Economist: Jobs lag state's growth

Jordan Novet / The Bulletin

Oregon’s gross domestic product should continue to rise in the next couple of years, but job growth might not be able to keep up, according to economist Bill Watkins.

That’s why Watkins, executive director of the Center for Economic Research and Forecasting at California Lutheran University, predicts in his quarterly economic forecast that, at least heading into the first quarter of 2014, GDP growth in the state will outperform nonfarm payrolls.

On average, Watkins’ department projects that GDP will jump 3.7 percent each quarter between the second quarter of 2012 and the first quarter of 2014, while payroll levels will increase about 1.3 percent per quarter during that period.

Watkins, who is also director of the Central Oregon Economic Forecast Project, attributed the state’s situation to a few causes, including governmental blunders and big developments with relatively few workers, such as data centers.

“Cooling farms have huge value, create huge value and employ few people, which is to say their economic output growth rate exceeds their job growth rate,” Watkins wrote. “For example, Facebook’s $210 million, 300,000-square-foot facility employs less than 50 people, based on published reports we’ve seen.”

As of December, there were 54 employees at Facebook’s data center facility in Prineville, according to an economic impact statement by Economic Development for Central Oregon.

Intel’s expanding operations in the Portland area also offer a prime example of Watkins’ point. While Intel contributed to 5.6 percent of Oregon’s economy in 2009, its workforce comprised 3.9 percent of all jobs in the state, according to a report Intel commissioned.

Even as such projects boost the state’s GDP, and bring indirect economic impacts, they won’t directly translate to job growth, Watkins noted.

“Oregonians in general will not directly benefit (from GDP growth), because they do not own the physical or human capital,” he wrote.

But Ruth Lindley, EDCO’s marketing manager, said that’s not limited to Oregon.

“It’s a problem every community (in the country) is facing,” she said.

In any case, Watkins views recent public-sector mix-ups as additional factors contributing to GDP outperforming job growth in Oregon.

“The fiascos associated with Facebook’s taxes and with the auto advertisement did huge damage,” Watkins wrote, referring to the state’s initial plan to tax Facebook for intangible assets and the U.S. Forest Service’s denial of a permit for Mercedes-Benz to shoot a car commercial in the Deschutes National Forest. “They were seen throughout the nation, and some investors saw all they needed to see to take Oregon off their potentials lists.”

Watkins also suggested that Oregon consider revamping its tax system and add training for jobs in science, technology, engineering and math.

Affiliated with the Evangelical Lutheran Church of America, California Lutheran University is in Thousand Oaks, Calif., northwest of Los Angeles. Watkins and other consultants have received money from the city of Bend and Deschutes County to work on a road map to strengthen the region’s economy for the Deschutes Economic Alliance, a nonprofit corporation, according to The Bulletin’s archives.