Klamath and Lake Counties: Slow Job Growth Projected, but an Abundance of Replacement Job OpeningsNovember 12, 2020 The most recent 10-year industry projections are now available for Klamath and Lake counties. This forecast cycle runs from 2019 to 2029. The elephant in the room is the COVID-19 pandemic and recession that occurred in the early part of this projection cycle. There were some modifications made to the forecast to take into account initial losses due to the pandemic recession; in particular, we know that the 2020 average annual employment level will be lower than 2019. Ultimately these projections are not intended to forecast the ups and downs of the business cycle, but rather capture the broader long-term changes to the regional economy.
The foundation for the forecast are industry, population, and labor force trends. Between 2000 and 2010 Klamath County’s population expanded by an annual average growth rate of roughly 0.4 percent. That rate of growth slowed slightly over the past decade to 0.3 percent. Over the next 15 years Portland State University projects that annualized rate of population growth will slow even further to roughly 0.2 percent, which was an important factor considered in the employment projections over the next 10 years.
Historical rates of employment growth are also an important consideration for future job growth. From 2009 to 2019 Klamath and Lake Counties added around 980 jobs (+4%), much slower than the 20.5 percent statewide growth during the same period of time. Looking back 10 years the base period was in the middle of the Great Recession and the end of that 10-year period was the peak of the most recent expansion.
Our 10-year forecast builds off these trends and takes into account the broad losses from the COVID-19 recession. Over the 10 years between 2019 and 2029 Klamath and Lake counties are expected to add roughly 1,300 jobs, a growth rate of 5 percent. The projected rate of growth is expected to be much slower than the statewide projection of 9 percent; however, the 10-year forecast remains stronger than the region’s rate of growth over the previous 10 years.
At the industry level, we expect to see the largest job gains in health care and social assistance (+520 jobs), construction (+150), retail trade (+140), and leisure and hospitality (+140). These growth sectors are largely being driven by the growing and aging population. Strong momentum remains behind the local tourism industry that is expected to contribute to gains in the retail and leisure sector.
Although most industries are projected to grow over the next decade, a few industries are expected to see losses, including manufacturing (-160 jobs) and professional and business services (-70). Manufacturing has been trending down since 2015 across the region and there were additional losses due to COVID. Our projections do not anticipate any additional losses beyond the jobs lost due to the pandemic. Professional and business services is a volatile industry in the region with a downward trend over the past five years. The pace of losses is expected to moderate considerably compared with recent losses as the industry shed 460 jobs between 2016 and 2019.
Although the region is only expected to net an additional 1,300 jobs over the next 10 years, that does not mean that the region will be lacking in employment opportuntiies. To the contrary, there will be ample opportunities as we move through the decade. The aging of the workforce is expected to result in significant replacement openings.
There are expected to be nearly 34,000 replacement job openings by 2029. In other words, the average job is expected to turnover at least 1.2 times between 2019 and 2029. This is a huge opportunity for job seekers, but should leave many businesses feeling uneasy. Without significant population growth from the working-age population, there may be labor shortages over the next decade. We have been watching this potential labor shortage approach for years as the share of the workforce 55 and older rises each year as the baby boomers neared retirement age. Back in 1990, roughly 12 percent of the local workforce was 55 or older. By 2000 it was 14.5 percent, 24.4 percent in 2010, and now 26.6 percent as of 2020.
Klamath and Lake counties can look forward to a decade of opportuniity, but that opportunitiy does not come without challenges. Filling these jobs that open due to retirements will be critical in maintaining the labor productivity of the region.