Revisiting the Klamath Employment Outlook

by Damon Runberg

June 5, 2017

The state of Oregon has experienced a period of prolonged economic expansion going back to autumn 2014 when employment levels surpassed the previous peak. This growth has been largely fueled by job gains in the state’s largest urban centers, such as Portland, Salem, and Bend. The story in rural Oregon is much different. Many communities are still struggling to recover from the recession. Here in Klamath County employment totals remain 5.7 percent below the pre-recession peak, or around 1,400 jobs. Although a jobs recovery remains elusive, the employment situation is trending up.

Hiring activity has picked up with Klamath County adding nearly 1,200 jobs in the past two years. More jobs were added in the past two years than the previous four combined.
Back in 2014, we projected that the Klamath region, which encompasses all of Klamath and Lake Counties, would add around 1,600 jobs between 2014 and 2024. Checking in on these projections we see that as of the end of 2016 the region is ahead of the projected growth curve. Klamath area businesses hired nearly 63 percent of all jobs forecast to be added during the 10-year forecast period in just two years. Although these strong growth numbers over the past several years are reason for optimism, it is important to note that past trends do not guarantee future success. There are a variety of factors that can unravel the strong gains seen over the past several years.

An expanding job market depends on two things. First, demand for a particular good or service that is produced by businesses in your community. Second, is a supply of labor that possesses the necessary skills and experience to fulfill the needs of those businesses hiring. As the national and state economies continue to post sustained growth, the demand for goods and services produced in Klamath County, such as wood products and tourism, are on the rise. The number of online help wanted ads in Klamath County is up 22 percent from five years ago.

Future concerns largely rest in the second piece of the puzzle: our local labor supply. The unemployment level is at an all-time low going back to 1990, which means the supply of available labor is tight. The rate is declining due to local hiring, but also due to structural declines in the labor force. The total labor force is down 3 percent from 2006; likely the result of an aging workforce. Over the past 10 years the youth workforce (younger than 25) declined by 12 percent in Klamath County, while the older workforce (55 and older) rose by a staggering 26 percent. How do local businesses expand when there is a short supply of labor to replace those retiring workers?

Fortunately, Klamath County is in a unique position to respond to this labor crunch. Klamath Falls is the envy of other rural communities with two fantastic suppliers of skilled labor: Klamath Community College (KCC) and Oregon Institute of Technology (OIT). In the past year, just fewer than 10,000 individuals were enrolled in a course at one of these two institutions of higher learning. Retaining these predominately young and skilled workers is an important first step in ensuring Klamath County has the supply of labor for tomorrow’s jobs.

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