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Oregon economist Josh Lehner says we are in strange times, with a sense of high unemployment and a worker shortage at the same time.

COURTESY: OREGON OFFICE OF ECONOMIC ANALYSIS - At 6%, Oregon's unemployment as of March 2021 is below average.

The Oregon Employment Department and the Oregon Office of Economic Analysis recently released an article on the current state of the labor market.

"It may be harder for businesses to find workers than you might think," said Josh Lehner, an economist for the State of Oregon.

The study says that what usually happens during recessions is that unemployed workers greatly outnumber job vacancies, and competition holds down wage growth. As jobs become more plentiful, wages go up to attract workers.

However, the pandemic recession is different.

"These usual dynamics are either accelerated or gone. Labor demand and wage growth remain strong, while the pool of candidates is smaller than you might think," said Lehner.

COURTESY: OREGON OFFICE OF ECONOMIC ANALYSIS - Oregonians' personal income is rebounding quicker than ususal in this pandemic recession.

"Nationally, and here in Oregon, job openings have returned to pre-pandemic levels. Businesses are advertising just as many vacancies today as back in the strong economy a couple of years ago."

And according to research from the Federal Reserve Bank of Atlanta, underlying wage growth remains in line with pre-COVID trends.

"A majority of Oregon employers (54%) are citing difficulty hiring workers, just as they have in recent years," Lehner said.

Not just looking

The economists say this recovery looks different because several simultaneous factors are constraining the supply of labor for job openings.

"These include a reduced or altered labor force due to COVID-related issues transfer payments and benefits supporting households more during the pandemic, and rapid hiring during the re-opening period creating more intense competition among employers for workers," said Lehner. "Some people aren't looking for work. The unemployment rate doesn't include would-be workers who are out of the labor force, meaning they neither have a job, nor are they looking for one."

Some of that is down to fear of catching COVID-19.

The Current Population Survey shows an estimated 45,000 people in Oregon said they were prevented from looking for work due to COVID-related reasons during the first quarter of 2021.

COURTESY:  - Josh Lehner, economist at the the Oregon Employment Department and the Oregon Office of Economic Analysis.

And not enough people are vaccinated yet to make that fear go down. Oregon is nowhere near herd immunity, where the unvaccinated can go about at will, knowing the vaccinated have helped reduce the danger.

"Only about half the adult population has received at least one vaccine dose for COVID-19 as of mid-April. "

One in six Oregonians in the labor force had kids and could not work and watch them while in-person school was suspended, increasing the unemployed pool.

"Even with the anticipated return of full-time, in-person learning for the 2021-2022 school year, child care slots, which were already too scarce in most areas of the state prior to the pandemic, and summer programs will likely continue operating with reduced capacity for some time," said the report. "These constraints limit workforce options for some parents of younger children.

COURTESY: OREGON OFFICE OF ECONOMIC ANALYSIS - One in six Oregonians in the labor force had kids and could not work and watch them while in-person school was sustpended, which also increased the unemployed pool.

$670 a week equals $16.75 an hour

"Fiscal stimulus and enhanced unemployment benefits during recessions have generally aimed to encourage economic demand and support families during times of economic distress. Total personal income in Oregon today is about 15% higher than before the pandemic. The recovery rebates and enhanced unemployment insurance benefits each have added $12 billion to personal income in Oregon. This income support is the primary reason why the recovery and overall economic outlook is so bright."

All that money might be putting off some people from looking for work, but economists say that is temporary.

Federal Pandemic Unemployment Compensation (FPUC) adds $300 onto weekly unemployment insurance benefits through September 4, 2021. Weekly regular unemployment (UI) benefit has averaged $370 per week, so with FPUC, that's an average payment of $670 per week.

"That's roughly the same as earning $16.75 per hour for someone working full time, or higher than the Oregon minimum wage for the Portland area, which is $13.25 now and will rise to $14 on July 1, 2021.

The study notes that $16.75 an hour, working year-round, would total $34,800 in gross earnings for a worker. The median earnings for full-time workers in Oregon in 2019 were $50,712. Wages are going up, so "it's unlikely that this benefit, in itself, is keeping a vast number of workers on the sidelines." Also, refusing to work to stay on unemployment is fraud.

Whither Uber?

Self-employed, contract, and other workers not covered by unemployment insurance can now get Pandemic Unemployment Assistance (PUA) if they lost work through no fault of their own. PUA pays a minimum of $205 per week, and each eligible week of benefits will also include the additional $300 FPUC payment. These funds effectively keep the self-employed and contract workers from regular payroll jobs.

The report says this recession differs from the last two big ones — the dot-com bust (2001) and the Great Recession (2009).

"Today's economic pain is not evenly felt across the economy… The pandemic recession unemployment has been overwhelmingly due to temporary layoffs. Many unemployed Oregonians today indicate they are expecting to be recalled to their jobs when the time comes."

Whereas in previous recessions, the job losses were largely permanent.

"Rather than protracted, increasing unemployment, the jobless numbers have dropped much faster during this recovery," Lehner said. "Oregon's unemployment rate matched the nation's at 6.0% in March, below the average of 6.8% over the past two decades. Currently, hiring employers are facing a typical or slightly lower-than-typical available labor pool for their job openings."

Where's my waiter?

And the labor force is not evenly distributed. Some sectors (such as transportation, warehousing and utilities, and professional and technical services) bounced back while other (hospitality and dining) are dragging due to COVID-19.

More than 60% of Oregon's lost jobs in the spring of 2020 were in bars, hotels, nail salons, restaurants, and schools. Recent, significant rebounds have been notable in leisure and hospitality, adding more jobs per month than the overall economy did pre-COVID. As these businesses look to hire workers with similar skills at the same time, it does increase difficulty — and wages or perks — to get workers in the door and on the job." (However, that may changes as restaurants are forced to close indoor dining yet again in 15 counties in late April 2021 due to COVID-19 measures.)

Resume substack

The economist says he expects "the pandemic-specific challenges and issues related to COVID fear and lack of in-person school to ease this fall."

But the safety net supports will also expire then. And if wages rise, so might prices, causing inflation.

"Or, will future dynamics play out more slowly than the dramatic spikes and drops in unemployment and monthly jobs gains seen over the past year?"

He expects the labor market to tighten further.

"The pool of available candidates will remain below-average even as sidelined workers come back into the labor force, and migration flows return. Employers will need to continue to cast a wider net and dig deeper in their resume stack to attract and retain workers, just as they were doing pre-pandemic."


Joseph Gallivan
Reporter, The Business Tribune
971-204-7874
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