Oregon Office of Economic Analysis

Welcome to a new feature on the blog: the Graph of the Week! These are meant to be short and to the point, while hopefully also interesting to you. While I will try to post each week, these will more likely be a recurring feature every couple of weeks. There is also a new Topic over in the right column so you can quickly browse all these graphs of the week. I am retroactively calling the update to the historical financial crises graph the first edition, so today I present the second edition: Health and Social Assistance employment in Oregon.

A lot has been made of the slowdown in health care spending and costs in recent years (see HERE and HERE for two examples) and the question naturally turns to what does this mean for the outlook. If this slowdown is more or less permanent, then the projections for our national debt get a lot more rosy than if the slowdown is temporary and we soon return to previous rates of growth. IHS Global Insight buys into the slowdown in health inflation (that is the cost of providing services will remain below rates seen in the past decade) but believes overall health spending will increase as more people will now be covered under the Patient Protection and Affordable Care Act (aka Obamacare) and as the overall population ages (that is, per capita health spending will increase in their outlook).

As for our office, luckily we do not have to forecast Oregon health care costs, but we do forecast employment and we’ve bought into a slowdown in job growth. After decades of very strong growth, nearly 3 percent per year, the health industry has ramped up considerably to account for both the advancements in technology and services provided but more importantly for the aging Baby Boomers which have just now begun to pass the quasi-official retirement age of 65. We’re expecting between 25,000 and 30,000 Oregonians to reach 65 each year for the next decade or even longer. Even so, employment growth in the industry will likely remain below previous trends at about 2 percent per year moving forward. While this is slower than the past rates of growth, it is still stronger than overall job growth in Oregon, so the industry is still becoming a larger and larger share of the economy.