Editor’s note: Today is the last installment of a five-part series of articles by EO Media Group looking at the lack of workers for jobs in Central, Eastern, Southern and Coastal Oregon — why workers are not returning to previously held jobs and how businesses are functioning without being fully staffed. This last segment is a Q&A with economists.
To say it’s been a tough year to be a business owner would be an understatement.
The rise and fall of COVID-19 cases, risk levels that opened and closed businesses, new safety protocols and a severe labor shortage have forced many business owners to rethink and retool their operations. Some industries — health care and leisure and hospitality — have been hit hard by the pandemic and a labor shortage. Others, like professionals, haven’t felt a thing, economists say.
In response, small businesses have raised wages, bumped up benefits and raised prices to offset these new costs. A job that paid a minimum wage of $9.25 an hour in 2016 now pays $12.75 an hour, according to the Oregon Bureau of Labor and Industries.
The Oregon Employment Department reported that the state regained nearly two out of three jobs lost in spring 2020, when government mandates restricted or closed business operations. A record level of job openings were reported in April and June in Oregon and across the country. Businesses reported 98,000 job vacancies at any given time between April and June.
In addition, there were about 32,500 Oregonians between April and June who have said they couldn’t work because of child care concerns or health concerns related to COVID-19.
For the past five weeks, EO Media Group explored the effect of the labor shortage on businesses, industries and workers young and old.
The Bulletin asked regional economists — Damon Runberg (Central Oregon), Erik Knoder (Oregon Coast), Christopher Rich (Eastern Oregon) and Guy Tauer (Southern Oregon) — along with Gail Krumenauer, state employment economist, to project where Oregon’s economy is headed.
Their answers have been edited for clarity and brevity.
Q: What is the economic vision for Oregon going forward now that the initial impacts of the pandemic-related shutdowns are behind us?
Krumenauer: I think the general, common theme is that we’d all hope to see continued recovery and/or economic expansion. As recovery and/or expansion continues, there are some longer-term factors that are going to come into play, creating headwinds for growth. Those are lower net in-migration (the primary way we grow our workforce is from people moving here), and ongoing or increasing baby boomer retirements. And rural areas tend to have a larger share of workers at or near retirement age.
Q: Will there be inflation or other effects on the economy because of the higher wages paid to workers in this tight labor market?
Krumenauer: I’d say that yes, we’ve already been seeing higher inflation in recent months. It’s due in part to worker wages rising, in part to higher demand (this summer for things like air travel and accommodations), and also in part to shortages in supply chains that are reducing the ability to produce as many of certain goods as people want (microchips and cars are a good example of this).
Q: Where is the economy headed?
Runberg: Payroll records through the first quarter of 2021 revealed that we are nearing a complete recovery from the COVID-19 pandemic in the spring. When we get those same records through the end of summer, they’ll likely reveal that we are currently recovered as of September. The big picture trend is clear that the retiring of the baby boomers has begun and it is one of the factors in our tight labor market. According to the Current Population Survey, there was a 4.5% increase in those 65-plus who were not in the labor force in 2020. That is a big jump. Roughly 2 million people age 65 and older are out of the labor force nationwide.
Q: Will businesses have to continue to pivot to stay ahead of this current labor crisis?
Krumenauer: As for businesses pivoting, or rather continuing to adjust their hiring strategies, yes. I think they’ve already been incredibly innovative in changing their business operations due to COVID, and in trying to hire more workers when the labor market is so tight (lots of job openings, relatively low unemployment, and some workers still facing barriers to taking jobs).
Q: What are some of the things employers are doing to encourage workers to return to the workforce?
Krumenauer: For one, employers have raised wages. Those wages have risen by more than 2% in Oregon over the past year. Three out of five offered health benefits, and half offered retirement benefits. One out of 10 of employers offering health insurance, and one out of five offering retirement benefits, cited worker hiring and retention advantages related to those offerings. Half of Oregon’s private firms offered paid holidays, and half offered paid vacation days. One-third offered at least one of the following: flexible work schedules, production or performance bonuses, paid professional development training and life insurance. Some employers have relaxed experience requirements.
Employers also are layering help wanted signs with other efforts such as referral incentives, signing bonuses, posting with online job boards, and working with recruiters outside of their immediate geographical area.
Q: What’s the outlook for the regional economy in the next six months?
Oregon Coast regional outlook by Knoder: “Over the next 12 months I expect that the coast will add jobs. From 2014 through 2019 the coast added an average of 1,764 jobs from August of one year to the August of the following year. The Office of Economic Analysis forecasts that Oregon will regain jobs lost in the pandemic recession by the summer of 2022. In August 2021 the five coastal counties remained below their August 2019 non-farm employment by roughly 3,400 jobs. This suggests that although the counties have the potential to regain the remainder (3,400) of the jobs lost in the pandemic recession by next summer, I think it is more probable that they will fall short of that. Around 1,700-1,800 is normal growth for the coast, and even last year during the rapid early recovery the coast added only about 3,000 jobs in the five main coastal counties.
“Job growth tends to be sooner in the recovery and faster in the north coast and slower in the central and south coast.”
Central Oregon outlook by Runberg: “A full recovery is an important milestone, but it does not mean that we will avoid significant head winds moving forward. Difficulty finding workers will continue to plague employers as unemployment levels fall dramatically and demand for workers remains elevated. The labor market is also increasingly feeling the pinch of baby boomers retiring out of the labor force.
“However, this labor tightness should ease, at least marginally, as the demand for labor slows moving into the winter months and normal migration patterns resume. Central Oregon has long relied on in-migration to help bolster the local labor supply. The pandemic and the housing shortage likely slowed that inflow over the past 18 months. Despite the marginal improvement, employers should already be planning for a future where labor supply constraints are the norm. This likely looks like more automation, higher wages, and on-the-job training.”
Southern Oregon regional outlook by Tauer: “If the forecast holds true, the Rogue Valley should see continued recovery for the next few months, but much depends on the pandemic and how governments and consumers respond to the rise in cases due to the Delta variant. The Medford area has recovered essentially back to August 2019 employment, so may add jobs slower than other areas with more jobs to still recover. The forecast shows about 66,000 jobs statewide over the next year, so the Rogue Valley’s share if it grows proportionally as Oregon, that would be a few thousand jobs over the next year . Josephine County is still a few hundred jobs below its August 2019 total, so has more room to add back jobs to get to pre-pandemic level.”
Eastern Oregon outlook by Rich: “The largest uncertainty in Eastern Oregon’s regional outlook is currently COVID-19. Prior to the pandemic, the region saw prolonged job growth beginning to slow due to a tight labor market. One of the largest concerns employers voiced was a need to hire workers and a lack thereof. Industries at the top of the list were health care and social assistance, manufacturing, retail trade, leisure and hospitality, and transportation. Total employment reached a peak of 70,570 jobs in October 2019 and the average annual unemployment rate for the region had fallen to a low 4.7%. The January through August average unemployment rate for the region was 5.3%.”