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Oregon's Food Manufacturing Sector: A Staple of Oregon's Economy
by Pat O'Connor
Published Nov-22-2013

 
Food manufacturing has long been an important industry in Oregon's economy. It has been an important partner with Oregon's famous agriculture sector, a symbiotic relationship that allowed both industries to be a stable and long-time fixture of Oregon's economy. During the past 50 years, Oregon's food manufacturing sector employed 20,000 to 26,000 people, and the industry's share of total employment shrank. Back in 1959, food manufacturing employed 21,400 and comprised 4.3 percent of the state's total nonfarm payroll. In 2012, the activity employed 24,900 and comprised 1.5 percent of the state's total nonfarm payroll.

One reason for food manufacturing's steadiness over time is efficiency gains due to technological innovations. Computer-operated equipment can now picture, sort and grade food products in the blink of an eye - work that traditionally would have been completely done by hand using human senses. Food manufacturing is not alone in adopting new technologies to increase efficiency: technological innovations in recent decades allowed Oregon's wood product manufacturing sector to automate many functions and become a much more efficient industry, being able to maintain production levels while reducing labor input.

A Peek at Employment
 
Food manufacturing tends to weather economic slowdowns and recessions fairly well. People may hold off on purchasing a new house, new appliances, or they may cut back on dining out when the economy is slow. But people have to eat, even when the economy is not doing well. That certainly has been the case during the recent recession and recovery. From 2007 to 2012, Oregon's total employment declined 5.3 percent. During that same period of time, Oregon's manufacturing sector shed 15.8 percent of its jobs. In contrast, Oregon's food manufacturing employment managed to grow 7.8 percent from 2007 to 2012, bucking the trend of large employment losses experienced by the rest of the manufacturing sector during the recession.

Food manufacturing has also been a steady industry in the long run. From 1990 to 2009, Oregon's manufacturing employment declined nearly 16 percent. During that same period of time, food manufacturing employment grew 1,000, or 4.2 percent.

Oregon's food manufacturing industry comprises a larger share of the state's total employment compared with the nation. Nationally, food manufacturing made up 1.1 percent of total nonfarm employment in 2012. In Oregon, the sector comprised 1.5 percent of total nonfarm employment. California is very well known for its agriculture industry, yet food manufacturing made up only 1.0 percent of California's total nonfarm employment in 2012.

Looking within food manufacturing, one of the big reasons why Oregon has a larger-than-average share of employment is the large presence of frozen food manufacturing (Graph 1). In the U.S., frozen food manufacturing comprises a little less than 6 percent of total food manufacturing employment. In Oregon, frozen food manufacturing comprised 27 percent of the state's total food manufacturing employment, which is more than four times the concentration found nationally.

Much of Oregon's frozen food manufacturing employment is located in the Willamette Valley and Eastern Oregon, two areas with large concentrations of food manufacturing (Graph 2). In rural areas, food manufacturing makes up a larger percentage of total employment. Eastern Oregon accounts for 16 percent of the state's food processing employment even though it has less than 4 percent of the state's total private employment. The coastal counties of Oregon make up more than 8 percent of statewide food manufacturing employment while they comprise only 4 percent of Oregon's total private employment. The Salem Metropolitan Statistical Area (MSA) is the only metropolitan area in Oregon where food manufacturing comprises a larger-than-average percentage of total employment. Much of the frozen food manufacturing employment in the Willamette Valley is located in the Salem area.

The Portland area has the largest share of food manufacturing in Oregon with 37 percent of the state's total. Portland, however, makes up 55 percent of the state's total private employment, so food manufacturing is underrepresented in the Portland area compared with the statewide average. Although a significant amount of Portland's food manufacturing sector produces products that are sold out of state, a larger percentage of the products produced in Portland are sold within Oregon compared with a rural area like Eastern Oregon. In Eastern Oregon, the vast majority of the frozen food manufactured is sold and consumed outside of Oregon.

Graph 1
Oregon food manufacturing employment 2012
Graph 2
Oregon fraction of employment by region 2012
A Future of Growth
 
Looking to the future, food manufacturing is expected to be one of the bright spots in Oregon's manufacturing sector. From 2010 to 2020, Oregon's manufacturing sector is expected to grow 15 percent, adding 24,900 jobs. Food manufacturing is also expected to gain employment during the decade; it is expected to grow 10 percent, adding 2,300 jobs from 2010 to 2020. Although the manufacturing sector is expected to grow faster than food manufacturing, keep in mind that steep employment losses during the recent recession mean manufacturing will have less employment in 2020 than the sector had in 2008. Food manufacturing didn't experience steep employment losses during the recession and is projected to have 10 percent more employment in 2020 than in 2008.

Table 1 displays the 10 largest occupations within Oregon's food manufacturing sector. It shouldn't be a surprise to see that the large occupations within the industry are growing at close to 10 percent - the same percentage food manufacturing is expected to grow from 2010 to 2020. Until recently, job openings due to growth have been a fairly small piece of the puzzle regarding total job openings in the manufacturing sector. For some time, replacement openings have provided the bulk of job openings in Oregon's manufacturing sector. Food manufacturing follows that trend. From 2010 to 2020, Oregon's manufacturing sector is projected to have 62,618 total job openings; 37,478 of those job openings will be replacement openings and the remaining 25,140 openings will be due to growth.

The reason growth openings will comprise 40 percent of the total openings in manufacturing is once again due to the steep employment losses the sector experienced in 2008 and 2009. Since food manufacturing didn't experience steep employment losses in 2008 and 2009, a smaller share of their total openings will come from growth openings and a larger share will be due to replacement openings.

Table 1
Oregon Food Manufacturing Projections for Largest Occupations, 2010-2020
  2010 Employment 2020 Employment Percent Growth 2010 Occupational Percent of Total Industry 2010
Industry Percent of Total Occupation
Packaging and Filling Machine Operators and Tenders              3,289              3,610 9.8% 14% 62%
Bakers              1,095              1,204 10.0% 5% 43%
Laborers and Freight, Stock, and Material Movers, Hand                 961              1,051 9.4% 4% 4%
Production Workers, All Other                 910                 998 9.7% 4% 14%
Supervisors and Managers of Production and Operating Workers                 873                 956 9.5% 4% 12%
Graders and Sorters, Agricultural Products                 865                 945 9.2% 4% 33%
Food Mixing and Blending Machine Operators and Tenders                 782                 859 9.8% 3% 78%
Machine Feeders and Offbearers                 757                 827 9.2% 3% 16%
Fork Lift, Industrial Truck and Tractor Operators                 726                 794 9.4% 3% 8%
Inspectors, Testers, Sorters, Samplers, and Weighers                 636                 698 9.7% 3% 13%
Characteristics of Food Manufacturing Workers
 
A disproportionately large percentage of workers in food manufacturing are age 45 or older compared with the total private sector (Graph 3). The same is true for Oregon's overall manufacturing sector. This is a big reason why replacement openings are expected to comprise such a large share of the total openings within food manufacturing and manufacturing as a whole. Nearly half of the workers (47%) in Oregon's food manufacturing are age 45 or older. That compares with 42 percent of Oregon's total private-sector workforce.

Manufacturing has traditionally been a male-dominated industry in terms of employment. Oregon's private sector has 47 percent female workers. In Oregon's manufacturing sector, about 27 percent of the workforce is female (Table 2). Food manufacturing's workforce is nearly 41 percent female, less than the average across the private sector, but a dramatically larger percentage than the overall manufacturing sector. Food manufacturing comprised 15 percent of total manufacturing in Oregon during the fourth quarter of 2012, yet it employed 23 percent of all females in the manufacturing sector.

Table 2
Oregon Employment by Industry and Sex
Fourth Quarter 2012
  Male   Female Percent Female
Total Private  734,959  652,071 47.0%
Manufacturing  128,197    46,480 26.6%
Food Manufacturing    16,038    10,906 40.5%
Source: U.S. Census Bureau, LED
Graph 3
Oregon employment by industry and age class 2012
Wages
 
Compared with the rest of Oregon's manufacturing sector, food manufacturing's wages are relatively low. In 2012, the average annual wage in Oregon's manufacturing sector was $62,170, significantly higher than the average across all industries which was $44,229. Food manufacturing's average wage was less than both of those; its annual average wage in 2012 was $35,549.

One of the reasons food manufacturing's wages are relatively low compared with the rest of manufacturing has to do with the occupational mix of jobs within the industry, and the skills those jobs require. Out of the ten largest occupations within food manufacturing, none require any postsecondary training, they all require on-the-job training or related work experience. Typically, jobs that require less training and education pay lower wages than occupations requiring more training and education.

Table 3 shows that 7.8 percent of workers in food manufacturing are paid at or near minimum wage, a lower share than is seen across all industries. Only 2.5 percent of workers in Oregon's manufacturing sector have hourly wages at or near minimum wage. Within food manufacturing more than six out of 10 jobs (61.8%) pay an hourly wage of less than $15. Across all industries, 43.9 percent of jobs pay less than $15 an hour. Overall, in Oregon's manufacturing sector three out of 10 jobs pay less than $15 an hour.

Table 3
 Oregon - Fraction of Jobs by Industry by Hourly Wage Level - 3rd Quarter 2012*
  Hourly Wage
  Under $9.00 $9.00 - $9.99 $10.00 - $14.99 $15.00 - $19.99 $20.00 - $29.99 $30.00 - $39.99 $40.00 - $49.99 $50.00 - $59.99 $60.00 or more Total
Total - All Industries 9.0% 9.5% 25.5% 15.7% 17.6% 8.9% 5.3% 3.0% 5.5% 100.0%
Food Manufacturing 7.8% 18.5% 35.6% 15.7% 13.6% 4.7% 1.9% 0.7% 1.5% 100.0%
Manufacturing 2.5% 5.6% 21.8% 18.6% 22.3% 10.0% 6.7% 4.5% 8.0% 100.0%
* Count of records.  Individuals holding multiple jobs will be counted more than once.    
Records meeting the following conditions have been excluded from this analysis:
     0 (zero) hours reported
     999 hours reported
     wages < $7.25/hr calculated
     wages >  $500/hr calculated and < 10 hours reported
Source: Unemployment Insurance Wage Records
Summary
 
Although food manufacturing employment growth has not kept pace with the overall growth of the economy over the past half-century, it has remained an important and stable industry employing workers throughout the state. It is a particularly important industry for many rural parts of Oregon.

The industry provides a conduit where Oregon's agricultural crops are processed and exported outside of Oregon, becoming an important and stable part of Oregon's traded-sector economy.