Wages Continue to Rise in Douglas County

by Kale Donnelly

May 7, 2018

Are you an employer having a hard time filling your job openings? If so, you are not alone in your struggles, and for a reason that is becoming more and more prevalent in today’s economic climate – the supply of available labor is dwindling. Unemployment rates are at historic lows, but that is only one piece of the puzzle. We can track the competiveness of a local labor market by utilizing two data sources in unison. We can look at the number of new, unique job ads online for an area to measure the demand for labor over time. As the depths of the recession and its effects faded, our economic recovery began and the demand for labor started to steadily climb beginning in 2011. By applying a ratio of the number of unemployed person per online job ad it gives us a tool to gauge competition in the labor market, and today is much less competitive among job seekers than it was seven years ago.
At the beginning of 2011 there were roughly 20 unemployed persons for every single online job ad. Can you imagine competing against 19 other people, at a minimum, for one job? Today, that ratio is closer to four and a half unemployed per job ad, and almost every employer looking for new hires is feeling this labor crunch at the moment.

As a hiring manager, how can you attract the labor that you’re currently looking for? I like to think of three ways to find that right person: Hire from outside your area’s labor pool, upskill your current workforce for the vacant position and backfill at the lower end, or raise the wages that you’re currently offering. The issue with hiring outside of your region is the lack of housing availability and sufficient building activity throughout Douglas County, let alone the state. Many hiring managers who found the right hire outside of the area then turn into real estate agents, and finding the right home for a new hire and their family can prove difficult.

As for upskilling your current labor and backfilling the newly vacant positions, this doesn’t necessarily apply if you’re hiring for an entry-level position to begin with. While we don’t have much data on how upskilling and backfilling occurs, Josh Lehner, Economist for the Oregon Office of Economic Analysis, performed an interesting analysis on the “down skilling” of industries in Oregon by tracking the share of new hires with a bachelor’s degree in 2017 compared with 2010. Many industries posted a lower share of new hires with a college degree in 2017, which could very well point to some form of upskilling and backfill. Lower-end positions would be left vacant by those who moved upward within their company’s ranks, and those new vacancies could very well not require some form of post-secondary education. Josh points out that this could also be attributed to firms running lean during tough economic times and now being able to hire on more support staff. Regardless, this is an option for firms seeking to fill vacancies higher up their company ladder.

As for raising the wages offered for the position, we’re starting to see employers use this tactic across new hires and current employees. Wages have increased, but how these wages track with inflation is the real story. If you received an annual 3 percent wage increase but inflation rose at a higher rate that year, your purchasing power actually declined. After adjusting annual average wages for inflation, Douglas County’s workers have seen an increase in their purchasing power that exceeds their pre-recession peak levels in 2004.
The lack of labor supply has put upward pressure on wages, and this is great news for workers. However, this will likely continue given our current economic climate and this has the potential to inflate the prices of goods. If employers are forced to pay more for the labor they want to attract and retain, they will eventually have to raise the prices of their goods and services to account for more expensive labor costs. However, Douglas County workers can enjoy the current increase in their purchasing power and further contribute to the economic growth of the area.

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