Is There Really a Tight Labor Supply in Central Oregon?

Is There Really a Tight Labor Supply in Central Oregon?

by Damon Runberg

June 27, 2017

A tight labor supply does not mean there are no unemployed residents in the community. Many industries require workers with very specific skills, education, and experience. Take for instance one high-demand occupation, registered nurses (RNs); a specialized degree and a license are required. However, to work in a higher level setting, such as the emergency department or intensive care unit, a hospital may require years of very specific experience or additional certifications on top of the base RN requirements. Not every unemployed worker can qualify for that position. As a result, the tightness of the labor supply is relative depending on the industry doing the hiring. That being said, we can generalize the tightness of the labor supply by looking at the relationship between hiring demand and our unemployed workforce.

Over the past year, Central Oregon averaged fewer than 4,000 unemployed workers a month across all three counties. During that same 12-month period, the region averaged around 2,600 new unique help wanted ads a month according to The Conference Board, an average of fewer than two unemployed persons for every online job posting. To put that into perspective, three years ago there was a ratio of four unemployed persons for every job posting. If we went all the way back to the depths of the recession there were more than 10 unemployed persons per job posting.

Although the supply of available labor relative to hiring demand is at a very low level, the good news is that it hasn’t dipped much below that 2-to-1 ratio of unemployed persons per job posting. In fact, Central Oregon hasn’t seen the ratio substantively change in over 18 months. Why did the labor supply-to-demand ratio level off?

The number of unemployed workers in Central Oregon continues to decline, but we saw the number of help wanted ads plateau in 2016 and actually begin to dip a bit during the first part of 2017. A slowdown in hiring demand, as measured by help wanted ads, is helping to stabilize the labor supply. Additionally, the region’s labor force is growing fast enough to maintain the current ratio of unemployed persons per job posting. Central Oregon’s labor force grew by nearly 10,000 between 2014 and 2016, a growth rate around 10 percent. The growing labor force coupled with a slowdown in job postings isn’t easing the labor crisis; instead it is just preventing the labor crisis from getting any worse.

For those unconvinced by the online job posting data, we have another survey that helps to measure hiring demand, the quarterly job vacancy survey. This survey estimates the number of job vacancies from businesses throughout the region on a quarterly basis. This data is not gathered at the county or Central Oregon level, instead it is an estimate of the job vacancies across the broader swath of Oregon along the east slope of the Cascades, including parts of the Columbia Gorge, Central Oregon, and the Klamath Basin. Despite this broader geography the job vacancy survey paints a similar picture to the online job postings. Over the past year (Fall 2016-Spring 2017) the broad region along the east slope of the Cascades averaged fewer than two unemployed persons per job vacancy.

Rapid hiring over a prolonged period of time is the main culprit behind our current labor constraints. However, a few regional challenges compounded with one another help to exaggerate the tight labor supply. First, the cost of living is relatively high across Central Oregon. Second, a large share of local job vacancies are part-time, seasonal, and/or low paying. Third, lack of housing inventory is making it difficult for businesses to recruit workers from outside the region. Fourth, our relatively small labor force compared with large metro areas makes it difficult for many businesses to fill vacancies in highly skilled or technical occupations. Any one of these issues would be a nuisance, but all of them together are forcing businesses to rethink their hiring practices.