Posted by: Josh Lehner | May 7, 2015

State Labor Markets, Sneak Peek

As promised, here is our second sneak peek at upcoming research, following the first on our Oregon Start-Up Breweries report the other day.

Even though Oregon, and the nation, have fully regained the total number of jobs lost during the Great Recession, the economy is not fully healthy today. Given population and productivity gains, however meager, and the fact that part of the decline in the unemployment rate is due to overall lower labor force participation rates, there is still considerable room before our office would say Oregon’s economy is at full employment.

This is one reason our office has used broader measures of the economy and labor market. My favorite is the Total Employment Gap, first developed by Andrew Levin at the IMF, and now a professor at Dartmouth. I have taken his national work and applied to the state level across the country. I have also looked at job polarization across states in recent years as well. These concepts and trends are closely related, particularly to the downside (job losses in recession.)

All told, Oregon’s labor market today is about 60 percent recovered from the depths of the Great Recession to where we were at the start of it. With a 5.4 percent unemployment rate, Oregon very likely has no cyclical unemployment left, however our labor force participation rate remains a few percentage points below our office’s demographically-adjusted full employment rate. Unlike many other states, Oregon’s underemployment gap is actually declining since the worst of the crisis (4th largest decline) but it still exists.

Even with this relatively good news, Oregon’s Total Employment Gap remains above the typical state. This partially reflects the fact that Oregon never fully healed from the tech recession in the early 2000s, so we were starting from a worse position. It also reflects the severity of the recession in the state. Oregon was among the 10 states with the largest employment losses. Even with strong growth in recent years, particularly the past 1-2 years, it takes time to make up the lost ground. The biggest concern is how much permanent damage the Great Recession causes. A stronger economy can, will and is pulling folks back into the labor force.



Lastly, Oregon suffered larger losses among the so-called middle-wage or middle-skill jobs than the typical state. As our office’s report pointed out, Oregon’s labor market is polarizing at roughly the same rate as the nation, or typical state. However during, and immediately after recessions, these trends are exacerbated. On the brighter side, Oregon has seen significantly above average growth in high-wage, and/or cognitive non-routine occupations, while the growth in low-wage, and/or manual non-routine jobs is about average. The fears that we are seeing only a low-wage, bad job recovery are overblown. The fears that middle-wage jobs are being lost forever is slightly overblown, see our middle-wage job outlook for more on why.


  1. Clear and useful post, yet again, thanks!

    The links to the total employment gap references are particularly useful. I will have to look at applying these measures to Montana’s data, as we are further ahead on the aging demographic curve.

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  3. […] consider full employment prior to the Great Recession. Of course, we know not all is healthy and our Total Employment Gap remains a few percentage points away from something approaching […]

  4. […] is once again among the fastest growing states across a host of economic measures. The economy is not fully healed yet, but provided recent rates of growth continue for another couple of years — which our […]

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