2018 in Review: Another Year of Job Growth and Record Low Unemployment

by Nick Beleiciks

February 25, 2019

Oregon’s job growth in 2018 continued at a slower pace than the year before while the unemployment rate reached a new record low. The tight labor market made it difficult for employers to find enough workers to fill their vacancies, which seems to have limited the amount of job growth.

Oregon’s over-the-year growth rate of 1.6 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 2.2 percent in 2017 and 2.4 percent in 2016.
The jobs added in 2018 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 $26.95 per hour, the average real hourly wage in 2018 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 2018. It reached a low of 3.8 percent in August through October 2018, before drifting up to 4.1 percent by December. The annual average unemployment rate for the year will be the lowest on record.

Slower, More Rounded Job Growth in 2018

Seventy-nine percent of the 30,800 total nonfarm jobs added in Oregon from December 2017 to December 2018 were in the private sector. The 24,400 jobs added during the year created a 1.5 percent growth rate. The table shows how each major industry sector performed according to the number of jobs added or lost and their growth or loss rates.

Governments added 6,400 jobs since December 2017 for a growth rate of 2.2 percent, after adjusting for the reclassification of home care workers to private health care.
Local government employment, which includes K-12 schools and community colleges, added 5,000 jobs during the year. State government added 1,100 jobs after adjusting for the home care workers that are now counted in private sector health care. Federal government added 300 jobs.

Health care and social assistance is a perennial driver of job growth. It added 5,300 jobs during the year for a growth rate of 2.1 percent. Ambulatory health care services, which include a range of outpatient services from physician offices to medical laboratories, added the most jobs within this sector. Hospitals, and nursing and residential care facilities followed.

Private-sector social assistance added 17,100 jobs, but with an asterisk. This is because home care workers, previously counted in state government, are now counted in the private sector. Legislative action clarified that for purposes of workforce and labor market information, home care workers are not employees of state government. That aligned Oregon’s data for these workers with other states, but created a one-time increase in the January 2018 social assistance data (and corresponding drop in figures for government). After adjusting for the reclassification, private-sector social assistance added just 200 jobs.

The construction sector added 4,900 jobs for a growth rate of 4.8 percent from December 2017 to December 2018. This was Oregon’s fastest growing major sector. Nearly all of the job growth was in building construction and specialty trade contractors. Relatively few jobs were added in heavy and civil engineering construction.

The sprawling professional and business services industry added 4,800 jobs during the year. This broad sector includes a wide range of industries from accounting to waste collection. Professional and technical services, an industry that spans a variety of businesses from accountants to veterinarians, has been a growing industry in recent years. The industry was essentially flat in 2018, losing 100 jobs. Management of companies and enterprises added a healthy 2,200 jobs for a growth rate of 4.6 percent. Administrative and waste services added 2,700 jobs over the year for a growth rate of 2.6 percent.

Oregon’s manufacturing sector added 2,800 jobs from December 2017 to December 2018 for a growth rate of 1.5 percent. That’s slower than the 2.3 percent national rate of job growth in 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 2,500 jobs during the year. Most durable goods manufacturing industries added jobs. The exception was wood product manufacturing, which lost 200 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, added just 300 jobs during the year.

Oregonians seem to be having more fun than ever as the number of jobs in leisure and hospitality grew by 2,500 during the year. The growth was in accommodation and food services which added 2,700 jobs. Some of those gains were offset by losses in arts, entertainment, and recreation, which cut 200 jobs over the year.

The number of jobs in the ambiguously named other services sector increased 2,000 over the year for a growth rate of 3.1 percent. This is a catch-all service sector that includes repair and maintenance businesses, personal and laundry services, and membership associations and organizations.

The transportation, warehousing, and utilities sector moved along in 2018, adding 1,900 jobs for a growth rate of 3.0 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.

Financial activities added 800 jobs since December 2017 for a growth rate of 0.8 percent. The real estate and rental and leasing component of this sector added 4,000 jobs. Finance and insurance cut 3,200 jobs.

The information sector added 800 jobs over the year for a gain of 2.4 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.

Wholesale trade had a slow growth rate of 0.9 percent over the year, adding just 700 jobs.

Employment in the mining and logging sector, where about three-fourths of the jobs are in logging, fell by 200 jobs over the year.

Private educational services cut 500 jobs since December 2018 for a 1.4 percent gain.

Retail trade suffered from seasonally adjusted job losses during the holiday season and ended up with 1,400 fewer jobs in December 2018 than the year before. It was the only major sector with such a large drop in jobs over the year. Although many types of retail stores added jobs in 2018, those gains could not make up for the losses in sporting goods, hobby, book and music stores; clothing and clothing accessories stores, and motor vehicle and parts dealers.

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 2.3 percent. The Willamette Valley matched the statewide growth rate of 1.9 percent. Southern Oregon grew 1.4 percent, and the Portland area’s job growth was close behind at 1.3 percent. The Oregon Coast and Eastern Oregon regions saw slower growth rates of 0.8 percent and 0.7 percent.

Average Wages Rise Slightly Faster than Inflation

For most of the year, Oregon’s expanding economy did not bring real growth in the average wage. The inflation-adjusted average hourly wage averaged $26.16 per hour in 2018, about the same as in 2017. Wages increased faster near the end of 2018, with
average hourly wages in December 2018 about 1.9 percent higher than the year before 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.

Unemployment Rate Fell to a Record Low in 2018

Oregon’s unemployment rate reached a new record low in 2018. By December, 4.1 percent of Oregonians in the labor force were without a job, the same as in December 2017. The national unemployment rate was about the same at 3.9 percent in December.

Oregon’s unemployment rate saw movement throughout the year, even while remaining at record low levels. It started in January at 4.1 percent, then fell to its lowest point of 3.8 percent in August, September, and October. The unemployment rate then worked its way back up to 3.9 percent in November, and landed at 4.1 percent by December.
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 Falls in 2018

Oregon’s labor force participation rate, the percent of the population employed or actively looking for work, fell through the year to 62.1 percent in December.

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 60.9 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.

The labor force participation rate started dropping again in 2018, likely as the demographic trends continued, with more workers reaching retirement age and fewer teens participating in the labor force

Forecast Calls for Similar Job Growth in 2019

The official state economic forecast, produced by the Oregon Office of Economic Analysis, indicates that 2019 will bring a similar rate of job growth as 2018. The number of jobs is expected to increase by 38,800 in 2019 for a growth rate of 2.0 percent. The unemployment rate is expected to be slightly lower in 2019, averaging about 3.8 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 and natural disasters, 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.

The forecast notes that the strong labor market is driving employment rates higher and poverty rates lower for all ages and racial and ethnic groups across the state. One result is household incomes are reaching historic highs on an inflation-adjusted basis. In other words, Oregon’s economy was hitting the “sweet spot” in 2018.

Our Latest Articles Our Latest Articles

Latest Items