South Central Oregon Labor Market Continues to Ease

September 10, 2026

South Central Oregon heads into the second half of 2026 with a labor market that continues to soften. Regional employment remains lower than a year ago as businesses across both counties operate with leaner staffing levels. Klamath County’s modest declines and Lake County’s deeper, prolonged post‑pandemic losses together hold regional payrolls in the mid‑25,000s, below the peaks reached in 2023 and early 2024. Employers appear cautious about rebuilding their workforces, contributing to a labor market defined by restrained hiring rather than expansion. 

Total nonfarm employment in South Central Oregon declined modestly through the first half of 2026. Combined payrolls for the region (Klamath and Lake counties) averaged about 25,600 jobs in early 2026, down from roughly 26,000 in early 2025. This continues a gradual softening that began in late 2024.Regional job levels in 2026 have shown limited movement over the months but remain lower than last year. The region entered 2026 with signs of slower hiring following two years of relatively stronger job growth. Monthly totals ranged from 25,530 to 25,810 jobs, reflecting minor month‑to‑month movement and smaller seasonal gains compared with recent years. In 2025, monthly regional employment commonly ranged between 25,620 and 26,080 jobs, with stronger levels early in the year.
Although monthly changes have not been large, employment in the region continues to trend lower compared with 2025, indicating employers are maintaining reduced staffing levels rather than rebuilding to earlier peaks.

Declining employment appears across both counties, suggesting that slower growth is broad-based rather than concentrated in any single area. A large share of this regional softening reflects modest declines in Klamath County, which accounts for most of the region’s payrolls. Even though Klamath payrolls remain within long‑run norms, they no longer match the more robust levels seen in 2023, when several months surpassed 23,700 jobs and the region reached its recent high point. Early 2026 employment ranged from 23,400 to 23,630 jobs, slightly below the 23,680 to 23,930 levels common in early 2025 and short of the stronger levels seen in 2023. Even so, Klamath County remains within its typical historical range and continues to anchor overall regional stability. The more significant shift within the region comes from Lake County, where employment levels remain below pre pandemic norms. Lake County’s job totals in 2026 ranged from 2,130 to 2,210 jobs, continuing a pattern of reduced employment levels that has persisted since 2020. Prior to the pandemic, starting around 2017, the county routinely reached 2,240 to 2,380 jobs, with 2023 and 2024 briefly returning to those higher levels. But since late 2024, employment has weakened again and now sits near the lower end of the county’s long run range. These declines, although numerically small in absolute terms, represent historically significant reductions for Lake County and play an important role in shaping the region’s overall trend. 

With both counties showing slower hiring and Lake County remaining well below its pre pandemic footing, combined regional totals have hovered in the mid 25,000s. Overall, South Central Oregon’s labor market remains on a slower trajectory, shaped by modest payroll reductions in Klamath County and more persistent weakness in Lake County. Current patterns suggest the region will continue operating at a lower employment level unless broader economic conditions support renewed hiring.