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2013 Oregon added 37,300 jobs – best since 2006

February 28, 2014

Oregon experienced real growth growth in 2013


By Josh Lehner
Oregon Office of Economic Analysis Blog

Oregon finally saw some real job growth in 2013. The state’s economy was strong enough to add 37,300 jobs over the year through November. That’s above average for a growth year and the largest November to November jobs gain since 2006. In fact, more jobs were created in 2013 than in 2011 and 2012 combined!

The addition of 37,300 jobs from November 2012 to November 2013 represents a growth rate of 2.3 percent. Job growth in 2013 was faster than the average rate for growth years since 2000, which is 1.7 percent. Oregon’s job growth in 2013 ranked as the fourth-fastest year of growth since 2000, but it was not enough to fill in the deep hole dug by the recession (Graph 1). That will require an additional 53,900 jobs.

Despite the job growth, the high number of unemployed Oregonians keeps downward pressure on worker earnings. The average hourly wage in 2013 was about $22.50 per hour. After adjusting for inflation, the average worker in Oregon is earning less than before or during the recession.

Oregon’s unemployment rate fell over the year, falling from 8.4 percent to 7.3 percent by November. Oregon’s unemployment rate was relatively close to the national rate of 7.0 percent in November. Similar to the past three years, steady improvement in the unemployment rate stalled during the summer but continued to improve in the fall months.

Graph 1

Oregon experienced real growth growth in 2013

Private Sector Drove Job Growth in 2013

Oregon’s private sector added 38,900 jobs between November 2012 and November 2013, but the loss of 1,600 jobs in government means Oregon’s net job growth was 37,300. Table 1 shows how each major industry sector performed according to the number of jobs added or lost and their growth or loss rates.

Oregon’s largest sector – trade, transportation, and utilities – added 9,500 jobs over the year for a growth rate of 3.0 percent. Much of the growth in the sector was in the retail trade industry, which added 6,500 jobs. Retailers added jobs throughout the year, but larger than expected gains near the end of the year suggest they were preparing for a busy holiday shopping season.

The construction sector finally started rebuilding its workforce in 2013 by adding 8,100 jobs for a growth rate of 11.8 percent, the fastest growth rate of any sector. Construction lost the largest share of employment during the recession and has added back just a handful of jobs since then.

Professional and business services is a broad sector that includes industries such as legal, architectural, and computer services, management of companies, and administrative and support services for business, among others. It added 7,600 jobs over the year for a growth rate of 3.9 percent. Half of the growth was in professional and technical services. Employment services, the industry that includes temporary help agencies and is sometimes considered an indicator of future hiring, added 1,300 jobs since November 2012.

Many Oregonians continued to have fun in 2013, as illustrated by the 5,900 jobs added in the leisure and hospitality sector. Accommodation and food services added 5,600 jobs, while 300 jobs were added in the arts, entertainment, and recreation industry.

Private educational and health services was the only sector that seemed to avoid job losses during the recession, and it continues to be a driver of growth during the recovery. The sector added 4,900 jobs between November 2012 and November 2013.

Recovery continued in manufacturing as the industry added 2,600 jobs. Manufacturing lost more jobs than any other sector during the recession. It has been steadily adding jobs during the recovery, but the rate of growth slowed in 2013. Durable goods manufacturing added just 400 jobs; growth in wood products, primary metals, fabricated metal products, and machinery was partially offset by losses in computer and electronic products and transportation equipment. Nondurable goods manufacturing added 2,200 jobs, most of them in food manufacturing.

Other services, the catch-all service sector which includes repair and maintenance businesses, personal and laundry services, and membership associations and organizations, added 800 jobs.

Mining and logging added 500 jobs between November 2012 and November 2013. Although not a large number of jobs, the sector’s growth rate of 6.8 percent made it the second-fastest growing sector in 2013.

The information sector added 300 jobs. The sector includes a mix of publishing, motion picture and sound recording, broadcasting, telecommunications, and data processing services. Gains in software publishers were partially offset by losses in newspaper publishers and telecommunications.

The collapse of the housing market and fallout from the 2008 financial crisis continues to drag on Oregon’s banking industry as measured by employment in financial activities. The sector lost 1,300 jobs from November 2012 to November 2013, the only major private sector to lose jobs. Insurance carriers also cut jobs during the year. Looking up for this sector was the real estate and rental and leasing industry, which added 400 jobs.

Public-sector job losses continued to be a drag on overall growth in 2013. Government employers cut 1,600 jobs for a 0.6 percent reduction. A gain of 1,300 in state government was outweighed by a loss of 2,500 jobs in local government and a loss of 400 jobs in federal government. Local education bore the brunt of government job cuts, while state education continued to add jobs.

Table 1
November 2012 to November 2013 Nonfarm Employment Change
November November Percent
2012 2013 Change Change
Total nonfarm employment 1,646,900 1,684,200 37,300 2.3%
Trade, transportation, and utilities 318,900 328,400 9,500 3.0%
Construction 68,700 76,800 8,100 11.8%
Professional and business services 197,300 204,900 7,600 3.9%
Leisure and hospitality 171,900 177,800 5,900 3.4%
Private educational and health services 239,700 244,600 4,900 2.0%
Manufacturing 172,800 175,400 2,600 1.5%
Other services 57,200 58,000 800 1.4%
Mining and logging 7,400 7,900 500 6.8%
Information 32,900 33,200 300 0.9%
Financial activities 90,300 89,000 -1,300 -1.4%
Government 289,800 288,200 -1,600 -0.6%
Central Region the Fastest Growing Area of the State

The year brought continued job growth to most areas of the state. Total nonfarm employment grew the fastest in Central Oregon with a growth rate of 2.8 percent. The Portland area grew 1.9 percent, Southern Oregon grew 1.8 percent, the Willamette Valley grew 1.2 percent, and the Oregon Coast grew 1.1 percent. Employment in Eastern Oregon fell by 0.2 percent, led by losses in Umatilla County as work wrapped up on the closure of the Umatilla Chemical Depot.

Average Wages Not Keeping Up With Inflation

Although Oregon saw some real job growth in 2013, there was not any real growth in the average wage (Graph 2). The average wage was $22.46 per hour during the 12 months through November 2013. After adjusting for inflation, Oregon’s average wage was lower in 2013 than at any point since the start of the recession.

There were at least four unemployed Oregonians for every job vacancy in 2013. That made for a “buyer’s market” and employers probably did not need to raise wages above inflation in order to fill most vacancies.

Graph 2

No recovery in average hourly earnings of Oregon workers

Unemployment Rates Fell in 2013

Oregon’s unemployment rate continued to improve in 2013. By November, 7.3 percent of Oregonians in the labor force were without a job, the lowest rate in five years. The national rate was 7.0 percent (Graph 3).

Oregon’s unemployment rate fell from 8.4 percent in November 2012 to 7.3 percent in November 2013, although there was a slight increase during the summer. The summers of the past few years have brought an increase in the number of unemployed entrants to Oregon’s labor force. These are people who were not working prior to becoming unemployed, but were not immediately able to find a job when they started looking. Examples include students who graduate or look for summer work, people who move to Oregon before finding a job, and anyone returning to the labor force after a period of absence. The unemployment rate continued to improve during the fall months.

The number of unemployed Oregonians fell 25,400 over the year. That’s certainly an improvement, but there were still nearly 131,000 unemployed in November and many were considered long-term unemployed. One out of three unemployed Oregonians were looking for a job at least six months. Since the number of layoffs was not unusually high in 2013, the number of unemployed who were without a job for less than six months returned to pre-recession levels.

Nearly every Oregon county saw improved unemployment rates over the year. The lone exception was Wheeler County, where the unemployment rate rose from 6.9 to 7.1 percent from November to November. Some areas did better than the state average, while other areas continued suffering high levels of unemployment. Unemployment rates vary dramatically among the counties, ranging from a high of 11.9 percent in Harney County to a low of 5.4 percent in Benton County in November 2013.

Graph 3

Oregon's unemployment rate neared the U.S. by end of 2013

Labor Force Participation Rates Continued to Fall

Oregon’s labor force participation rate continued to fall through 2013 (Graph 4). The share of the population employed or looking for a job has been falling steadily since 2000, in Oregon and nationally. The decline began accelerating in 2011, reaching just 61.2 percent in Oregon by November 2013, a historical low point since records for Oregon began in 1976. The national participation rate fell to 63.0 percent in November. The three trends driving participation have been the aging of the population, fewer teenagers joining the labor force, and the relatively weak job market.

The oldest baby boomers have now reached retirement age. Even though baby boomers are more active in the labor force at their age than previous generations were, enough are now retiring to lower the overall participation rate in 2013.

Teenagers have been less active in the labor force as they concentrate more on education. Those teens looking for a job have increasingly needed to compete with older workers for available positions. The trend is a decade old, but it continued to lower the overall labor force participation rate in 2013.

Wage stagnation in recent years also contributes to declining participation because flat wages do nothing to pull more people into the labor force. Real wage growth from a stronger jobs recovery will likely be necessary to overcome the demographic trends driving labor force participation downward.

Graph 4

Labor force participation rate continued to fall in 2013

Forecast Calls for Steady Job Gains in 2014

The official state economic forecast, produced by the Oregon Office of Economic Analysis, indicates that growth in 2014 will look similar to 2013. Annual job gains in 2014 could be 35,600, an increase of 2.1 percent. Employment is expected to reach pre-recession levels by the middle of 2015.

Oregon’s economy is expected to do slightly better than the U.S. in job growth over the next few years. The forecast expects job growth in most private sectors and anticipates strong job growth (more than 3%) in computer and electronic products manufacturing, mining and logging, construction, professional and business services, and leisure and hospitality. Job losses are expected to end for financial activities and government in 2014.

The job growth is expected to help continue improving Oregon’s unemployment rate, which is expected to average 7.6 percent in 2014, down from an average of 8.0 percent in 2013.

Of course, projecting job growth into the future is very difficult. The forecast notes risks such as federal fiscal policy and the effects of sequestration, the strength and durability of the housing market recovery, European debt problems and their continued drag on the global economy, commodity price inflation (particularly gasoline prices), spillover from global economic markets, and premature tightening of quantitative easing. The volatility in overseas markets could impact Oregon’s economy in a good or bad way, depending on how things shake out.

If 2014 turns out a lot like 2013, it will bring another year of real improvement to Oregon’s job market.

 

  
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