Measuring Resilience Among Oregon CountiesDecember 15, 2017 The lead author for this article is Mallory Rahe, Extension Community Economist and Instructor at Oregon State University.
December 2017 marks the 10-year anniversary of the start of the Great Recession. It’s a good opportunity to look at county economic and industrial resilience in Oregon over the last decade. Nationally, the Great Recession officially lasted from December 2007 to June of 2009. Oregon’s economy started losing jobs in March 2008, and like the nation, continued to lose jobs for two years. Oregon’s economy has been adding jobs since February 2010 and by November 2014 the economy had recovered the 147,000 jobs lost during the recession. Compared with the nation, Oregon lost a larger percent of jobs between December 2007 and January 2010 (8.5% compared with 6.2% nationally). Oregon’s unemployment rates peaked at 11.9 percent in 2009, compared with 10.0 percent nationally. In May 2017 the state’s economy recorded the lowest unemployment rate (3.6%) since comparable records began in 1976. These national and state averages mask a diverse set of outcomes at the county level.
Some counties resisted the national trends of job loss or even gained employment during the official dates of the recession. Here in Oregon, three counties increased their number of total jobs between 2007 and 2009: Morrow, Hood River, and Wheeler. Of these, Morrow County was the largest outlier, growing by 2.9 percent. The rest of the state lost jobs and so the discussion below focuses on job loss.
Economic resilience research focuses on measuring and understanding how individual economies respond to shocks. We apply some of this work to Oregon to measure variations in resilience at the county level based on nonfarm employment, a new set of data that combines farm and nonfarm employment, and the effect on average county wage levels. We also explore the role that industries have on county resiliency by evaluating the resistance and recoverability of industries at the statewide level.
Nonfarm Employment Resiliency in Oregon
Resiliency has a number of definitions but can be broadly understood as how a system reacts to change. There are two parts of the reaction, resistance to a downturn and the subsequent recovery of jobs. Using the state of Oregon averages as a benchmark, we adapt measures of resistance and recovery from Ron Martin et al.’s 2016 study of areas in the United Kingdom to visualize economic resilience among Oregon’s 36 counties.
Resistance: Did a county lose a larger or smaller share of total employment than the state average loss of 8.5 percent between December 2007 and January 2010?
Recovery: Did a county gain back a larger or smaller share of total employment than the state average gain of 15.4 percent between February 2010 and September 2016?
Key Observations Interpreting Resiliency
On the resistance axis (looking at the chart from top to bottom) the counties with the most resistance to job losses during the recession were Morrow, Sherman, Hood River, Wasco, and Gilliam counties. Only Morrow County crosses the midline recoverability axis (looking at the chart from right to left) indicating that it was the only county of this group that added a larger share of jobs after the recession ended than the state average. Hood River and Sherman counties came closer to matching the state average job growth post-recession than Wasco and Gilliam counties did.
- On the recoverability axis (looking at the chart from right to left) the counties with the fastest job growth between February 2010 and September 2016 were Morrow, Deschutes, and Washington counties.
- There is not a linear pattern from least to most resilient among Oregon’s counties.
- The largest number of Oregon’s counties can be found in the upper left hand quadrant. This means that these counties lost a smaller share of jobs but have not been adding jobs back as fast as the state on average.
- By this definition over this time period, Morrow County is the most resilient and Crook County is the least resilient.
Urban and Rural Resilience
- Large economies like Multnomah, Washington and Clackamas counties hold a substantial share of all Oregon jobs and these counties appear most similar to the state average.
- Among the Portland metro region, Multnomah and Washington counties have fared the best. Multnomah lost the smallest percent of all jobs among the three counties, and Washington County has had the third fastest rate of job recovery in the state.
- Deschutes County experienced the second largest decline in jobs, but unlike Crook has experienced strong job growth during the recovery and has added back more than 7,830 additional jobs than before the recession started as of September 2016.
- Crook County experienced the largest decline in total employment, and has had a slower recovery with fewer jobs added back than most counties. Some of this employment change was unrelated to the recession as employers completed announced relocations within the region. This will dampen the effect on the working resident population in Crook County.
- Excluding Morrow County, urban areas in the state have outperformed rural areas in recovering jobs after the recession.
- Metropolitan counties tended to have weaker resistance and their economies lost more jobs than nonmetropolitan counties. Benton County fared the best among the state’s urban areas and sixth in the state while Josephine, Columbia, Douglas, and Deschutes counties were four of the bottom six counties with the lowest resistance scores.
Farm Employment Improved Economic Resiliency
Nationally many parts of the agricultural sector were countercyclical during the most recent recession, adding jobs while most industries lost jobs. In Oregon the story was a little more complicated due to the high number of different types of crops that are grown. Figure 2 provided a summary of the state’s nonfarm employment; Figure 3 replicates the same pattern as Figure 2 but now includes all jobs, adding in farm employment numbers. In Oregon, counties with more farm employment were sometimes more resilient.
Previous analyses by the Oregon Office of Economic Analysis have discussed the strong performance of the Columbia Gorge region: Hood River, Wasco, Sherman, and Gilliam. Notably by 2015 this rural region was the first to recover all of the jobs that were lost during the recession. Their placement on Figure 3 shows that this set of counties lost fewer jobs than the state average but that their rate of job recovery has also lagged the state average. They were able to return to previous total employment numbers quickly primarily because they lost fewer jobs rather than adding jobs back the fastest. The four Columbia Gorge region counties had between 17.4 percent and 22.2 percent of all jobs in the farm sector in September 2016 (ranking them 5th through 8th in the state). The farm sector in all four counties lost fewer jobs than the nonfarm sector and increased each county’s resistance score. Since the recession ended, the farm sector has added more jobs than the nonfarm sector in two of these counties (Gilliam and Wasco). This has also improved their recoverability scores.
- Farm employment increased faster than the state in 15 counties, improving both aspects of those counties’ resilience scores. The counties who benefited from stronger growth in farm employment had some of the largest shares of total employment in farms including Wheeler, Lake, and Harney counties. Although the farm sector did not outperform the nonfarm sector in all counties with a large percent of farm jobs.
- Morrow County’s strong economic resilience is attributed to its nonfarm industries. Changes in farm employment in the county reduced both the resistance and recoverability scores, 29.1 percent of all jobs in the county were in the farm sector in September 2016.
- The strength of the farm sector helped reduce job loss in Hood River, Sherman, Jefferson, Crook, Columbia, and Benton counties, but slow growth in this sector between 2010 and 2016 slightly reduced the recoverability scores of these counties.
Monitoring changes in the total number of jobs is a straightforward approach to measuring resiliency – or how an economy adapts to an external shock. A more complicated understanding of this adaptation includes examining what happens to other indicators in the county as it changes. Researchers refer to this as “adaptation.” Intuitively we can think about multiple paths:
- Economic downturns close the most inefficient, struggling businesses, those that survive closure are best prepared to take advantage of growth opportunities and decisively start rehiring.
- Economic downturns push remaining firms farther towards efficiency; firms reallocate resources more strategically towards market demand in order to stay open.
- Economic downturns can shift the industrial structure in a county as an entire region is no longer competitive and loses industries or gains new competitive advantage and grows industries.
- Migration and resulting demographic shifts can alter the current and future labor force either positively or negatively.
Oregon’s real average wage has increased faster, at 8.7 percent, than the nation (5.4%) indicating that in the aggregate the economy is generating more wages and salaries per job than before the recession started and has improved faster. In 2016, Oregon had a lower average wage of $49,467, while the national average was $53,621. This speedier rate of growth is helping to close the gap between Oregon and other states. The average wage for a region is derived by dividing the total of all wages by the total number of jobs. Therefore, the average wage is different than the distribution of wages within an economy and provides a partial understanding of how worker’s standard of living is changing in an area.
Real Average Wage Changes as an Indication of Adaptation
Increasing average wages is generally a positive indicator of economic development. In the context of recovering from a recession, it may be a less reliable indicator. An increase in average wages could have been derived through the loss of low-wage jobs, growth of high-wage jobs, or both. The average wage in a county does not account for unemployment rates or changes in the labor force participation rate.
- Crook and Grant counties are two of the state’s least resistant counties, but both have seen average wages increase faster than the state and the nation. This could suggest these counties may be slower to adapt but may be improving their economy as they recover.
- Three counties are distinct for having lower average wages in 2016 than when the recession ended in 2009: Gilliam, Sherman, and Umatilla counties. Wages for some industries can be highly volatile from year to year which can distort comparisons. This can be especially problematic in small economies like Gilliam and Sherman counties, where large construction projects temporary raised the average wage during the recession. Umatilla is a larger economy, suggesting that a lower average county wage is being driven by changes in multiple industries. Umatilla wages have been relatively flat, decreasing by 0.9 percent between 2009 and 2016.
- Four other Oregon counties are among the state’s least resilient and have seen positive but smaller wage increases than the national and state average: Jefferson, Klamath, Columbia, and Josephine. Further examining change in these counties could reveal different adaptation paths than counties that lost a similar percent of jobs but have recovered more of those jobs and have seen average wages increase faster during the recovery of those jobs. This includes Jackson, Lane, Clackamas, and Linn counties.
Other County Level Observations
- A majority of Oregon’s counties (25) have not only seen increasing wages but those increases have been faster than the national increase in average wages.
- This growth in wages is helping close the gap between Oregon’s counties and the national average wage. Washington and Multnomah counties had a higher average wage than the national average in 2016.
- Rural counties have seen some of the fastest wage growth: Crook and Morrow’s average wages both increased more than 25 percent while average wages in Hood River and Wasco counties increased 10.3 percent to 16.1 percent.
- Washington County experienced the fastest wage growth among metropolitan counties at 14.9 percent; this county recorded the highest average wage in the state in 2016. Clackamas County had the second fastest real average wage increase of 7.1 percent.
This brings the conversation to industries. When we think about how a county economy is changing we consider both internal and external factors. Growth is a function of the types of businesses in a place, as well as the competitiveness of the region, the skills and knowledge of the workforce, proximity to markets and transportation access, etc. Every recession is different and affects certain segments of the economy more or less. Figure 5 replicates the resiliency grid with Oregon’s total employment by industry as one way to discuss industrial resiliency in the state.
Industrial Resilience Observations
- The state’s most resilient industries are in the upper right quadrant.
- Four industries experienced positive job growth during the recession (2007-2010). Two of these industries also experienced faster than average growth after the recession ended: health care and social assistance; and management of companies and enterprises.
- Private educational services and state and local government also had positive job growth during the recession but slower than average growth after the recession ended.
- From 2010 to 2016, all industries attained positive growth rates, adding jobs, except for the federal government sector which has been shrinking.
- The construction industry has been the most volatile in the state, losing 32.8 percent of all jobs during the recession, the largest share of any industry, and growing 31.2 percent after the recession ended, the second strongest growth rate after professional and technical services.
- The combination of losing more than 10 percent of jobs during the recession and having a growth rate of 6 percent or slower since the recession makes information and financial services the state’s least resilient industries.
- Between December 2007 and September 2016, the state had not regained the jobs lost in durable goods manufacturing, construction, financial activities, information, and mining and logging.
McMullen, Mark and Joshua Lehner, Rural Oregon: Analyzing Demographic and Economic Trends Across Rural Oregon and a Look Ahead. Oregon Office of Economic Analysis. September 2015. https://oregoneconomicanalysis.files.wordpress.com/2015/08/rural-oregon-2015.pdf
Nelson, Jessica. The Employment Landscape of Rural Oregon. State of Oregon Employment Department. May 2017. https://www.qualityinfo.org/documents/10182/13336/The+Employment+Landscape+of+Rural+Oregon
Another rule of thumb measure of resiliency asks the question, has an economy added back all of the jobs it lost? A recent analysis by David Cooke and Christopher Rich at the Oregon Employment Department undertook that question:
Cooke, David and Christopher Rich. Twenty Below: Oregon Counties and the Pre-Recession Peak. State of Oregon Employment Department. January 2017. https://www.qualityinfo.org/-/twenty-below-oregon-counties-and-the-pre-recession-peak and for more details see: https://www.qualityinfo.org/documents/10182/79531/052517+-+Twenty+Below+Oregon+Counties+and+the+Pre-Recession+Peak