Douglas County, an Economic Update

by Annette Shelton-Tiderman

July 5, 2017

As the stormy months of winter and early spring are now behind us and last year’s economic data have been checked and rechecked, now is a good time to take a look at Douglas County’s economy. Usually, we analyze business activities on the basis of business type and ownership – is the business owned by private individuals or is the activity one that government oversees? For example, we typically look at private schools and health care providers separately from public providers. However, since the services and workforce needs are the same, we could view these private and public entities as a combined category. In other words, all education and health-related work is grouped together regardless of whether services are provided by the county’s healthcare districts and public schools or by individuals running their own businesses.

Douglas County’s Industry Sectors from a 30,000-foot Perspective

Grouping similar businesses allows us to analyze the county’s economic sectors by function. This is particularly useful when our educators and labor market planners want to see which business areas have the greatest number of workers – and where there might be future job opportunities or training needs. The graph below shows this 30,000-foot view of Douglas County’s industry sectors by function.
Roughly, 55 percent of the county’s employment in 2016 occurred within three industry sectors. Douglas County’s education and health services account for 24 percent of county employment. This includes not only professional staff (e.g., teachers, physical therapists), but also the office staff, grounds crews, and others who work for these business entities. The second largest industry sector in our area is trade, transportation, and utilities; retail trade accounted for two-thirds of the more than 7,000 jobs. Douglas County’s manufacturing sector employed more than 4,500 people in 2016, and despite substantial losses during the Great Recession, it is still the third largest industry sector in our area. Not surprising, job growth is expected to be strongest in the largest sector: education and health services. Also projected to offer employment opportunities are retail trade; manufacturing; leisure and hospitality; and professional and business services (e.g., staffing agencies, call centers, as well as accounting offices, etc.).

Workforce Characteristics of Some Industry Sectors

It may seem odd that manufacturing, which only employs 12.2 percent of the county’s workforce, would be near the top in anticipated job growth. This can be explained, in part, by looking at the age-related characteristics of this industry’s workforce. It has been said that, “demographics are destiny” – for some of our businesses, that is true. Education and public administration (government) have the oldest workforce members with 35 percent of those sectors’ employees being age 55 or over – in other words, one-third are within 10 years of retiring. In addition, roughly 7 percent of education and over 8 percent of public administration staff are already over age 65! Many workers in health care and social assistance, another critical industry, are also anticipating retirement, as 27 percent are age 55 or older. Manufacturing workers tend to be older; 26 percent are at least age 55. All of these industries offer opportunities that often require not only post-secondary education or training but also on-the-job experience. These people will likely be difficult to replace.
At the other end of the spectrum are those industries offering more entry-level positions. For example, more than one out of every four workers in leisure and hospitality – the basis of much of our tourism, is under the age of 25, and nearly half are under the age of 35. It is easy to see that many of our youth find their first jobs in this seasonal and dynamic industry. Retail trade, also a source of many jobs, has a younger workforce. Although nearly one out of every five workers is under the age of 25, roughly 40 percent of retail workers are under the age of 35. These large business sectors offer many job opportunities at the entry-level and provide important experience for those new to the workforce.

Joined at the Hip: Construction and Housing

From an industry viewpoint, construction work falls into one of three categories: construction of buildings (20% of the industry’s workforce), heavy and civil engineering construction (29% of the workforce), and specialty trade construction (51%). Job activities, skills required, wages, and availability of workers vary depending on the category and specific building project. Although there are some entry-level employment opportunities, the construction industry encompasses a wide-range of highly skilled occupations. This is clear from the age breakout of this industry’s workforce: 47 percent are at least age 35, and one out of every four construction workers is within 10 years of retirement.
Douglas County’s construction industry saw its peak employment levels in 2006, just prior to the Great Recession. Construction employment opportunities shriveled up, as evidenced by the lack of building permits issued for single-family residential homes. This decline in building permits, coupled with a slow-down in previous years, laid the groundwork for limiting current and future housing options as well as employment opportunities for construction workers. Sixty percent of Douglas County’s housing was built prior to 1980.

An Economist’s Standard Approach: Supply and Demand

When we talk about an area’s economy, we always seem to end up talking about supply and demand. From a workforce perspective, we have data from the Oregon Employment Department’s recent vacancy survey which tells us that businesses continue to have unmet needs for skilled workers. Our demographics reveal that we can anticipate many retirements within the next 10 years – retirements that will likely remove the county’s most experienced and skilled workers from the workforce across nearly all industries.

As is typical in rural Oregon, Douglas County relies on in-migration to maintain and grow the region’s population. People, in turn, generate demand for goods and services as well as supply the workforce for meeting these demands. Economic capacity-building is often characterized as the dynamic exchange between identifying demands, inventorying supplies, and characterizing and implementing effective and efficient means for developing infrastructure and workforce supplies to meet the demands. Stay tuned, there are challenges and opportunities ahead!

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