Oregon Office of Economic Analysis

Yesterday afternoon Mark testified in front of the House Committee on Economic Development and Small Business (video here). He really touched on a lot of the greatest hits when it comes to the current state of the labor market and how we are thinking about the outlook. A copy of his slides are below for you to browse if you would like. But first, a brief recap:

Overall, it’s encouraging that the labor market has recovered from the pandemic. The workers have fully returned, and issues like distance learning, lack of childcare, fear of the virus, the impact of federal aid and enhanced unemployment insurance benefits and the like are in the rearview mirror. There are relatively fewer working-age Oregonians not looking for work today than there was pre-pandemic. There is not some reserve army of folks sitting on the couch playing video games. And yet a labor shortage still remains because firms are looking to chase market opportunities given consumer demand is so strong. The shortage is from very high labor demand, not a lack of supply based on the Oregon data.

Compounding the cyclically tight labor market is the structural demographic story of increased retirements. New, young workers outnumber retirements, so Oregon’s labor force is and is expected to grow but will do so at a slower pace than in past decades due to our now decades-long low birth rate, and slower migration. These demographic trends impact every single industry. An interesting question arose during the discussion yesterday about which industries young workers are going into in greater numbers, so we are adding that to the research agenda. One tidbit there is we know young Oregonians have returned to the trades in the past decade, but to what degree we see other trends in other sectors, we will take a closer look.

To increase the number of available workers for local businesses to hire and expand there are really two options. One is to see continued net in-migration to the state. As of 2021, Oregon still saw more young adults across all levels of educational attainment move into the state than move out. We do not have any details on the 2022 numbers, which will be out this fall. The other way to increase the workforce is through higher participation rates among people already living in Oregon. This is where our previous look at the Latent Labor Force comes in. If we were to address any or all of these historical disparities — differences across sex, race and ethnicity, and educational attainment — it would increase the size of the local workforce by much more than stronger migration every could.

Lastly, economic growth isn’t just about the number of workers, but also about productivity. There are many different forms of capital that can be used to increase worker productivity, be it natural, financial, physical, human, or social in nature. Each regional economy within the state has strengths (and weaknesses) in these different forms of capital which can propel (or hinder) growth in the years ahead.