Business Formation in Northwest Oregon

by Erik Knoder

February 7, 2019

The other services industry is often the forgotten stepchild of labor market data, but it has been the driving force behind business formation in Northwest Oregon for the past 16 years. From 2001 through 2017 the other services industry did, in fact, account for 49 percent of growth (+639) in employer worksites in Northwest Oregon. The catch is that most of this growth was in private households. The other services industry also includes repair, beauty, and laundry businesses; and religious and civic organizations.

Private households alone accounted for 44 percent of the growth in employer worksites. Although some of this growth is from households hiring cooks or gardeners, it appears that much of it resulted from an increase in the number of personal support workers. These workers help children and adults with intellectual or developmental disabilities and adults experiencing mental illness. In 2000, Oregon created the Home Care Commission to help provide homecare to seniors and people with disabilities. The expansion of this program appears to be a major factor in increasing the number of household employers in the state.

Business formation increased rapidly during the construction boom from 2004 through 2007. The number of worksites declined during the Great Recession, then climbed again as the recovery took hold in 2013. Although the Great Recession ended nationally in 2009, the employment recovery occurred several years later in most of Northwest Oregon. From 2007 to 2012 the number of worksites dropped 2 percent in Northwest Oregon. Employment dropped 1 percent over the same years, suggesting that smaller employers may have closed shop more frequently than larger ones.

Although no other industry came close to other services’ share of growth, the professional, scientific, and technical services industry accounted for 14 percent of the growth in worksites. Healthcare and social assistance and accommodation and food services each contributed 13 percent of the growth in the number of worksites.

Four industries – agriculture, construction, manufacturing, and retail trade – had a decline in their number of worksites from 2001 through 2017, though these declines were small. The construction industry had the largest decline with a loss of 52 worksites (-4%).

Business formation varied by county from 2001 through 2017. Benton County, as befitting its metro area status, added 535 employer worksites, which accounted for 41 percent of the total. Columbia County added 280 worksites, Clatsop County contributed 207, Lincoln County grew by 152, and Tillamook County, with the smallest economy in the region, chipped in 119 worksites.

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