Posted by: Josh Lehner | March 2, 2016

Oregon Nearing Full Employment, Jan ’16

As our office continues to unpack the latest employment data, which most importantly included revisions to the 2015 estimates, it’s looking even better than initially thought. Oregon is now getting very close to full employment, something we are likely to reach in the fall. Below is a quick look at two measures of full employment.

Right now, employment across the state stands at an all-time high, some 70,000 jobs above levels reached prior to the Great Recession. However, the population has grown as well. Our estimate of the potential labor force has increased nearly 89,000 since the start of the recession. This takes into account demographic changes within the overall population.

Thus, jobs have not quite caught back up with population growth. But, relative to the depths of late 2009, Oregon is 89% recovered by this measure of the jobs gap. Our office’s outlook expects the gap to fully close by October or November of this year.


Our more comprehensive look at the Total Employment Gap, likewise brings good news. In January Oregon is 84% recovered relative to pre-Great Recession levels.

The unemployment and underemployment gaps are gone. That is, the unemployment rate is actually lower than our estimate of NAIRU and the share of workers working part-time but want full-time work is back down to pre-recession rates. What remains is the labor force participation gap.


Of course the lower LFPR helps to lower the unemployment rate to the extent that the discouraged workers simply give up looking. However, even the LFPR brings some good news after the revisions. It is up about 1 percentage point over the past couple of years, even as the aging population is pulling down the potential LFPR.


Moving forward, our office does not expect too much improvement in the LFPR but we do expect some improvement. Our baseline outlook calls for another percentage point increase over the next couple of years. This is above what some economists expect — the consensus seems to be no improvement, just moving sideways — but given the return to normal labor market dynamics in the state, a modest increase is not an unreasonable expectation in our view.

Even so, our office does not expect the participation gap to fully close. Some of the decline and scars of the Great Recession are likely permanent. As discussed recently, the lower LFPR and EPOP among middle-aged Oregonians is of the greatest concern today.

All told, full employment in Oregon is clearly within sight. Strong labor market gains and a return to normal dynamics are propelling us closer.


  1. I agree that the employment numbers look encouraging, but suspect they don’t tell the whole story.

    There is some consensus that the participation rate is being affected by Boomer retirement, which may take years to resolve (I.e., as more Boomers die), but other factors are also affecting the LFPR and EPOP, including: shifts in the state’s industriaL base, declining Union participation, stagnate wage growth, a decline in employees pension schemes and increased longevity, all of which. Can affect the participation rate positively or negatively.

    What is missing from these numbers is any indication of the incomes being earned by workers who have entered or rejoined the workforce. How has that changed over time? Anecdotally, it appears that many workers employed after the Great Recession may be earning less than before. In part, this reflects the long term effects of both offshoring and technology, but it must also reflect a change in the basic demand for labor. In the long run, increasing productivity without a commensurate increase in wages concerns me more than secular shifts in the participation rate.

    • Hi Scott,

      Thanks for the comments, thoughts and questions. I haven’t looked specifically at how earnings are for those who rejoined the workforce are doing, but that’s an interesting item to research. We do have some depressing, but good research on wages and reemployment for the RV Industry which collapsed in Oregon during the Great Recession. This is our take on the work the Employment Department did a few years back.

      More specifically, however, wages are up in Oregon in every sector and in every region of the state. These are averages, not medians, or bottom quartile, etc. However it is good news.

      In the bigger picture, which masks any industry/regional/individual issues, Oregon’s average wage today — relative to the national average — is at its highest point since the timber mills started closing in the early 1980s. Our strong wage gains in the state are encouraging. Of course, not all is perfect and inflation-adjusted wage growth is lower and household incomes are just now starting to get back to pre-recession figures for many folks.


  2. […] claim requires more rigorous use of the dark arts of the Dismal Science. This is what we have in a new report from the Oregon Office of Economic Analysis. The state could hit full employment later in the […]

  3. […] Right now, employment across the state stands at an all-time high, some 70,000 jobs above levels reached prior to the Great Recession. Oregon is now getting very close to full employment, something we are likely to reach in the fall. Read the Oregon Office of Economic Analysis report now. […]

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