The hypothesis for the research analysis, which I led, was to consider whether the custodial institutions, and the attendant population connected to those institutions, placed an undue burden on the budgets, infrastructure and services of local governments and public agencies. Our findings did not support the hypothesis.
An Economic Analysis Of Locating Oregon\'s Custodial Institutions In Marion County and The City Of Salem
1. An Economic Analysis of Locating Oregon’s Custodial Institutions in
Marion County and the City of Salem
Nathan Isaacs
Thanh Tran
Fred Thompson
Willamette University’s
Center for Governance and Public Policy Research
ABSTRACT
The Center for Governance and Public Policy Research was asked to conduct an economic analysis
of locating Oregon’s custodial institutions within Marion County and the city of Salem.
The hypothesis considered was that these custodial institutions, and the attendant population
connected to those institutions, place an undue burden on the budgets, infrastructure and services
of local governments and public agencies. Our findings do not support the hypothesis.
KEY WORDS: Prisons; state mental hospital; economic spillovers; wages; employment; income;
property taxes; economic development.
BIO
Nathan Isaacs is a 2009 MBA candidate at the Atkinson Graduate School of Management with
an emphasis in management consulting and finance. He is a former award-winning newspaper
journalist and distinguished Navy submarine veteran.
Thanh Tran is a 2009 MBA candidate Atkinson Graduate School of Management with an
emphasis in quantitative analysis and the financial markets of Southeast Asia.
Fred Thompson is the Director of the Center for Governance and Public Policy Research. He
also is the Grace and Elmer Goudy Professor of Public Management and Policy Analysis at
Willamette University’s Atkinson Graduate School of Management.
2.
3. Table of Contents
MAP OF OREGON AND MARION COUNTY .......................................................................... iii
INTRODUCTION ..........................................................................................................................1
LITERATURE REVIEW ................................................................................................................2
BACKGROUND ............................................................................................................................3
Community ...............................................................................................................................3
Prisons .......................................................................................................................................5
Federal Prison ...........................................................................................................................6
Juvenile Correction Facilities ...................................................................................................6
Marion County Sheriff’s Office Parole and Probation Division ...............................................7
State Hospital ............................................................................................................................7
RESEARCH ANALYSIS ...............................................................................................................9
Wages ........................................................................................................................................9
Income.....................................................................................................................................15
Employment ............................................................................................................................15
Property Taxes.........................................................................................................................19
Income Taxes ..........................................................................................................................19
Services ...................................................................................................................................20
Schools ..............................................................................................................................20
Prison Families..................................................................................................................24
Law Enforcement & Crime ...............................................................................................25
Census ...............................................................................................................................29
Prison Industries................................................................................................................30
Alternatives .............................................................................................................................31
CONCLUSION .............................................................................................................................31
BIBLIOGRAPHY .........................................................................................................................33
LIST OF GRAPHICS ...................................................................................................................34
APPENDIX A ...............................................................................................................................35
i
4. ACKNOWLEDGEMENTS
The authors would like to thank the following agencies for their assistance in answering research
questions and gathering requested information: Oregon Employment Department; Oregon
Department of Corrections; Oregon Youth Authority; Oregon Department of Revenue; Oregon
State Hospital; Salem Hospital; SEDCOR; Willamette University; Oregon State Hospital; Marion
County Sheriff’s Office; Salem-Keizer School District.
ii
6. INTRODUCTION
Willamette University’s Center for Governance and Public Policy Research was requested to
conduct an analysis of the economic effect of Oregon’s state custodial institutions on the Marion
County and Salem economies. The hypothesis which we were asked to consider is that these
custodial institutions, and the attendant populations associated with those institutions, place an
undue burden on the budgets, infrastructure and services of the local governments and public
agencies within the county.
For the purposes of this research, those institutions that were evaluated included the Oregon
State Correctional Institution; Oregon State Penitentiary; Santiam Correctional Institution; Mill
Creek Correctional Facility; the Hillcrest and MacLaren Youth Correctional Facilities; and the
Oregon State Hospital. These seven custodial institutions currently have about 2,300 employees;
more than $100 million combined annual payroll; and about 3,900 adult inmates, 475 juvenile
inmates, more than 600 mental health patients/inmates. We also studied the effect of an estimated
4,400 people who are paroled and/or under post-prison community supervision in Marion County
and administered by the Parole and Probation Division of the Marion County Sheriff’s Office.
This analysis is expected to serve as a benchmark of empirical research for policy makers at the
state and local levels. Up to now, without such information being collected and analyzed into one
document, perceptions may have served as reality in these, often vibrant, political and community
discussions about the community’s custodial populations. This analysis does not attempt to quantify
the social costs and/or benefits associated with incarcerating convicted juvenile and adult criminals
in Marion County-area correctional facilities, or evaluating/treating the mental health problems of
those being held or committed to the Oregon State Hospital.
This study was performed in the four-month period between May and August 2008. The
purpose of this project is to provide information through reliable primary and secondary data that
will show the effects these custodial institutions have on the Marion County and Salem economies.
The study also exposes a need for more research on this subject.
We have tested our hypothesis through several research methods, including an examination of
wages, income, employment, property taxes, and delivered services. The focus of the study was
to be on the quantitative economic effects these custodial institutions had in the local economy.
However, we also have identified the qualitative effects and spillovers associated with custodial
institutions and compared those with spillovers associated with Willamette University and Salem
Hospital.
It is axiomatic that economic development is not generally associated with job creation, but
with substituting more productive jobs for less productive jobs. As a first approximation, wages are
a reasonable proxy for productivity. Consequently, we collected wage data for identified custodial
institutions, which we compared with the State of Oregon, the Salem Metropolitan Statistical Area
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An Economic Analysis Of Locating Oregon’s Custodial Institutions In Marion County
7. (MSA), Willamette University, Salem-Keizer School District and with the Salem Hospital, the
county’s largest private employer. We evaluated the differences in those wages and considered any
effects they may have on the local economy. Effects can arise directly, indirectly through business-
to-business transactions, primarily through an entity’s supply chain, or induced, as the result of
payroll spending. When added, the direct, indirect, and induced effect equals the total economic
effect that the subject custodial institutions have in Marion County.
We also attempted to quantify the expense of providing public services to those institutions.
This could include hiring more police officers, sheriff’s deputies and other first responders; require
providing healthcare to an increasing number of indigent people; or have a disproportionate
number of students who require extraordinary care (realized in free and reduced lunches, special
education, social supervision or other services). We then subtracted these service costs from
the total economic effect to arrive at the net economic effect of having about 9,400 people, or
about 3 percent of the county’s population, either in custody or under some type of court-ordered
community supervision.
LITERATURE REVIEW
The business of prisons and their effect on Oregon communities was examined in the April
2008 issue of Oregon Business magazine. The article created a stir throughout the state when it
suggested that, while prisons may bring jobs to a rural community, they did not bring prosperity.
Much of the empirical research done on the subject of the economic effects of prisons has dealt with
rural communities. This is hardly surprising, as Besser and Hanson (2003) report in “Development
of Last Resort: The Impact of New State Prisons on Small Town Economies,” prisons are moving
from metropolitan locations to non-metropolitan areas. Only ten percent of prisoners housed in
state prisons built in the 1990s are located in metropolitan locations; sixty-nine percent are located
in smaller communities that have relatively high poverty levels, unemployment rates and low
household wages.1
As Oregon Business suggests, the benefits to these communities of hosting prisons are somewhat
controversial. In 2001, Christopher Setti et al. (2001) carried out an analysis of the economic
effects of the six prisons constructed in Eastern Colorado’s rural plains since 1985. They show that
per capita income in the six prison counties increased significantly relative to non-prison counties,
primarily because prison jobs pay better than agricultural and service jobs. However, the authors
insist that building a prison does not guarantee future prosperity. While counties hosting prisons
did better than other rural counties, they continued to lag behind the state as a whole. A January
1 From an analytic standpoint, locating prisons in rural areas is convenient because one can expect their effects to be
both identifiable and uncontaminated by other factors.
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An Economic Analysis Of Locating Oregon’s Custodial Institutions In Marion County
8. 2002 article published in FedGazette arrived at a similar conclusion. It assessed the results of
locating a federal prison in Stanley, Wisconsin, a small town (1,898 inhabitants) with a declining
population in a high unemployment high wage region. They concluded that the facility created
400 jobs directly and indirectly another 319, but did not significantly increase average wages. In
contrast, “Big Prisons, Small Towns: Prison Economics in Rural America” (King, Mauer & Huling
2003), claims that rural counties in New York, where prisons have been sited after 1982 have not
grown significantly faster in either in terms of employment or in terms of per capital income than
other similar counties.
The conclusion that might be drawn from these studies is that prisons are likely to have a
positive economic effect only where wages are relatively low and that this effect will be significant
only where unemployment is high.
BACKGROUND
Community
Marion County is one of 36 counties in Oregon. The county encompasses nearly 1,200 square
miles, stretching from the Willamette River in the west and to the Cascade Mountains in the
east. The county is bordered by seven others (clockwise): Clackamas, Wasco, Jefferson, Linn,
Benton, Polk, and Yamhill.2 Marion County includes 20 incorporated cities and 37 unincorporated
communities (see Table 1). The county had an estimated July 1, 2007 population of 311,070.3 The
county had an estimated 140,203 employed in the labor force and a 5.4 percent unemployment rate
in 2007.4
The county is the state’s largest producer of agriculture, producing more than 150 cash crops
and food processing is among the county’s largest industries.5 The county is also home to 38 of the
largest state agencies employing 18,143 people in 2007.6 The county also is home to Willamette
University, Chemeketa Community College and Corban College.
Salem stretches over 47 square miles. It is the state’s capital as well as the county seat and
largest city in Marion County with a population of 152,290.7 It is also the second largest city in the
state. The Salem MSA is one of six in the state and includes both Marion and Polk counties. The
Salem MSA had a 2005 GDP of $10.4 billion (see table 2).8
2 Oregon Blue Book. http://bluebook.state.or.us/local/counties/counties24.htm
3 Population Research Center, Portland State University
4 Oregon Employment Department
5 Oregon Blue Book. http://bluebook.state.or.us/local/counties/counties24.htm
6 Oregon Employment Department
7 Population Research Center, Portland State University
8 Bureau of Economic Analysis, U.S. Department of Commerce
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9. Table 1: Population Estimate for Marion County and its incorporated cities
Table 1: Population Estimate for Marion County and its Incorporated Cities
Population Estimates for Oregon and Marion County and Incorporated Cities: April 1, 1990 - July 1, 2007
Prepared by Population Research Center, PSU, March 2008.
Census Population,
County and July 1 Population Estimates April 1
Cities 2007 2006 2005 2004 2003 2002 2001 2000 2000 1990
OREGON 3,745,455 3,690,505 3,631,440 3,582,600 3,541,500 3,504,700 3,471,700 3,436,750 3,421,399 2,842,321
MARION 311,070 306,665 302,135 298,450 295,900 291,000 288,450 286,300 284,838 228,483
Aumsville 3,300 3,205 3,130 3,080 3,050 2,980 3,000 3,050 3,003 1,650
Aurora 955 920 785 660 660 660 660 660 655 567
Detroit 265 260 255 250 250 250 260 260 262 331
Donald 995 895 750 660 640 630 610 620 625 316
Gates (part)* 460 455 450 445 445 435 435 430 429 458
Gervais* 2,250 2,250 2,240 2,130 2,110 2,070 2,080 2,045 2,009 992
Hubbard 3,095 2,960 2,855 2,750 2,700 2,560 2,510 2,500 2,483 1,881
Idanha (part)* 145 145 145 145 145 145 145 145 147 177
Jefferson 2,590 2,590 2,515 2,490 2,480 2,470 2,540 2,505 2,487 1,805
Keizer 35,435 34,880 34,735 34,380 34,010 33,100 32,950 32,515 32,203 21,884
Mill City (part)* 328 325 315 310 310 295 305 305 312 308
Mt. Angel 3,755 3,665 3,630 3,600 3,700 3,660 3,400 3,130 3,121 2,778
St. Paul 410 420 415 400 390 380 350 355 354 322
Salem (part)* 129,830 127,720 126,525 123,890 123,410 122,290 120,920 119,790 119,040 94,990
Scotts Mills 300 300 300 300 300 300 310 315 312 283
Silverton 9,205 8,915 8,230 8,060 7,980 7,680 7,420 7,470 7,414 5,635
Stayton 7,765 7,700 7,505 7,360 7,300 7,200 6,960 6,870 6,816 5,011
Sublimity 2,255 2,225 2,225 2,160 2,160 2,120 2,150 2,170 2,148 1,491
Turner 1,690 1,645 1,570 1,480 1,480 1,400 1,340 1,200 1,199 1,281
Woodburn 22,875 22,615 22,110 21,790 21,560 20,860 20,410 20,310 20,100 13,404
Unincorporated 83,168 82,575 81,450 82,110 80,820 79,515 79,695 79,655 79,719 72,919
Please use caution when comparing the population estimates of the unincorporated county areas over time, and note that population estimates for the
unincorporated areas represent revised estimates rather than estimates resulting from direct change during the year.
Table 2: Total GDP (in millions)
Table 2: Total Gross Domestic Product (in millions)
Total GDP (in millions)
Metropolitan Area 2001 2002 20 03 200 4 2005
Bend, OR (MSA) 3 ,830 4,127 4,520 5,063 5,666
Corvallis, OR (MSA) 2,409 2,764 2,956 3,426 3,473
Eugene-Springfield, OR (MSA) 7 ,978 8,610 9,017 9,848 10,425
Medford, OR (MSA) 4,404 4,729 5,072 5,604 5,988
Portland-Vancouver-Beaverton, OR-WA (MSA) 77,181 79,407 81,556 90,839 95,573
Salem, OR (MSA) 8,464 9,145 9,768 10,448 11,147
Source: Bureau of Economic Analysis, U.S. Department of Commerce
Among the largest employers in the Salem MSA, as of December 31, 2007, include state and
local government, 19,100 employees and 17,800 employees, respectively; Salem Hospital, 3,500
employees; T-Mobile, 1,100 employees; Norpac Foods, 1,100 employees; Truitt Bros. Inc., 919
employees; SAIF Corporation, 711 employees; Kaiser Permanente, 550 employees; Wachovia,
510 employees (See Appendix A).
In late September 2008, Salem and Marion County proudly announced that Sanyo Solar of
Oregon would build an $80 million solar-cell manufacturing plant in southeast Salem. The facility
is expected to employ about 200 people.
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10. Prisons
Why is Salem home to the state’s prison and Eugene the state university? According to local
legend, Salem had first choice. The Oregon Constitution, in fact, once stated (article XIV, Sec. 3,
since repealed), “all public institutions of this state, other than public institutions located outside
Marion County prior to November 1, 1958, shall be located in Marion County.” The point is that
these institutions were once seen as engines of economic growth and development.
In 1864, the state purchased 147 acres of land from the Morgan L. “Lute” Savage Donation
Land Claim for a penitentiary, at a price of $9,019.17.9 The Oregon State Penitentiary (OSP) was
moved from Portland to Salem in 1866 to a 26-acre site on the property, where it remains today
and is the state’s only maximum-security prison. Since then, another three state prisons have been
added to the Marion County and Salem community.
The Oregon State Correctional Institution opened in 1959 as a medium-security facility. The
Santiam Correctional Institution was built in 1946 and was used as an annex to the Oregon State
Hospital for mental health patients. In 1977, the Department of Corrections began using the facility
as a minimum custody pre-release center and in 1990 became the Santiam Correctional Institution.
The Mill Creek Correctional Facility is located on the former Boys’ Training School site, which
was turned over to the state in 1929 to be run as a prison farm. In 1992, the Mill Creek facility was
merged with Santiam Correctional Institution for administrative efficiencies. All three institutions
are located on the eastern outskirts of Salem.10
The state Department of Corrections has a total of 14 correctional facilities throughout the
state with a total prison population, as of January 2007, of about 13,291 inmates of which about
Table 3: State Custodial Institutions in Marion County
Custodial Institution Inmates/ Employees
Patients
Oregon State Penitentiary 2,313 538
Oregon State Correctional Institution 884 250
Santiam Correctional Institution 431 113
Mill Creek Correctional Facility 275 51
Hillcrest Youth Correctional Facility 180 191
MacLaren Youth Correctional Facility 295 300
XXX
Oregon State Hospital 600 1201
Parole and Community Supervision 4,400 69
XXX
Parole and Post Prison Supervision (Absconded) 1,600
Total 9,433 3,245
Source: Oregon Department of Employment
9 Becker, Thomas; et al. Cultural Resources Investigation of the Oregon State Hospital Property, Marion County,
Oregon. Architectural Resources Group. January 2008.
10 Oregon Department of Corrections, http://egov.oregon.gov/DOC/OPS/index.shtml; and Oregon Secretary of State
Archives, http://arcweb.sos.state.or.us/state/odc/hist/current_org_smci.htm.
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11. 29 percent or 3,903 were in the four Marion County institutions.11 That is a 16 percent drop from
1997 when the four institutions housed 45 percent of the state’s prisoners, or 3,823 of the 8,531
inmates.
The adopted 2007-2009 biennial budget for the Department of Corrections was $1.3 billion,
about 19 percent more than its previous budget. The four prisons located in Marion County have
2007-2009 biennial budgets of about $156 million combined with the Oregon State Penitentiary
making up about 52 percent of that amount.
The department also was budgeted about $10 million to begin the initial planning and design of
its next prison, which is not scheduled to be opened until late 2012 or 2013. However, the Department
of Corrections and the state are readying themselves for the fiscal and operational impact that either
one of two November ballot measures would have if passed by voters, which is expected.
One of the initiatives, sponsored by Republican activist Kevin Mannix, would set mandatory
three-year minimum prison sentences for drug dealers, burglars and identity thieves regardless of
their criminal history. Its implementation is estimated to cost more than $200 million a year. The
Legislature is giving voters a second, less expensive, option that would beef up property crime
and identity theft sentences, as well as add money for drug treatment. That measure is expected
to cost about $50 million annually. The Mannix measure would add about 4,000-6,000 inmates
to Oregon’s prison system. The countermeasure would add about 1,400 inmates. If both measures
pass, the one with the most votes will become law beginning in January 2009.
The Department of Corrections, as of August, had not released plans on how it would
accommodate the influx of prisoners. Initially, based on prison over-crowding examples elsewhere
nationally, some of the burden of housing those inmates would be placed on Oregon’s county jails.
That, in turn, could force booking restrictions, meaning some suspected criminals, depending on
their crime, would be booked into the criminal system following their arrest and then released from
jails, pending the outcome of their criminal trials.
Federal Prison
The state has only one federal prison, the Federal Correctional Institution in Sheridan, which is
within 30 miles of Salem and located in Yamhill County. It is a medium-security prison that houses
about 1,900 male offenders. The facility also includes a detention center for male offenders and an
adjacent minimum-security satellite prison camp that also houses male offenders.12
Juvenile Correction Facilities
The Oregon Youth Authority operates seven secure correctional facilities in the state housing
about 800 inmates. The Hillcrest Youth Correctional Facility is located in Salem and houses about
11 Oregon Department of Corrections, “Quick Facts” and “Biannual Inmate Profiles,” www.oregon.gov/DOC/
12 Source: Federal Bureau of Prisons
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12. 180 youth inmates. The MacLaren Youth Correctional Facility is located in Woodburn and houses
about 295 youth inmates. The Oregon Youth Authority has a biennial budget of $305 million – of
which the two Marion County institutions have budgets of $42.2 million for MacLaren and $25.8
million for Hillcrest.
Marion County Sheriff’s Office Parole and Probation Division
The Marion County Sheriff’s Office Parole and Probation Division supervise about 4,400
offenders and another 1,600 offenders who have failed to check in with their parole officer and
likely have left the area. The division’s caseload is organized into geographic regions within the
county. There are also specialized caseloads for sex offenders, drug offenders, gang offenders and
domestic violence cases.
State Hospital
In 1883, less than a mile to the north of the Oregon State Prison, the state mental hospital,
originally called the Oregon State Insane Asylum, was built on what has evolved to a 144-acre
campus that includes 72 buildings which are scattered around several park-like landscaped areas.13A
majority of the buildings were built between 1883 and 1958. Two of the buildings are listed as
local landmarks by the City of Salem – the Dome Building, which was built in 1912, and the
J Building, which was built in phases between 1883 and 1915.14
Most of the hospital’s patients were committed to the hospital from criminal courts, including
those “incompetent to stand trial,” those hospitalized for treatment and competency restoration
before returning to trial, and those found “guilty except for insanity.” The remaining patients were
committed by civil court.15
In recent years, the state mental hospital has made news headlines, sparked controversies and
prompted several state and federal investigations into conditions and care given at the facility. The
Oregonian newspaper earned a 2005 Pulitzer Prize for its editorials that focused on the years of
neglect at the hospital, which is the oldest psychiatric hospital still in use on the West Coast.16 The
hospital is also popularly known as the setting for the Academy Award winning1975 film, “One
Flew over the Cuckoo’s Nest.”
Following those state and federal investigations, and a consultant’s report that the building’s
disrepair was beyond renovation, the state Legislature in 2007 authorized $458 million to build
two new hospitals in the coming years. Among the criteria used in selecting the two sites was
13 Becker, Thomas; et al. Executive Summary: Cultural Resources Investigation of the Oregon State Hospital Property,
Marion County, Oregon. Architectural Resources Group. January 2008.
14 ibid
15 Oregon State Psychiatric Hospital Replacement Site Recommendations Document. Published Jointly by the
Department of Human Services and the Department of Administrative Services. 2007.
16 “The Oregonian Captures Pulitzer for ‘Forgotten Hospital’” Dave Hogan. The Oregonian. April 18, 2006.
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13. Table 4: SITE EVALUATION RANKINGS
Table 4: Site Evaluation Rankings
NORTHERN SITES RANK TECHNICAL PROGRAM COMBINED
Oregon State Hospital grounds – Salem 1 184 172 356
DOC – Turner Rd/Deer Park – Salem 2 165 169 334
Reeds Crossing – Hillsboro 3 146 168 314
Shute Road – Hillsboro 4 150 159 309
SOUTHERN SITES RANK TECHNICAL PROGRAM COMBINED
OC – Junction City 1 162 160 322
Coker Butte – Medford 2 185 126 311
KOGAP Orchard – Medford 3 183 119 302
Airport Breeze – Medford 4 131 138 269
Source: Oregon State Psychiatric Hospital Replacement Site Recommendations Document
spelled out in three basic questions: Did the proposed site meet the acreage and location (a north
and central location in western Oregon) needs; how well did the proposed site meet technical site
attributes and cost requirements; and how well did the proposed site meet programmatic needs and
support requirements? (See Table 4).
According to the site selection document developed by the Departments of Human Services
and Administrative Services, the main factor for choosing the two sites was that they were closer
to population centers and to those who were most likely to utilize the hospitals’ services.
The approved recommendations resulted in an estimated $250 million, 620-bed, 680,000
square-foot mental hospital being built on the current campus in Salem beginning in 2009 and is
expected to be opened by 2011. The second hospital, with 360 beds, will be built in Junction City
(just north of the Eugene-Springfield MSA) in 2013. The Junction City property, a 242-acre parcel,
is owned by the Department of Corrections and was originally planned for a two-stage new prison
project, including a 1,640-bed minimum- and medium-security lockup.17
Earlier this year, Salem Mayor Janet Taylor spoke out against the proposed new mental
hospital, saying it would add to the city’s reputation as a home for criminals and people with
mental illness.
“For too long, the Salem area has shouldered a disproportionate share of the state’s burden
for providing group homes for patients discharged from the hospital’s program for the criminally
insane,” Taylor was quoted in the Salem Statesman Journal. “I’m not taking a NIMBY (Not In My
Backyard) attitude. I’m talking what is fair for the patients, the employees, and the Salem area. It is
only fair that we do our share of the load for incarcerating people and treating people with mental
illness. But it’s not fair if we’re taking it for the whole state.”18
She has since relented to the hospital’s construction in her city, but still advocates that the size
of the Salem project be reduced and that a third hospital should be built in the Portland metro area.
State officials have said any changes now would be too costly.
17 “State officials evaluating sites for new psychiatric hospitals” Register Guard. Jan. 5, 2007.
18 “Salem mayor opposes new Oregon state hospital” The Associated Press, Jan. 29, 2008.
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14. RESEARCH ANALYSIS
Wages
As we analyzed the 2007 wage data for Oregon and the Salem MSA, we found that the average
(mean) annual wage for the Salem MSA was $40,350, which was about $4,000 less than the
Oregon state average of $44,437.19 In comparison with Oregon’s five other MSA regions, the
Salem MSA’s average annual wage was only higher than that of Medford’s $39,267 (see Figures
1-4). The median annual wage for Salem MSA was about $35,400.
Figure 1: Mean annual wages for Salem MSA in 2007
Summary for Mean Annual - Salem, Oregon -2007
A nderson-D arling N ormality Test
A -S quared 8.89
P -V alue < 0.005
M ean 40350
S tD ev 18285
V ariance 334340697
S kew ness 1.43308
Kurtosis 2.68021
N 323
M inimum 18170
1st Q uartile 27430
M edian 35400
3rd Q uartile 49760
30000 45000 60000 75000 90000 105000 120000 M aximum 124110
95% C onfidence Interv al for M ean
38348 42351
95% C onfidence Interv al for M edian
33424 38201
95% C onfidence Interv al for S tDev
9 5 % C onfidence Inter vals
16975 19815
Mean
Median
34000 36000 38000 40000 42000
Figure 2: Mean annual wages for Oregon in 2007
Summary for Mean Annual - Oregon -2007
A nderson-Darling N ormality Test
A -S quared 17.51
P -V alue < 0.005
M ean 44437
S tD ev 20159
V ariance 406405320
S kew ness 1.58891
Kurtosis 3.86745
N 635
M inimum 18480
1st Q uartile 30220
M edian 38850
3rd Q uartile 53570
20000 40000 60000 80000 100000 120000 140000 M aximum 148790
95% C onfidence Interv al for M ean
42866 46008
95% C onfidence Interv al for M edian
37240 40655
95% C onfidence Interv al for S tDev
9 5 % C onfidence Inter vals
19108 21334
Mean
Median
36000 38000 40000 42000 44000 46000
19 This data came from the U.S. Department of Labor and excluded: (1) wages for some occupations that do not
generally work year-round or full-time; (2) wages that were equal to or greater than $70.00 per hour or $145,600 per
year; and (3) industry wage estimates that were not released.
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15. Figure 3: 2003-2007 Annual Wage Trend of Salem Metropolitan Service Area and Oregon
Figure 3: 2003-2007 Annual Wage Trend of Salem MSA & Oregon
$46,000
$44,437
$44,000
$42,544
$42,000
$40,433 $40,350
$40,000
$39,462
$38,992
$38,566
$38,000 $38,243
$37,793
$37,436
$36,000
$34,000
$32,000
2003 2004 2005 2006 2007
Oregon State (Average) Salem MSA (Average)
Source: U.S. Department of Labor, Bureau of Labor Statistics
Figure Figure 4: Mean Annual WageOregon’s Six Metropolitan Service Areas in in 2007
4: Mean Annual Wage in in Oregon's Six Metropolitan Service Areas 2007
$48,000
$46,050
$46,000
$44,000
$41,828 $41,770
$42,000 $41,085
$40,350
$40,000 $39,267
$38,000
$36,000
$34,000
Salem Bend Corvallis Eugene-Springfield Medford Portland-
Vancouver-
Beaverton
Source: U.S. Department of Labor, Bureau of Labor Statistics
Among the Salem MSA’s top occupations, ranked by number of workers, were Retail Sales
(5,700), Cashiers (4,260), General Office Clerks (4,080), and Food Preparation (including Fast
Food) (2,780). Among the Salem MSA’s top wage earners are General Dentists (mean annual salary
$124,110), Chief Executives ($122,290), Pharmacists ($102,530); and general and operations
managers ($99,920). Among the Salem MSA’s top occupations ranked by both annual salary
and number of employments are general and operations managers, registered nurses, all other
managers, and computer specialists (see Tables 5-7).
Willamette University’s Center For GovernanCe and PUbliC PoliCy researCh 10
An Economic Analysis Of Locating Oregon’s Custodial Institutions In Marion County
16. Table 5: Top occupations by number of employees in Salem in Salem Metropolitan
Table 5: Top occupations by number of employees MSA in 2007 Service Area in 2007
Wage Estimates
Occupation
Employment Median Hourly ($) Mean Hourly ($) Mean Annual ($)
Retail Salespersons 5,700 10.34 12.22 25,420
Cashiers 4,260 9.02 9.83 20,440
Office Clerks, General 4,080 13.13 13.25 27,550
Combined Food Preparation And Serving Workers, Including Fast Food 2,780 8.68 8.85 18,400
Customer Service Representatives 2,650 12.51 13.89 28,890
Laborers And Freight, Stock, And Material Movers, Hand 2,360 11.04 12.4 25,800
Registered Nurses 2,330 32.54 31.77 66,080
Janitors And Cleaners, Except Maids And Housekeeping Cleaners 2,200 11.65 12.21 25,400
Bookkeeping, Accounting, And Auditing Clerks 2,120 15.09 15.84 32,940
Truck Drivers, Heavy And Tractor-Trailer 2,110 16.09 16.66 34,650
Source: U.S. Department of Labor, Bureau of Labor Statistics
Table 6: Top 6: Top occupationsmean annual wage in Salem MSA in 2007
Table occupations by by mean annual wage in Salem Metropolitan Service Area in 2007
Wage Estimates
Occupation
Employment Median Hourly ($) Mean Hourly ($) Mean Annual ($)
Dentists, General 110 57.81 59.67 124,110
Chief Executives 190 55.99 58.8 122,290
Pharmacists 210 50.01 49.29 102,530
General And Operations Managers 1,860 42.61 48.04 99,920
Judges, Magistrate Judges, And Magistrates 50 45.99 46.02 95,720
Sales Managers 160 41.96 44.96 93,510
Computer And Information Systems Managers 100 43.93 43.87 91,260
Medical And Health Services Managers 170 40.6 42.84 89,110
Lawyers 650 39.58 42.23 87,830
Financial Managers 250 37.7 40.64 84,540
Source: U.S. Department of Labor, Bureau of Labor Statistics
Table 7: Top occupations by both mean annual wage and the number of employees in
Salem Metropolitan Service Areamean annual wage and the number of employees in Salem MSA in 2007
Table 7: Top occupations by both in 2007
Wage Estimates
Occupation
Employment Median Hourly ($) Mean Hourly ($) Mean Annual ($)
General And Operations Managers 1,8 60 42.61 48.04 99,920
Registered Nurses 2,3 30 32.54 31.77 66,080
Managers, All Other 1,4 00 31.36 31.27 65,050
Computer Specialists, All Other 1,3 40 28.75 28.52 59,320
Truck Drivers, Heavy And Tractor-Trailer 2,110 16.09 16.66 34,650
Bookkeeping, Accounting, And Auditing Clerks 2,120 15.09 15.84 32,940
Customer Service Representatives 2,6 50 12.51 13.89 28,890
Office Clerks, General 4,0 80 13.13 13.25 27,550
Retail Salespersons 5,7 00 10.34 12.22 25,420
Cashiers 4 ,2 6 0 9.02 9.83 20,440
Source: U.S. Department of Labor, Bureau of Labor Statistics
The mean annual wages in 2007 for the combined custodial institutions, Willamette University,
Salem-Keizer School District and Salem Hospital were dramatically higher than the Salem and
Marion County averages (see Tables 8-10). Salem Hospital has the highest mean annual wage of
$60,380. Willamette University has a mean annual wage of $55,617.20 And the custodial institutions
(except the state hospital) have a mean annual wage of $51,214. Those averages are in the upper
75% quartile for the Salem MSA. The Salem-Keizer School District average wage for teachers
of $48,517 was for the 2006-2007 school year and, as such, would be just at the upper 75 percent
quartile for the area. The Oregon State Hospital’s $45,372 mean annual wage is slightly higher
than the Oregon state average of $44,437 and significantly higher than the Salem MSA average.
20 This excludes adjunct faculty. If all were accounted the average wage would drop to $53,249.
Willamette University’s Center For GovernanCe and PUbliC PoliCy researCh 11
An Economic Analysis Of Locating Oregon’s Custodial Institutions In Marion County
17. Table 8: Annual 8: Annual meanin 2007 for Salem Hospital
Table mean wages wages in 2007 for Salem Hospital
Category Employees Percentage Total Payroll Average Annual ($)
Staff Rn 702 29% 52,492,752 74,776
Other Clinical 550 23% 34,308,560 62,379
Clinical Support 317 13% 10,173,925 32,094
Other Professional 97 4% 6,522,901 67,246
Administrative Support 232 10% 8,246,950 35,547
Facilities Support 293 12% 9,153,789 31,242
Physicians 11 0% 2,607,280 226,720
Management 212 9% 22,281,709 105,102
Total 2,414 145,787,866
Average 60,380
Source: Salem Hospital
Table 9: Annual 9: Annual meanin 2007 for Willamette University
Table mean wages wages in 2007 for Willamette University
Average
Category Employees Percentage Total Payroll
Annual ($)
Adjunct Faculty 54 8% 1,374,553 25,502
Administration 170 25% 10,975,414 64,453
Classified 214 31% 6,643,600 31,039
Faculty 209 31% 15,630,548 74,904
Professional 39 6% 1,875,099 48,643
Total 685 100% 36,499,214 53,284
Average (Excluding Adjunct Faculty) 55,617
Source: Willamette University
Table 10: Annual10: Annual mean wages in 2007 forcustodial institutions in in MarionCounty and
Table
mean wages in 2007 for state state custodial institutions Marion County and
State Hospital in Salem in Salem
State Hospital
Average
Category Employees Percentage Total Payroll
Annual ($)
Oregon State Correctional Institution 250 22% 12,996,733 51,987
Oregon State Penitentiary 538 47% 28,185,904 52,390
Santiam Correctional Institution 113 10% 5,520,296 48,852
Mill Creek Correctional Facility 51 4% 3,038,097 59,571
Hillcrest Youth Correctional Facility 191 17% 8,264,166 43,268
MacLaren Youth Correctional Facility
Total 1,143 100% 58,005,196 50,748
Oregon State Hospital 1,201 100% 38,657,014 32,187
Source: Oregon Department of Employment
To assess further the wage characteristics of these institutions relative to the community in
which they are located, we constructed a statistic model showing the distribution of jobs in terms of
annual wages characteristic of each (See Figures 5-8). The bottom line is relatively unambiguous.
To the extent that wages are a satisfactory proxy for productivity – it should be a pretty good one
– the direct economic effect of these institutions is positive. They make a significant contribution
to the economic product of the Salem SMA, especially Salem Hospital. Their overall effect is to
Willamette University’s Center For GovernanCe and PUbliC PoliCy researCh 12
An Economic Analysis Of Locating Oregon’s Custodial Institutions In Marion County
18. Figure 5:5: Comparison ofof 2007 annualwages in wages in Marion County
Figure Comparison 2007 annual mean mean Marion County
$90,000
$79,388
$80,000
$70,000
$60,000
$55,617
$51,214
$50,000 $48,517
$44,437 $45,372
$40,350
$40,000
$30,000
$20,000
$10,000
$-
Salem State of Oregon Oregon State Salem Keizer State Custodial Willamette Salem Hospital
Hospital in Salem School District Institutions in University
Marion County
Figure 6: 6: Distribution Curve of Annual Wages at Willamette University
Figure Distribution Curve of Annual Wages at Willamette University
DISTRIBUTION CURVE OF ANNUAL WAGE AT WU
A nderson-D arling N ormality T est
A -S quared 9.06
P -V alue < 0.005
M ean 53165
S tD ev 19793
V ariance 391757342
S kew ness -0.21477
Kurtosis -1.74885
N 100
M inimum 25502
1st Q uartile 31039
M edian 64453
3rd Q uartile 74904
30000 45000 60000 75000 90000 105000 M aximum 74904
95% C onfidence Interv al for M ean
49238 57093
95% C onfidence Interv al for M edian
48643 64453
95% C onfidence Interv al for S tD ev
9 5 % C onfide nce Inte r v als
17378 22993
Mean
Median
50000 52500 55000 57500 60000 62500 65000
Willamette University’s Center For GovernanCe and PUbliC PoliCy researCh 13
An Economic Analysis Of Locating Oregon’s Custodial Institutions In Marion County
19. Figure 7:7: Distribution Curve ofof Annual Wages at Salem Hospital
Figure Distribution Curve Annual Wages at Salem Hospital
DISTRIBUTION CURVE OF ANNUAL WAGE AT SALEM HOSPTIAL
A nderson-Darling N ormality Test
A -S quared 5.54
P -V alue < 0.005
M ean 59657
StD ev 22696
V ariance 515102752
Skew ness 0.228719
Kurtosis -0.721934
N 100
M inimum 31242
1st Q uartile 32957
M edian 62379
3rd Q uartile 74776
30000 45000 60000 75000 90000 105000 M aximum 105102
95% C onfidence Interv al for M ean
55154 64161
95% C onfidence Interv al for M edian
62379 67246
95% C onfidence Interv al for S tD ev
9 5 % C onfidence Inter vals
19927 26365
Mean
Median
55000 57500 60000 62500 65000 67500
Figure 8:8: Distribution Curve of Annual Wages at StateState Custodial Institutions in Marion County
Figure Distribution Curve of Annual Wages at Custodial Institutions in Marion County
DISTRIBUTION CURVE OF ANNUAL WAGE AT CORRECTION INSTITUTIONS
A nderson-Darling N ormality Test
A -S quared 14.03
P -V alue < 0.005
M ean 50684
S tDev 3838
V ariance 14733026
S kew ness -0.711864
Kurtosis 0.711284
N 100
M inimum 43268
1st Q uartile 48852
M edian 52390
3rd Q uartile 52390
24000 36000 48000 60000 72000 84000 96000 108000 M aximum 59571
95% C onfidence Interv al for M ean
49922 51446
95% C onfidence Interv al for M edian
51987 52390
95% C onfidence Interv al for S tD ev
9 5 % C onfidence Inter vals
3370 4459
Mean
Median
50000 50500 51000 51500 52000 52500
Willamette University’s Center For GovernanCe and PUbliC PoliCy researCh 14
An Economic Analysis Of Locating Oregon’s Custodial Institutions In Marion County
20. raise the community’s average real wage. Offsetting that benefit somewhat, Salem Hospital and
Willamette University also have the effect of increasing its variance. It is not evident that they
induce very much in the way of additional development, either forward or backward through their
supply chains. Most of their high value-added inputs are accessed outside of the area, aside from
construction of their plants.
Next we will turn to indirect effects.
Income
Personal income is a comprehensive measure of the income of all persons from all sources.
In addition to wages and salaries it includes employer-provided health insurance, dividends and
interest income, social security benefits, and other types of income. Personal income also includes
transfer payments from the government. Transfer payments include social security income, food
stamps, Medicare and Medicaid, welfare income, and student grants and loans received from the
government.21 When examining Marion County’s per capita income of $29,453, the county ranks
below the state ($33,299) and national averages ($36,714), but is in the top third among the state’s
36 counties (See Figure 9). The county’s five-year personal income growth rate of 3.61 percent
incrementally beats the state rate of 3.58 percent; both lag behind the national average of 4.47
percent (See Figure 10).
Employment
The Salem MSA, like elsewhere in Oregon, has steadily increased employment since the last
economic downtown in 2000-2001 (See Figure 11). For the 2007 year, the Oregon Employment
Department reported the Salem MSA’s employment gained 2,800 jobs, or 1.9 percent, with the
private sector responsible for 2,300 of those jobs. The fastest growth sector for new jobs was in
construction employment with about 600 jobs; however, like the rest of the country, the industry
has cooled since fall 2007.
Another strong performer, regional economist Pat O’Conner reported in the 2007 employment
summary, was the professional and business services sector–which includes staffing agencies–
grew 33 percent between 2001 and 2007, with the addition of 3,300 jobs.
Another growth area has been food manufacturing, which has increased jobs by 20 percent, or 900
jobs, between 2003 and 2007. The Salem MSA accounts for 19 percent of the state’s annual average
agriculture employment with about 11,600 of the state’s 59,780 agriculture jobs.
Public-sector employment in the Salem MSA increased by 500 in 2007. However, public-
sector employment has been fairly flat in recent years, according to the Employment Department.
21 Regional Economic Information System, Bureau of Economic Analysis, U.S. Department of Commerce
Willamette University’s Center For GovernanCe and PUbliC PoliCy researCh 15
An Economic Analysis Of Locating Oregon’s Custodial Institutions In Marion County
21. Figure 9: Per Capita Personal Income (Ranked by 2006 Income)
Per Capita Personal Income (ranked by 2006 income)
County 2002 2003 2004 2005 2006
1 Clackamas 35,316 35,973 37,631 39,116 41,378
2 Multnomah 34,049 34,362 35,656 36,602 38,529
* United States 30,821 31,504 33,123 34,757 36,714
3 Washington 31,690 32,140 33,069 34,515 36,259
4 Benton 30,811 32,896 34,373 33,814 35,722
5 Deschutes 28,122 28,952 30,421 31,909 33,522
* Oregon 28,931 29,565 30,621 31,599 33,299
6 Jackson 26,459 27,491 28,658 30,133 31,785
7 Yamhill 25,641 26,197 27,516 29,399 31,044
8 Lane 26,471 26,744 27,943 29,209 30,825
9 Lincoln 26,449 26,868 27,847 28,596 30,436
10 Columbia 27,211 27,444 27,967 28,997 30,174
11 Clatsop 26,027 27,167 27,178 28,155 29,571
12 Marion 25,553 26,661 27,462 27,994 29,453
13 Hood River 23,875 24,502 25,895 27,130 29,333
14 Curry 24,057 24,669 25,743 26,975 29,186
15 Tillamook 25,495 25,963 27,043 27,706 29,128
16 Grant 24,741 25,490 26,822 26,744 29,077
17 Douglas 24,751 25,038 26,028 26,824 28,198
18 Wallowa 24,237 24,291 26,413 26,645 28,112
19 Wasco 23,539 24,140 25,393 25,812 27,720
20 Polk 25,655 26,530 26,945 26,429 27,647
21 Morrow 22,062 24,945 27,012 25,278 27,537
22 Union 24,201 25,729 26,804 25,904 27,445
23 Coos 24,488 25,867 25,504 25,848 27,269
24 Linn 24,358 24,499 25,340 25,730 26,916
25 Klamath 23,487 24,501 24,837 25,414 26,908
26 Harney 22,529 23,880 23,833 25,233 26,358
27 Josephine 22,519 22,788 23,825 24,824 26,224
28 Lake 22,291 23,545 24,281 24,638 25,982
29 Wheeler 19,657 22,780 22,518 24,574 25,657
30 Umatilla 23,132 24,064 24,049 23,949 24,900
31 Baker 21,317 21,969 22,794 23,426 24,460
32 Crook 21,661 22,430 22,605 23,289 24,038
33 Gilliam 18,110 22,736 25,064 25,411 23,889
34 Jefferson 20,783 21,582 22,151 22,501 23,812
35 Malheur 18,698 19,830 19,965 19,943 21,137
36 Sherman 18,044 20,266 22,962 20,732 19,550
Source: Regional Economic Information System, Bureau of Economic Analysis, U.S.
Department of Commerce
The agency reported that between 2001 and 2007 total government employment dropped 200 jobs.
It should be noted that Oregon law constrains employee salaries to be no more than X percent of
the biennial budget. The growth of the gambling industry can be seen in the 11.1 percent increase
in Indian tribal employment. The Confederated Tribes of Grand Ronde operate the Spirit Mountain
Casino in Polk County.
Willamette University’s Center For GovernanCe and PUbliC PoliCy researCh 16
An Economic Analysis Of Locating Oregon’s Custodial Institutions In Marion County
22. Figure 10: Per Capita Personal Income 2002-2006 (with growth percentages)
$45,000
$41,378
$40,000
$38,529
4.04% Growth
$36,714
Clackamas
$35,316 3.14% Growth Multnomah
$35,000 United States
$34,049
$33,299 Oregon
4.47% Growth Marion
Polk
$30,821
3.58% Growth
$30,000 $29,453
$28,931
3.61% Growth
$27,647
1.89% Growth
$25,553
$25,000 $25,655
2002 2003 2004 2005 2006
Figure 11: Unemployment for Oregon, the Portland MSA and Salem MSA between January 2005
and June 2008 Unemployment for Oregon, the Portland MSA and Salem MSA between January 2005 and June 2008
Figure 13:
9.00%
8.00%
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
Dec-06
Dec-07
Dec-05
Aug-06
Oct-06
Aug-07
Oct-07
Aug-05
Oct-05
Apr-07
Apr-08
Apr-06
Apr-05
Nov-06
Jan-07
Nov-07
Jan-08
Jan-05
Nov-05
Jan-06
Sep-06
Feb-07
May-07
Sep-07
Feb-08
May-08
May-06
Feb-05
May-05
Sep-05
Feb-06
Mar-07
Jul-06
Jun-07
Jul-07
Mar-08
Jun-08
Mar-06
Jun-06
Mar-05
Jun-05
Jul-05
Oregon Portland MSA Salem MSA
Willamette University’s Center For GovernanCe and PUbliC PoliCy researCh 17
An Economic Analysis Of Locating Oregon’s Custodial Institutions In Marion County