2017 in Review: Job Growth Slows as Unemployment Reaches Record LowJanuary 10, 2018 Oregon’s job growth slowed in 2017 to its slowest rate in five years. The slowdown wasn’t caused by employers needing fewer workers. This slowdown seems to be the result of employers struggling to find enough workers to fill their vacancies, which is limiting the amount of job growth.
Oregon employers added a healthy 50,600 jobs in the 12 months through June, before slowing down later in the year. The 30,600 new jobs added from November 2016 to November 2017 were the fewest jobs added since 2012.
Oregon’s over-the-year growth rate of 1.7 percent was slower than the historical average and just the ninth fastest growth since 2000. That is noticeably slower than the previous two years of 2.8 percent in 2016 and 3.4 percent in 2015.
The jobs added in 2017 were not just low-paying jobs. On the contrary, a mix of industries paying lower-, middle-, and higher-average wages contributed to overall job growth. This means the average real hourly wage of Oregon’s workers continued to rise. Now reaching $25.90 per hour, the average real hourly wage in 2017 was the highest it’s been in recent years. But the rate of wage gains was slower than the year before.
Oregon’s unemployment rate was in record low territory for all of 2017. It reached a low of 3.6 percent in May 2017, before drifting up to 4.2 percent by November. The annual average unemployment rate for the year will be the lowest on record.
Construction Provided the Foundation of Job Growth in 2017
Ninety-three percent of the jobs added in Oregon from November 2016 to November 2017 were in the private sector. The table shows how each major industry sector performed according to the number of jobs added or lost and their growth or loss rates.
The construction sector added 7,400 jobs for a growth rate of 7.9 percent from November 2016 to November 2017. This was the fastest growing sector. Most of that job growth went to building construction and specialty trade contractors. Relatively few jobs were added in heavy and civil engineering construction.
Health care and social assistance is a perennial driver of job growth. It added 6,000 jobs during the year for a growth rate of 2.6 percent. Nursing and other residential care facilities added the most jobs within this sector, followed by ambulatory health care services, which include a range of outpatient services from physician offices to medical laboratories. Hospitals and social assistance also added jobs but growth in these industries was slightly slower than overall job growth.
Oregonians seem to be having more fun than ever as the number of jobs in leisure and hospitality grew by 5,200 during the year. Much of the growth was in accommodation and food services which added 4,100 jobs. Arts, entertainment, and recreation added 1,100 jobs, racking up a 4.2 percent growth rate.
Retail trade added 3,100 jobs for a growth rate of 1.5 percent. These gains were caused by the reclassification of recreational marijuana sales away from the other services sector and into retail trade. Absent this reclassification, retail trade employment most likely would have been flat over the year.
The sprawling professional and business services added 2,600 jobs during the year. This broad sector includes a wide range of industries from accounting to waste collection. Professional and technical services were responsible for most of the growth, adding 3,500 jobs. Management of companies and enterprises added just 300 jobs. Administrative and waste services lost 1,200 jobs over the year. These losses were in employment services (mostly temp agencies) and in services to buildings and dwellings.
Governments added 2,200 jobs since November 2016 for a growth rate of 0.7 percent. Local government employment, which includes K-12 schools and community colleges, added 2,700 jobs during the year. State government added 100 jobs, while federal government cut 600 jobs.
Financial activities added 1,600 jobs since November 2016 for a growth rate of 1.6 percent. The real estate and rental and leasing component of this sector added 1,400 jobs. Finance and insurance added just 200 jobs.
The transportation, warehousing, and utilities sector moved along in 2017, adding 1,200 jobs for a growth rate of 1.9 percent. Couriers and messengers (which includes package delivery services), truck transportation, and utilities all contributed to the growth. Warehousing and storage didn’t see any growth over the year.
Oregon’s manufacturing sector added 500 jobs from November 2016 to November 2017 for a growth rate of 0.3 percent. That’s about the same rate of growth as U.S. manufacturing during this time. The group of businesses that manufacture durable goods (products with a life expectancy of more than three years such as lumber, computers, and transportation equipment) added 600 jobs during the year. Most durable goods manufacturing industries added jobs. The exception was transportation equipment manufacturing, which lost jobs during the year. The group of businesses that manufacture nondurable goods products with a life expectancy of less than three years such as food and paper, cut 100 jobs during the year. These losses were due to cuts in paper manufacturing.
The information sector added 400 jobs over the year for a gain of 1.2 percent. The sector includes a mix of publishing, motion picture and sound recording, broadcasting, telecommunications, and data processing services. Hiring by software publishers countered job losses in telecommunications and at newspaper, book, and directory publishers.
Private educational services added 400 jobs since November 2016 for a 1.1 percent gain.
Wholesale trade had a slow growth rate of 0.4 percent over the year, adding just 300 jobs.
Employment in the mining and logging sector, where 76 percent of the jobs are in logging, went unchanged over the year.
The number of jobs in the ambiguously named other services sector fell by 300 over the year, dropping 0.5 percent. This is a catch-all service sector that includes repair and maintenance businesses, personal and laundry services, and membership associations and organizations. The losses were caused by the reclassification of recreational marijuana sales away from this sector and into retail trade. Absent this reclassification, other services employment would most likely have grown in 2017.
Most Regions of Oregon Are Seeing Strong Job Growth
The year brought continued job growth to most areas of the state. Total nonfarm employment grew fastest in Central Oregon from November to November, with a growth rate of 2.4 percent. Portland area job growth continued at a healthy 2.2 percent. The Willamette Valley was close behind with growth of 2.1 percent, and Southern Oregon grew 1.7 percent. Eastern Oregon and the Oregon Coast saw slower growth rates of 1.1 percent and 0.7 percent.
Average Wages Continue to Rise Faster than Inflation
Oregon’s expanding economy brought real growth in the average wage, but at a slower rate than the prior year. At $25.90 per hour in 2017, the average wage increased 1.9 percent after adjusting for inflation.
Part of the rise in wages was due to the tight labor market, which usually means employers need to increase wages in order to hold on to their current employees and to attract new workers. After adjusting for inflation, the average wage for workers in Oregon is about $1.30 higher than it was at the start of the Great Recession.
The Unemployment Rate Fell to a Record Low in 2017
Oregon’s unemployment rate continued to fall in 2017. By November, 4.2 percent of Oregonians in the labor force were without a job, compared with 5.6 percent in November 2016. The national unemployment rate was about the same at 4.1 percent in November.
Oregon’s unemployment rate saw movement throughout the year, even while remaining at record low levels. It started in January at 4.3 percent, then fell dramatically to its lowest point of 3.6 percent in May. The unemployment rate then worked its way back up to 4.3 percent in October, and landed at 4.2 percent by November. The summer increase may have been caused by a larger than usual influx of unemployed job seekers.
Oregon’s annual average unemployment rate this year will likely be the lowest on record, at least since 1976, which is as far back as comparable data exist.
Labor Force Participation Steadies in 2017
Oregon’s labor force participation rate, the percent of the population employed or actively looking for work, increased in the first half of the year, before steadying at 63.6 percent from July through November.
Oregon’s participation rate, like the nation’s, has generally been falling since the year 2000 due to the aging of the population and because fewer teenagers are joining the labor force. Oregon’s labor force participation rate began falling faster from 2011 to 2013, dropping to a record low 60.7 percent in late 2013. After remaining near that low for the next two years, Oregon’s rapid job growth drew enough new entrants into the labor force to overcome the demographic trend, and the participation rate started rising.
Forecast Calls for Faster Job Growth in 2018
The official state economic forecast, produced by the Oregon Office of Economic Analysis, indicates that 2018 will bring slightly faster job growth. The number of jobs is expected to increase by 41,900 in 2018 for a growth rate of 2.2 percent. The unemployment rate is expected to be slightly higher in 2018, averaging about 4.4 percent.
Of course, projecting job growth into the future is very difficult. The forecast mentions risks such as the impact of U.S. economic conditions on Oregon, housing affordability and not enough new supply of housing in Oregon, global economic spillovers, the potential impacts of climate change, commodity price inflation, and the status of federal timber policy. Federal fiscal policy may also have a big impact on Oregon’s economy. Oregon ranks above average in terms of direct federal employment and has an above-average share of federal transfer payments to households. Transportation funding is also a concern.
The forecast notes that labor supply constraints could lead to slower job growth. One of Oregon’s traditional economic advantages over other states is the ability to attract young, working-age households. Population growth through net in-migration helps support job growth, and Oregon’s population growth does not appear to be topping out.