent less (see Figure 9). Tese data suggest that

young Oregonians may not be able to match

the earning power o their parents.

Although state-level data are not available,

we know that in 2010 the national unem-

ployment rate or workers under age 25 and

not enrolled in school was 18.4 percent --

nearly double the overall U.S. unemployment rate o 9.6 percent. Unemployment among young high school

graduates nationally is more than double that o young college graduates 22.5 percent in 2010 comparedto 9.3 percent among young workers with a our-year college degree.21

0

$10,000

$20,000

$30,000

$40,000

$50,000

BACHELORS DEGREE OR MORE

SOME COLLEGE

HIGH SCHOOL DIPLOMA

LESS THAN HIGH SCHOOLCOMPLETED

figure 9. Median earningS of oregon workerSaged 25-34 by edu CaTion, 1980-2010 (2011 dollarS)

s ource: Dmos analysis of Current Populaon Survey data, using 3-year average

Data for Some College not broken down by degree status due to sample siz


10/13


page 10 of 11

College TuiTion and feeS

In-state tuition at Oregons colleges and

universities was $7,080 or 2009-2010.For the last decade, these costs have

closely mirrored in-state tuition or the

nation as a whole.22 Like the rest o the

country, tuition costs have increased

steadily in Oregon with the exception

o the late 1990s and the rst ew years

o the 2000s. Since 1986-87, tuition

costs in Oregon have increased nearly

300 percent (see Figure 10). (Note that

these gures reer to tuition and ees

and do not include room and board.)

STudenT debT

Tree out o ve college graduates in

Oregon entered the labor orce with student debt in 2009, and their average debt $22,417 was 21st high-

est in the nation.23 Perhaps more alarming is the act that growing numbers o students are accumulating

debt without completing a degree, putting them on a shaky path to the uture.24

healTh and reTireMenT benefiTS

Young workers aged 25-34 are more likely than other workers in Oregon to lack health insurance cover-

age -- 23 percent are currently uninsured and nearly a third (31 percent) o young workers lack access

to health insurance coverage through their employer. Both gures increased substantially since the late

1990s, although the situation has improved

in recent years (see Figure 11). A generation

ago, young workers aged 25-34 were more

likely to have access to a retirement plan

at work than all workers regardless o age,

but now the opposite is true. Only 52 per-

cent o Oregons young workers have access

to an employer-sponsored retirement plan

and even ewer (41 percent) actually par-

ticipate.25 And most o these plans are risky

401(k)-type plans rather than traditionalpensions.

LACKS HEALTH

INSURANCE

EMPLOYER DOES NOT

PROVIDE HEALTH INSURANCE

0

10%

20%

30%

40%

1998 2002 2006 2010

figure 11. healTh inSuranCe aCCeSS aMongoregon workerS aged 25-34

s ource: Dmos analysis of the Current Populaon Survey (CPS), using2-year averages.

figure 10. annual in-STaTe College TuiTi on inoregon and The u.S.

0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000


1986

-87

1988

-89

1990

-91

1992

-93

1994

-95

1996

-97

1998

-99

2000

-01

2002

-03

2004

-05

2006

-07

2008

-09

s ource: Digest of Educaon Stascs.


11/13


page 11 of 11

CoNCLUSIoN

T h e A m e r i c A n D r e A m came to lie in Oregon in the orm o a strong and vibrant middle class thatsustained the states economy or decades. But or the rst time in generations, more people are alling

out o the middle class than joining its ranks. Te economy is still productive, but the gains are accruing

primarily to the top.

Workers are going to have to ght to get their air share. Just as the post-war middle class was built, it is

possible to rebuild it and strengthen it or the next generation. Tat will require the strength o workers

coming together to reclaim the American Dream and demanding that our elected ofcials work or workers.


12/13


page 12 of 11

endnoTeS

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4. DmsaassCPpaSvdaas3-aavas.Fxamp,a1990appss-aavaasdaam19891991.

5. SDmssmddasssasmpas.

6. DmsaassCPpaSvdaas2-aavas.

7. CBdadPPsadEmPIs,PApa:ASaBSaAassImTds,Ap2008.p://www.pp./s/4-9-08sp-a-.pd

8. CkSk,OsMsmMas,OCPP,J2011,p://www.pp./2011/06/02/s-msm-mas/

9. EmNwsRas,BaLaSass,U.S.DpamLa,Jaa21,2011.p://www.s.v/ws.as/2.0.m

10. Uswvaasdaadadsapvds2007.OCPP,GmDas,BaRaHp,OWks,Spm2010.p://www.pp./2010/p20100903LaDa_.pd

11. JSm,TUWaAdvaaLw-WaWks,CEmadPRsa,Ma2008.p://www.pp./2008/200805UWaAdvaaCEPRp.pd

12. OCPP,GmDas,BaRaHp,OWks,Spm2010.p://www.pp./2010/p20100903LaDa_.pd

13. DavdHmms,DaT,EzaWaadSWad.MdaBakpUdSas,2007:RssaNaaSd,AmaJaMd,2007.p://www.wasps.m/wp-sv/ps/dms/ama_ja__md_09.pd

14. DmsaassCPpaSv(CPS)s2-aavas.

15. TKasFamFda,EmpHaBs:2010SmmaFds,2010,p://s.k./pd/2010/8086.pd

16. DmsaassCPpaSv(CPS)s2-aavas.Fxamp,a1990appssw-aavadaam1989ad1990.

17. AaH.M,FasaG-Sass,adDaMd,AUpda401(k)Pas:Issm2007SCF,CRmRsa,2009.

18. BaLaSass,U.S.DpamLa.

19. JMamadJaCasOdz,DmsOsHJssRak:TGd,BadadNMa,As6,2009.p://www.wk.m/2009/08/06/vs.m

20. DaampdU.S.CssBam2008AmaCmmSv,Ta991.Ow-OpdHsUsVaadCssSa:2008.

21. HdSzadKaAEdwads,TCass2011:YWksFaaDLaMakWaSaN,EmPIs,Ap2011.p://p.3d./7d652122a9188_m614a.pd

22. DsEdaSass,Avadadaadsadmadadaspad-m-qvasdsd-asssadsa.

23. TPjSdD,SdDadCass2009,O2010.p://pjsdd./s/p/

ass2009.pd

24. LawGadxadLaaPa.BwsWDpO:ANdAspCSdLaTd,TNaaCPPadHEda,2005,p://www.da./ps/w/

25. DmsaassCPpaSv(CPS).


13/13


page 13 of 11

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Demos OCPP Report