Palouse Basin

This section on regional economics of the Palouse Basin was written by Professor Chuck Harris, with input from Jay O'Laughlin and Phillip Cook; it is excerpted from Harris et al. 2000 (please refer to the full report in PDF format for a complete list of references cited herein).

Introduction


It has become a truism that many, if not most, rural communities in the Inland West and Northern Rockies of the United States are now or traditionally have been dependent to some degree on natural resources for their economic and social well-being. Significantly, many rural communities in this region are surrounded by public lands, which limits control over the use of natural resources on those lands as well as the market demands for those resources. Increasing globalization of market economies and decreasing access to natural resources for commodity-production here in the U.S. are especially problematic for these communities, which traditionally have been dependent on industries such as mining, agriculture, and logging and wood-products manufacturing. This changing situation is especially significant for rural communities in the interior Columbia River basin, a region that spans Idaho, central and eastern Washington and Oregon, and western Montana and Wyoming. In that region, 53% of the land is publicly owned and managed by land-management agencies such as the U.S. Forest Service (USFS) and the Bureau of Land Management (BLM).
The management of public lands in the Inland Northwest has undergone significant changes in recent decades that are affecting local communities. The amount of timber offered, sold, and harvested has dramatically decreased since the late 1980s (see, for example, Farnham and Mohai 1995, O'Laughlin et al. 1998). During the last several decades, court and administrative appeals (Jones and Taylor 1995) and shifting agency culture (Brown and Harris 1992) have catalyzed organizational change in public resource management agencies, most notably in the USFS (Brown and Harris 1992). These changes represent a shift in management priorities and, in particular, an increased focus on non-commodity values (Farnham 1995). Likewise, rural communities close to public lands possessing high environmental and amenity values increasingly have been striving to capitalize on tourism and amenity-related uses of these lands as recreationists and new residents seek out these areas (Rasker 1993, 1995; Rudzitis 1999).		Timber logging
Hobo Cedar Grove	In responding to these ongoing changes, federal agencies like the USFS have increasingly emphasized both the productivity of the national forests for traditional commodity uses like timber and minerals, and also their use for non-commodity purposes such as wildlife protection and recreation activities. At the same time, consequent declines in timber harvests on public lands, lower prices for wood products, and increased production and importing of wood products are among the factors resulting in a significant number of mill closures in the Inland Northwest. These changes are dramatically affecting the conditions and situations in a number of the regional communities (McKetta 1999, McKetta and Robison 1998, Schallau and Goetzl 1992).

Economies in the West

Two Perspectives

Two differing perspectives have emerged regarding the Inland Northwest's economy with implications for community development. The traditional perspective has been that the region's economy is based on commodity-producing, "export-based" industries like agriculture, timber and mining, whose goods and services are exported outside the region. An alternative perspective asserts that the economic importance of traditional commodity-producing industries has declined in the region and that its environmental amenities and related economic development, along with an in-migration of new residents, will comprise the region's future economic base.

~ Export-Based Economies ~

From this perspective, increases in regional income from commodity-producing industries (e.g., agriculture, timber and mining) are viewed as the economic base of future economic growth, and in turn attract additional industries and jobs to the region (North 1955, Richardson 1969). An implicit theme in this literature and the popular press has been that traditional commodity-production industries can be critical for rural economies (McKetta 1999, McKetta and Robison 1998, Schallau and Goetzl 1992).

~ Amenity-Growth Economies ~

This alternative view is that much of the recent economic activity in the Inland Northwest has been stimulated by environmental amenities that, in turn, stimulate recreation and tourism spending and in-migration of people who place a high value on environmental amenities. Amenity-related sectors of the economy that produce good and services in excess of local demand are viewed as an important part of the region's economic base and, ultimately, the cornerstone of its economic growth. This view of the West's "new economy" is of a region whose economic prosperity is not only advanced by, but dependent on, environmental quality. According to this "amenity-growth" hypothesis, the region's prosperity has become uncoupled from resource "extraction" and may now actually suffer when its environmental amenities are negatively affected by traditional commodity production.

Functional Economies

The Regional Economics of "Functional Economies"

The functional economic region of eastern Washington and north central Idaho is dominated by Spokane, WA, the region's major trade center with a population of approximately 400,000 people. The city of Lewiston, with an approximate population of 31,293 in 2006, is the largest community in north central Idaho and represents a second tier of communities dominated by Spokane in this trade hierarchy. Comparable communities in the Palouse Basin include Pullman, WA, and Moscow, ID. Smaller communities in the region, such as Colfax, WA, and Potlatch, ID, with respective populations of approximately 2,700 and 700, represent the smallest rural towns in the region and the third, or lowest, tier in the hierarchy comprising this functional economy.

This situation can have important implications for a regional economy that is viewed in terms of a functional economy representing a particular trade hierarchy among communities. The service base for some first- and second-tier communities (that is, the largest cities and towns) can be dependent on inputs from smaller towns, whose residents help support that service base, but who also are more dependent on commodity-producing industries for jobs and income. Consequently, changes in the smallest, third-tier communities (say, a loss in those commodity-producing industries and jobs) can have significant impacts up the trade hierarchy on the service sectors and economies of communities in the first and second tiers.

The traditional, commodity-production model of economic growth is supported by these findings -- especially the major role that resource-based commodity industries can play in the economic development of small towns as opposed to larger ones. In large towns (pop. > 10,000), traditional industries (i.e., agriculture, mining, timber) represent, on average, a total of 15.1% of all jobs, while in the small towns (pop. < 1,500), those sectors accounted for over 40% of all jobs.

The situation for communities that might be characterized in terms of the amenity-growth model is equally revealing. In contrast to the above finding, employment in the total service economy represents a much higher proportion of the workforce in the larger towns, accounting for 68.8% in towns and cities over 10,000 in population, as opposed to 53.8% for small towns under 1,500 in population.

Employment

Employment in the Basin

Another key feature of the social setting of the region concerns the economic activity that underlies the employment of the region's populace. Many residents of the Basin are employed by the two universities, and the location of the county seats in Moscow and Colfax also contributes to the economic activity in the Basin. In addition, government jobs include teachers and school administrators in the region's public school districts. Finally, housing construction, retail trade and services (e.g., health, financial, entertainment, etc.) are major sectors of economic activity that provide jobs in the Basin. Many of these jobs are located in the counties' two largest cities (Moscow and Pullman), and many residents of the Basin's rural areas are employed in these major population centers, commuting to these cities for work, as well as to shop, dine out, and attend sporting events and other forms of recreation and entertainment.

Recent census projections indicate that a total of 17,933 jobs were recorded for Whitman County in 2003, with an average wage per job of $28,444. Fewer jobs and lower wages characterize Latah County, for which a total of 16,469 jobs were recorded in 2003, with an average wage per job of $23,013. However, the sizes of the total work forces in Whitman County (20,565) and Latah County (17,375) reflect the smaller relative labor pool in the latter; not unexpectedly, then, given that many employees in Pullman live in and commute from Latah County, unemployment is higher in Whitman County (4.4%) than in Latah County (3.7%).

In Whitman County, primary industries providing employment include educational, health and social services (45.1%); and arts, entertainment, recreation, accommodation and food services (10.2%). Major types of workers include:

Private wage or salary: 47%
Government: 46%
Self-employed, not incorporated: 7%

In Latah County, primary industries providing employment include educational, health and social services (39.8%) and retail trade (11.4%). Major types of workers include:

Private wage or salary: 55%
Government: 36%
Self-employed, not incorporated: 8%

The mean household income is relatively low in both the Idaho and Washington portions of the Basin. According to the 2000 U.S. Census Bureau data, 16.7% of the population is below the poverty line -- in comparison, 11.8% of the state of Idaho's population is below the poverty line. In contrast, a much larger percentage of the population in the Washington portion of the Basin is below the poverty line, at 25.6% -- in comparison, 10.6% of the state of Washington's population is below the poverty line. One explanation for this difference in the two cities in comparison to their states is that they provide a higher level of services for those households in poverty and on state and local assistance, and thus they attract low-income individuals as residents.