Oregon Office of Economic Analysis

The following post takes a look at the declining unemployment rates in the different regions of the state. The state reached its recessionary high unemployment rate of 11.6% in June 2009 and since then the rate has fallen 3.1 percentage points down to 8.5% in June 2012. Our office has previously examined the declining statewide figures, and has also detailed regional employment trends over the business cycle, see here, here and here. However we have yet to tackle the regional unemployment trends, that is until now. Since their recessionary highs, all regions of the state have seen an improvement in their unemployment rates, with the declines ranging from Central Oregon‘s 4.4% to the Columbia Gorge‘s 0.3% improvement.

However, while a declining unemployment rate is generally a good thing, not all of the declines are created equal. In every region outside of the Portland MSA, the labor force has declined in the past three years. That is, less individuals are looking for work, which by itself would lead to a lower unemployment rate. It is certainly true that some of this decline is due to individuals giving up looking for work (discouraged workers, or marginally attached workers) however this decline also includes workers who dropped out of the labor force for other reasons such as returning to school or moving out of the area. Note that the Columbia Gorge data is omitted here for graphing reasons and the region has seen a net decline in the labor force.

Taking the analysis a step further, one is able to deconstruct the changes in the unemployment rate based on the changes in the underlying components: labor force, employment, unemployment. The following map highlights the overall unemployment rate decline and then the contribution of each of these components to that decline.

A couple of items standout:

• Portland is the only region to see an increase in the labor force
• All other regions’ unemployment rate decline is partially attributable to a declining labor force (overall not a good thing)
• Both the Columbia Gorge and S. Central/Southeast Oregon have see employment losses over the past three years which, by itself, leads to a higher unemployment rate
• All other regions have seen employment increases

Finally, similar to the deconstruction of the statewide data, the following figure illustrates the changes on the unemployment rate that each individual component has in isolation.

Green arrows are used to indicate items that are generally good economic indicators while red arrows are used to indicate items that are generally bad economic indicators. All told 42 percent of the decline in the unemployment rate outside of the Portland MSA is due to the decline in the labor force, which is not generally considered a good indicator. Conversely, the Portland MSA’s unemployment rate would be 1.1 percentage points lower if it were not for the increase in the labor force.

As expected, the unemployment rate data (from the household survey) tells the same overall story that the payroll data (from the establishment survey) does on a regional basis. The bottom line remains that the Portland MSA is driving the overall employment growth in the state and the regions outside of the metro continue to languish in a state of, at best, low levels of job growth.