From Peak to Pandemic: 2020 Year in ReviewMarch 30, 2021 Oregon’s longest post-WW II economic expansion came to a dramatic end in 2020. February floods brought a federal disaster declaration in the Columbia Basin. An ongoing global pandemic took more than half a million lives nationwide and shut down huge portions of economic activity. Many Oregonians flocked to physically distanced outdoor recreation, only to be turned back home in fall by wildfires that burned more than a million acres of the state’s forests and cities. The cumulative devastation Oregonians faced in their lives and their livelihoods throughout 2020 translated to slow recovery from unparalleled job losses.
How It Started
The year began with unemployment near record lows going back to at least 1976. Oregon’s unemployment rate was 3.4% in January and 3.5% in February. The state’s monthly job growth averaged 2,900 in January and February, similar to the 2,400 jobs gained monthly throughout 2019.
Many economists had been watching for a recession since trends in short- and long-term Treasury bond yields, which “inverted” with short-term yields exceeding long-terms ones, signaled an approaching recession during summer 2019. While an inverted yield curve tends to be a reliable predictor of recession, there’s no telltale indicator for a downturn’s duration or severity.
How It Went
The pandemic recession had a faster onset with deeper impacts than even the Great Recession. The record-breaking layoffs that occurred in the spring of 2020 in response to the COVID-19 pandemic also occurred at breathtaking speed. One out of seven jobs statewide was either temporarily idled or permanently lost in two months’ time.
Oregon lost 285,500 nonfarm payroll jobs from February to April, a decline of 14.5%. In April 2020 alone, Oregon’s unemployment rate spiked by nearly 10 percentage points to a record-high 13.2% as nearly 200,000 more Oregonians lost their jobs over the month. By comparison, at the steepest point of decline in the Great Recession, 27 months into the downturn, employment had dropped 8.5% from its peak.
The pandemic recession hit in-person, service-based industries the hardest. By far, leisure and hospitality fared worst, abruptly losing 110,900, or half (51.3%), of all its jobs. Leisure and hospitality accounted for two out of every five jobs lost across Oregon’s economy in spring 2020. Likewise, areas of the state most dependent on travel, tourism, and other leisure and hospitality-associated activities suffered the largest job losses. Counties with the largest employment declines included Lincoln (-25.9%), Clatsop (-23.5%), Hood River (-23.0%), Deschutes (-18.4%), and Tillamook (-16.8%).
With schools largely shuttered in the spring, private education services also saw significant declines, losing one out of five jobs. Local government education, from K-12 through higher education, was also heavily impacted, although in the form of continued job declines as most other sectors stabilized or rebounded.
Unemployed workers are classified as such because either they have newly entered the labor force without a job, they voluntarily left their job without another one lined up, or they lost their job by layoff. One distinction of the pandemic recession was that overwhelmingly, those who became unemployed due to job loss were on temporary layoff.
At peak unemployment in April 2020, those who lost jobs accounted for 84% of unemployed Oregonians. Among them, 86% were classified as on temporary layoff. That’s quite a reversal from the Great Recession; during its months of highest unemployment, nearly three-fourths (72%) of layoffs were due to permanent job losses.
While temporary layoffs remained the largest share of those who lost jobs in 2020, permanent and long-term unemployment increased as the year wore on. From February to December, the total number of Oregonians experiencing long-term (6+ months) unemployment quadrupled to 64,300. Meanwhile, unemployment due to permanent job losses rose by 71.3% to 39,700.
In addition to those who lost jobs – temporarily or permanently – many more Oregonians found themselves working less than they would have liked in 2020. Another distinction of the pandemic recession was that, through either federal loans or altered business practices, many Oregon employers were able to keep operating either with fewer workers, or with workers on reduced schedules. Throughout 2020, the number of business establishments overall grew each quarter. Even in leisure and hospitality, the total number of payroll business units remained stable throughout the year.
The official unemployment rate includes those who are out of work, have actively looked for a job in the past four weeks, and are available and able to take a job if offered to them. Broader measures of labor underutilization can also capture workers or would-be workers negatively impacted by current labor market conditions.
Oregon’s broadest (“U-6”) measure of labor underutilization hit a series high of 20.9% in April 2020. That means one out of five workers or would-be workers were either out of work, discouraged from looking due to lack of prospects, sought work in the past year but not the past four weeks, or were working fewer hours than they’d like to be scheduled. Most of those in this expanded measure of labor underutilization were involuntary part-time workers. Between February and May 2020, the number of Oregonians working part-time for economic reasons doubled to 159,700.
Starts and Stops in Recovery
Phased re-opening began in Oregon in May, and with it, record-breaking monthly job gains came. Oregon had its largest-ever monthly employment gain in June 2020, adding 52,300 jobs. That momentum was not sustained though; monthly job gains tapered to 38,300 in July, then 16,300 in August. Oregon continued to register smaller monthly gains heading into the fall.
As COVID-19 cases also began to rise in the fall, Oregon instituted an initial “two week freeze” that included additional health and safety measures. Subsequent limitations on economic activity to prevent community spread of the disease by county and COVID-19 risk category continued through the rest of 2020 and into 2021.
In December 2020, Oregon lost 27,500 jobs over the month. Absent the pandemic, that December loss would have represented the biggest monthly job decline in Oregon since at least 1990. As in the spring, leisure and hospitality took the worst of the losses again, shedding 28,400 jobs over the month. Private education services lost jobs again in December as well, reaching its lowest jobs total of the year. Oregon closed out 2020 having regained 110,700, or 39% of all jobs lost in the spring.
Only one broad sector of the economy appeared to avoid the whiplash year experienced by the others. Transportation, warehousing, and utilities includes entities responsible for mail, package delivery, and the distribution system that gets them to us. As staying home became the norm in 2020, Oregonians increasingly relied on deliveries to our doors. The sector added jobs over the year, growing by 5,000 jobs (or 6.8%) as the rest of the economy struggled.
Uneven Gains Amid Many Disruptions
As has been in the case in recessions past, the losses and regained jobs during the COVID-19 downturn have been unevenly distributed across Oregon. While the Portland metropolitan area declined less and led Oregon out of the Great Recession, the state’s non-metropolitan areas experienced less severe effects from the pandemic recession. On an annual basis, employment declined by 5.2% in non-metro areas, compared with job losses of 6.9% in the Portland metro area, and a decline of 5.8% for all other metropolitan areas combined.
The top 10 counties with the smallest shares of initial spring job losses were in rural areas of Oregon. These areas of the state are less densely populated – an advantage in a time of physical distancing. The two counties with the least overall job impacts in spring 2020, Gilliam and Morrow, also had the smallest shares of leisure and hospitality employment. Another factor is local government, and/or local government education. During the initial recovery from April to November, six of the 12 counties with the smallest employment rebound had notably higher shares of local government employment than Oregon.
Some of these slowly rebounding areas – such as Jackson, Multnomah, and Clackamas counties – had neither low shares of leisure and hospitality jobs, nor high shares in local government. Yet, these are among the counties that experienced multiple economic disruptions in 2020. Portland experienced escalated and extended social unrest in the downtown business core compared with all other areas of Oregon during 2020. Multnomah County is also the home of Portland International Airport, which saw foot traffic essentially stop completely in spring, and remain down by more than half into the fall.
Jackson and Clackamas counties were among the most-affected areas in the massive September 2020 wildfires. These two counties had the largest number of jobs located at business establishments in all evacuation zones over the course of the fires, as well as the largest number of jobs in the Level 3 mandatory evacuation areas, where the fires burned most intensely and more long-term damage occurred.
A New Year
As measures to combat the spread of COVID-19 gain momentum in 2021, so too does the opportunity for greater economic recovery. In recent weeks, COVID-19 case counts have declined in many areas, and vaccine rollout efforts have accelerated. More areas of the state have moved out of the extreme COVID-19 risk category into high, moderate, or low-risk designations that allow for expanded capacity in some of the pandemic’s hardest-hit sectors.
In the wake of these encouraging trends, job gains have resumed in Oregon. Total nonfarm payrolls added a combined 20,900 jobs in January and February 2021. The new year hasn’t been without incident; the Portland and Willamette Valley areas experienced historic ice storms that left homes and businesses without power for days in February. Still, if pandemic conditions can continue to improve, the stage will be set for rapid economic healing. The latest forecast from the Office of Economic Analysis predicts stronger growth in 2021 and 2022 than Oregon has seen in decades, and a return to pre-pandemic employment in early 2023.