Posted by: Josh Lehner | February 11, 2021

Low-Wage Employment in Oregon

We know there is a clear disparity when it comes to the labor market. Workers in high-contact, in-person industries have borne the brunt of the recession. Layoffs here are due to the combination of public health restrictions and fearful consumers. Many of these jobs in Retail, Leisure and Hospitality, and Other Services (repair shops, barbers, nail salons, membership and religious organizations) are low-wage. Since the start of the pandemic our office has been using the following chart to try and highlight and simplify these patterns.

Now, it’s an imperfect chart because it is based on industry trends and average wages within those industries. Clearly there are high-paying jobs in low-wage sectors, just like there are low-paying jobs in higher-paying sectors, such as medical aides, receptionists at law firms, seasonal park workers, and the like. It would be better to look at individual wages not industry averages when making these comparisons. But as we talked about before the household survey has a small sample size and the data is quite noisy, even if the underlying trends are sometimes clear. As such, the chart above is about the best we can do in real time given the available data.

That big preamble sets the stage for a few comments on another data set I’ve been asked about a lot. Click your mouse if you’ve heard that Oregon has seen the largest decline in low-wage employment in the country. The source of that claim is the economic tracker put together by Opportunity Insights. They are quite reputable and our office has used their previous work over the years. Their pandemic tracker uses some unique third party data to create a whole range of estimates. One of them shows Oregon with the largest declines in low-wage employment.

The issue here isn’t the clickbaity potential of “worst in the nation” type discussions. We know in our standard data that Oregon is among the hardest hit states when it comes to employment in low-wage sectors, likely due to some combination of more restrictive health measures and/or more cautious consumers. If you add up Retail, Leisure and Hospitality, and Other Services across all states and compare pre-pandemic to the most recent data, Oregon’s decline (-18%) ranks 42nd out of all states. The median state is -10%.

No, the issue I have with the Opportunity Insights chart and what I’ve been telling folks asking about it is in the story the chart appears to tell. If we take it literally, what it says is that as Oregon’s economy reopened over the summer, employment in low-wage jobs didn’t just stop falling, but it continued to plunge ever since. We reopened bars and restaurants (to varying degrees), and employment fell further. That pattern doesn’t pass the sniff test.

So what’s going on? I don’t know for certain but I think I have a pretty good suspect ID’d. One possibility is the third party data used to compute these estimates simply isn’t representative of the overall economy. That’s usually a key consideration to have with the miscellaneous data sources out there, and why you should always take them with a grain of salt. But I’m not sure that’s in play here in this data. One reason is that Leisure and Hospitality — the hardest hit sector, mind you — trends from our standard employment data and from Opportunity Insights look identical. If the most impacted low-wage sector trends match, how do we get such divergences among all low-wage jobs?

What I actually suspect is happening, or is a key aspect at least, is the impact of the minimum wage. Notice the low-wage threshold in the Opportunity Insights data is $27,000 per year or less. That works out to $13 per hour. On July 1st, 2020 Oregon’s minimum wage in the Portland region increased to $13.25 per hour. Other counties saw increases to $11.50 or $12 per hour, and given the cascading impact of the minimum wage, we know workers above those thresholds likely received raises as well. It’s quite possible that many Oregon workers bumped up in terms of the nationally defined buckets from the low-wage to middle-wage category.

If this is actually the case, then it’s indicative of unique methodological issues largely related to Oregon, at least when trying to compare across states. Normally we would be concerned about the quality of the data, or the quality of the analysis itself. This time it’s possible that both of those are fine. Although we do not know for certain, of course. And Oregon’s middle-wage growth in the tracker data isn’t especially strong. At the end of the day it could be all of the above, or something else driving the wedge between the data sets. But we do know that the intuitive nature of the trends in low-wage employment in Oregon is not likely that it continued to plunge since reopenings over the summer.


Responses

  1. Do you report these findings, and questions to Opportunity Insights? You know that the Oregon Business Plan is working with them and we have a great relationship with their leadership!

  2. […] Source: Low-Wage Employment in Oregon | Oregon Office of Economic Analysis […]

  3. […] Source: Low-Wage Employment in Oregon | Oregon Office of Economic Analysis […]

  4. […] for Oregonians in the retail, leisure, and hospitality industries that have yet to recover from an 18% jobs decline or almost double the national […]


Leave a Reply to Low-Wage Employment in Oregon | eClips Cancel reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Categories

%d bloggers like this: