Rural Oregon lags in job growth, employment

By Oregon Employment Department ^[5]

Oregon’s job situation has improved in recent months as more people are finding work. The recovery has been far from ideal however. We have profiled Oregon’s key workforce ^[6] challenges at the statewide level in other articles, but many of these challenges are more severe in rural Oregon. This article looks at several key workforce challenges in Oregon’s 25 non-metropolitan counties.

Persistently high unemployment has long been a challenge for rural Oregon. Unemployment rates in non-metropolitan counties were already higher at the onset of the recession ^[7] than they were in the metropolitan areas (MSAs) and that continues today. The unemployment rate ^[8] for the combined non-metropolitan counties was 6.4 percent in December 2007, 1.7 percentage points above the Portland area’s unemployment rate of 4.7 percent, and 1 percentage point above the 5.4 percent unemployment rate in the combined metro areas of Bend, Corvallis, Eugene-Springfield, Medford, and Salem (Graph 1 ^[9]).

More than three years after the end of the recession, unemployment rates for Oregon’s rural counties remain stubbornly high. The non-metro unemployment rate was 10.3 percent in September 2012, 2.8 percentage points above the Portland area unemployment rate of 7.5 percent and 2.0 percentage points higher than the other combined metro areas’ unemployment rate of 9.3 percent.

Structural changes in a region’s economy occur when technology, trade, or policy changes alter the fundamental structure of industries within the region. When these structural changes lead to large job losses, it creates structural unemployment ^[10] that can persist even through an economic recovery. This is because some workers who lost their jobs may not have the skills needed by growing industries. It takes time for displaced workers to retrain for new jobs or move to where jobs are available.

The most challenging economic structural change faced by rural Oregon has been the reduction in logging jobs, and the shift away from wood product manufacturing jobs. In 1979, roughly two of every three manufacturing jobs in rural Oregon belonged in wood product manufacturing. By 2010, wood products accounted for one out of three rural manufacturing jobs. The mix of Oregon’s manufacturing jobs shifted away from “traditional” manufacturing jobs in non-metro areas to manufacturing jobs in the metro areas, many of which require workers with completely different sets of skills. In 1979, Oregon’s metropolitan areas – including counties that would become MSAs in later years – accounted for about seven out of every 10 manufacturing jobs. Now, about nine out of every 10 jobs in manufacturing is in a metropolitan area ^[11].

Structural change and the recession, among other factors, have worsened the problem of slow job growth in rural Oregon. The state’s non-metro counties experienced far slower employment growth than their metropolitan counterparts over the past two decades (Graph 2 ^[12]). For the combined non-metro counties, employment rose each year throughout the 1990s, and the number of jobs grew 19 percent from 1990 to 2000. But that rate of jobs growth was far short of the much faster pace of the metro areas. The number of jobs in the Portland area grew 33 percent during the 1990s, while the other combined metro areas grew 29 percent.

The disparity between non-metro and metro employment growth rates continued to grow during the next decade. Non-metro counties’ employment grew 24 percent, adding 61,000 jobs from 2000 through their pre-recession peak in 2007. Job growth was much faster in Oregon’s metro areas during that period. The Portland area gained 305,000 jobs (42%) over the period, and employment in Oregon’s other combined metro areas increased by 155,000 jobs (45%).

Like all areas, rural Oregon lost a lot of jobs during the recession. Unlike the Portland region, which is driving the statewide jobs recovery, Oregon’s rural areas and smaller metro areas have continued to see net job losses.

The challenge of slower job growth in Oregon’s rural areas isn’t likely to end soon. In fact, employment projections for the 10-year period between 2010 and 2020 show generally slower growth for rural regions than for metropolitan regions (Table 1 ^[13]). Each of the six workforce regions with the fastest projected employment growth include a metro area, while the five regions with the slowest projected rates of employment growth are comprised entirely of non-metro counties.

The slow job growth in rural counties leaves fewer opportunities for the unemployed ^[14] and for younger workers getting started on their career paths. Young workers everywhere were damaged by the recession, but the youth population itself was damaged in many rural areas.

Between 2000 and 2010, the number of young Oregonians between the ages of 15 and 24 grew 8 percent statewide. At the same time, the number of people in that age group actually declined in 14 Oregon counties, all of which were rural. Two rural counties experienced the greatest declines: Grant County lost 22 percent of its young people and Wallowa County lost 21 percent. The decline also reached double digits in Sherman (17%), Wheeler (16%), Gilliam (16%), and Crook (12%) counties. Fewer job opportunities explain part of this shift, but the aging population of rural areas also leaves fewer families with children in that age group.

The population of Oregon’s rural counties tends to be older than the population of metro areas. The statewide median age is 38 (one-half of all Oregonians are 38 years or older) while the median age is over 50 in six rural counties – Curry, Gilliam, Grant, Lincoln, Wallowa, and Wheeler counties.

The older population of rural counties means their workforces are also older. Statewide, 22 percent of workers in Oregon were 55 years old or older in 2011. In 14 of Oregon’s 25 non-metropolitan counties, at least 25 percent were 55 or older (Table 2 ^[15]). The oldest example is Wheeler County, where one in three workers is at least 55.

Although people are working far longer than they have in previous generations, it’s probably safe to assume that most workers would like to retire eventually. It could be a challenge to keep the same level of economic activity going unless rural counties can attract new workers.

The majority of projected job openings in all areas of the state between 2010 and 2020 will be due to retirements. If trends continue as they have over the long term – older workers retire and young people leave – Oregon’s rural counties could have trouble finding enough replacement workers, and businesses in these areas could face increased difficulty in finding skilled workers.

All areas of Oregon face several common workforce challenges, including high unemployment rates, slow job growth, and an aging workforce. These challenges are even more severe and more pressing for rural areas. Addressing the workforce needs of rural areas in a time of recovery in the metro areas continues to be one of Oregon’s key workforce challenges.