Oregon Office of Economic Analysis

In The Oregonian article today, it quotes Mark saying we expect about 1/3rd of the federal workers in Oregon to be furloughed immediately and this is about the same size as Tualatin or Coos Bay. How did we arrive at these figures?

Well, if one looks at the QCEW for 2012 it shows there are about 28,000 federal workers in the state with wages of about $1.9 billion. The Tualatin comparison is direct given the total population in the city is about 26,000. So the total federal workforce in Oregon is about the same size as the Tualatin population. However, what is the economic impact of the furloughs? Especially since not all federal workers are suddenly not working? This gets more complicated and we were able to do some back of the envelope type calculations, so take these with a grain of salt.

First, the QCEW employment data breaks out the federal workforce into some subcategories (natural resources, utilities, hospitals, etc). These do not line up directly with federal agencies but one can make some educated guesses. We took the agency by agency data on furloughs, summarized nicely by the The Washington Post and applied them to the Oregon data. Doing so reveals that about 1 in 3 federal workers to be furloughed immediately. This is due to the fact that postal workers will not be furloughed, only a few will be at the VA and at BPA and that Justice and the courts will not be furloughed for at least the first few weeks. Note that the Wall Street Journal finds that overall 41% of federal workers are currently furloughed. Given Oregon’s federal workforce composition, we would expect it to be a smaller share, so we know we’re in the right ballpark.

Doing the same calculations but for the wages provided in the QCEW data, yields a range of about $50-$75 million per month in wages associated with these furloughed workers. We then compared this range with wages by county across the state and it is somewhere in the ballpark of a Coos County (or Josephine or Klamath). This is akin to all workers in one of those counties missing a paycheck (or two or three if the shutdown drags out longer than a few days or weeks).

This is the immediate impact on the federal workforce in Oregon and should the shutdown continue for an extended period the share of workers furloughed will increase as a number of agencies have reserve funds that will last a short period. These direct wages are the first degree economic impacts and when it comes to a more complete impact figure, it really depends upon the duration of the shutdown. As Mark says in the article:

“With any luck, it will only last a few days, and businesses won’t change investment plans,” McMullen said. “Once it starts to be perceived as a long-term or permanent problem, then we start seeing cutbacks and it exacerbates the economic damage.”