Posted by: Josh Lehner | March 29, 2016

Oregon Jobs Gap by Region

Job growth has returned to all regions in Oregon and in many, employment has surpassed pre-Great Recession levels. However that alone does not indicate the economy is fully healthy. For most regions, the population continued to grow even as the economy cratered. Today our office is releasing a new regional measure called the Jobs Gap which compares the actual number of jobs with the amount needed to keep pace with the growing population.

To create the Jobs Gap, our office estimated the potential labor force in each region and how that changes over time due to demographics and the aging of the population. This is a similar concept to how we created the labor force participation gap at the state level. The current Jobs Gap by region is shown below.

JobsGap0216

Let’s use the Rogue Valley (Jackson and Josephine counties, or Medford and Grants Pass MSAs) as an example. During the Great Recession the region lost 13,000 jobs even as the population continued to increase. Additionally, migration flows dried up resulting in a slowly growing population. As such, in the Rogue Valley the potential labor force essentially flattened out and even declined a hair due to the aging demographics. At its largest, the Rogue Valley Jobs Gap totaled about 14,000 jobs or nearly 13%. This marks the second largest Jobs Gap statewide, trailing only Central Oregon. Not coincidentally both the Rogue Valley and Central Oregon experienced two of the nation’s largest housing bubbles and busts. Strong job growth in recent years has outpaced population gains, even as migration flows are returning. The region’s Jobs Gap is narrowing. Today the Rogue Valley has closed three-quarters of its Jobs Gap.

RogueGap0216

To see each region’s Jobs Gap, scroll through the slides below.

 

It is important to keep in mind what exactly the Job Gap shows. This is not necessarily a measure of full employment or full health. Rather it shows how employment today compares with employment prior to the Great Recession, after adjusting for population changes. So to the extent a regional economy was not healthy in 2007 or 2008, then closing the Job Gap likewise does not mean the region is fully healthy today either.

Finally, the potential labor force measures are sensitive to the initial assumptions we made about participation rates. Reasonable estimates are likely to differ. Thus the Jobs Gap has a range of plus or minus a percentage point or so, depending upon those assumptions. However the bigger picture trends remain the same in terms of the demographics and obviously the actual job growth numbers are, well, actual.


Responses

  1. Thank you, Josh, for the helpful analysis and the concise, informative charts.

    As you state in your narrative, the base year of 2007 is somewhat arbitrary. That year was the peak of an artificial housing and debt bubble, which, arguably, boosted the U.S. economy and Oregon’s economy far above their longer-term trend lines.

    Therefore, it might be helpful to select a base year that is a more normal year within the business cycle — perhaps 2004. Doing so would show the extent to which the Portland MSA’s economy and labor force dynamics are now performing well above historical norms.

    • Thanks David. You’re right that longer term trends are what’s really important here. However measuring business cycles can get complicated, so one common technique is to compare business cycle peak to business cycle peak. We don’t think we’re at a peak right now (hopefully!) so comparing today to the past peak is about all we can do unless we go back even further. The potential labor force figures are based on longer term trends, dating back to 2000. Second, yes the U.S. had a massive housing bubble in the mid-2000s. However the overall economy was not beyond longer-term trends. We had a misallocation of resources into the bubble and away from more sustainable/productive uses. Given there was not significant price or wage pressures during that time supports this view. Even as the housing market was considerably different.

  2. […] rate is increasing and employment opportunities are booming. Rural Oregon is growing again, narrowing the Jobs Gap. And middle-wage jobs are coming back; they do not decline forever. However job polarization […]

  3. […] population growth. Even as the economy cratered, people kept moving to Oregon and the state’s Jobs Gap hit nearly 170,000 or 10% back in early 2010. Today this gap is now […]

  4. […] to the population. Are there enough jobs for everyone? That is why our office continues to use demographically-adjusted potential labor force figures to gauge the Jobs Gap. This looks at employment relative to the size of the population that would likely be working or […]


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