Oregon Office of Economic Analysis

Continuing with the regional series and following up on the recent posts on Oregon’s timber counties and their outlook and the South Coast economy, this post takes a quick historical overview of the Southern Oregon economy. From the 1970s through the mid-2000s the region kept pace with the state overall and actually outpaced it in some regards, even with some major structural changes occurring. The chief structural change being the decline of timber-related employment, however strong growth, particularly in Medford, helped to offset some of these losses in the region overall. In recent years, the housing downturn had a much more pronounced impact in the region than the average region or state for that matter with employment just now beginning to improve on a sustained basis.

The three county regional definition is how our office examines the various parts of the state while the Oregon Employment Department actually separates Douglas into its own region (Region 6) and Jackson and Josephine into one combined region (Region 8). Here is how the Employment Department summarizes the local economy:

…Among the major industries in Douglas County, lumber and wood products, which comprise about 10 percent of the county’s total private sector employment, is the largest in manufacturing. Douglas County contains nearly 2.8 million acres in commercial forest lands. The county is the second largest producer in the state with 13 percent of the total timber harvest for Oregon in 2011….

…Major industries in [Jackson and Josephine] include wood products, agriculture, and tourism. Employment in wood products has fallen in recent years, but an increase in food manufacturing employment has somewhat offset the loss. Growth of the retirement sector has added employment in retail trade and services, especially health care.

Even with these larger sectoral shifts taking place , it is important to take a look at a region’s industry structure. Below are 2010 location quotients for Southern Oregon. Location quotients compare the relative size of industries across locations allowing one to see which industries a particular area has a concentration in, or possibly a comparative advantage. A value equal to 1 means the percentage of employment in that industry is the same as the percentage at the national level, while values greater than 1 mean the local area has a higher concentration in that particular industry and values less than 1 are the opposite

In terms of historical employment changes, the graph below compares the relative performance in job growth between Southern Oregon and the state overall. At this top level employment look, there are really two time period here: pre-2000 and post-2000. From the 1970s through 2000, overall employment effectively grew right along with the state as a whole, even if the recessions of the early 1980s and 1990 were a bit more pronounced. This growth was much faster than the U.S. overall as during this period the state grew about 40% more than the nation.

From 2000 through today the region underwent a stronger expansion during the housing boom – partially a function of having a less severe dotcom bust – but then an even more severe housing downturn. Specifically, Medford’s experience during the Great Recession and so far into recovery has been at approximately the 10th percentile when compared with all the MSAs in the country. That is, Medford has outperformed about 30-40 other MSAs across the country but experienced worse conditions than the remaining 330, or so depending upon the data set used. Part of the housing boom leading up to the bust was influenced by an influx of new migrants, particularly from California. See the Oregon timber counties post for more on the influx of these migrants and the county population forecast post for more on the demographic outlook more generally.

The unemployment rate for the region largely follows a similar pattern but is generally higher than the statewide numbers.

The next graph compares the four recessions in the past 35 years and their impact on the region’s employment. The early 1980s recession in the region was certainly severe, with job losses reaching over 14%, while statewide losses were approximately 12%, however the growth coming out of the early 1980s recession was equally strong as the decline going in. While it took over 6 years to regain the losses in Southern Oregon, the overall pattern is more of the V-shaped recession, albeit a deep one. Contrast that with today, however, where the severity was nearly the same yet a sustained recovery has been lacking and today, employment is in a much worse relative position than the corresponding period back in the 1980s.

The lackluster recovery can generally be explained by two important industry trends in recent years – housing and government – both of which play a more prominent role in smaller metropolitan areas and certainly more rural areas. With housing just now returning to strong growth, from a very low base, and state and local governments stabilizing, growth is expected to return and pickup moving forward. In fact, as shown previously, the private sector in Medford has been growing pretty well over the past year and we expect that to continue moving forward. For comparison purposes, click here for the state equivalent of the graph.

Finally, these last two graphs illustrate the region’s personal income over the past 42 years. For those interested, this data comes from the BEA but is only available at the local level through 2011 at the moment. On an inflation-adjusted basis, regional personal income per capita has largely followed the pattern seen by regions of the state outside of Portland. Over the full time period, growth has been a bit faster given the relative differences seen in the 1970s compared to today, however there are no major discrepancies in the growth paths. In terms of recession comparisons, the second graph again illustrates the severity of the two major recessions in the region and the relative changes when compared with statewide trends. The Great Recession’s impact is more severe than the early 1980s for the region.

For much more information on the Southern Oregon economy, I would suggest reading and reviewing the Employment Department’s work. They have two regional economists given their breakdown of the state. Guy Tauer covers Region 8 (Jackson and Josephine) and has written numerous articles over the years (see here for a list), in addition to also covering Region 7 (Curry and Coos). Brian Rooney covers Region 6 (Douglas) and likewise has written lots of good articles over the years (see his list of publications) that contain more information and data, while also covering Region 5 (Lane).

Lastly, I would also highlight a recent Feb 2013 set of slides (PDF) for Josephine county that contains recent trends of employment, travel spending, airport traffic, building permits, population changes and regional job vacancies.