Oregon’s economy entered the 2019–2021 biennium with job growth that was faster than the nation, and unemployment rates that were at historic lows. Oregon’s job growth slowed in the autumn of 2019, however, and by the end of 2019 job growth was lagging behind the nation slightly. But Oregon’s unemployment rate remained at record low levels and was down to 3.3% as 2020 began. In March 2020, Governor Kate Brown declared a state of emergency due to the novel coronavirus’ threat to public health. Oregon’s economic outlook changed dramatically in March 2020 as state and local governments implemented business restrictions to combat the spread of the COVID-19 virus. In April, Oregon’s unemployment rate rose to 14.2%, and the state lost 253,400 nonfarm jobs. Both were record levels of loss.
The COVID-19 virus devastated Oregon’s economy as over 90% of businesses across the state identified as having been negatively impacted by the pandemic during the peak of the crisis (U.S. Census Bureau, Small Business Pulse Survey). The most widely cited impact was a drop in revenue with nearly 70% of businesses seeing a decline in the demand for their goods or services during the first few months of pandemic restrictions. This loss in revenue led to a decrease in worker hours, business closures and mass layoffs. From the time of the first pandemic-related business closures through the end of 2020, more than 522,000 people (representing over 20% of the state’s labor force) were paid unemployment benefits totaling $6.5 billion in Oregon.
The COVID-19 story and its impact on Oregon’s economy is ongoing. As of early summer 2020 new cases of the virus continued to grow with many states across the nation reinstating restrictions to slow the spread of the virus. Although the full extent of the virus’s impact here in Oregon is unknown, it is evident which sectors have been most impacted by these measures to slow the spread of the virus.
Counties with large accommodation and food service sectors and tourism destinations were the hardest hit by COVID-19 restrictions. The number of initial claims in Lincoln and Clatsop Counties on the Oregon Coast represented over 25% of the labor force. Deschutes County, a popular tourism and recreation destination, posted the highest share of unemployment insurance claims among Oregon’s metropolitan counties, accounting for more than 20% of the Bend Metropolitan Statistical Area labor force.
Although COVID-related layoffs spread across all industries, it became clear early on that the most vulnerable Oregonians were being impacted more significantly. Occupational groups with a median hourly rate of less than $20 an hour represented around 66% of total initial claims for unemployment insurance, but that group only accounted for 58% of statewide employment. Layoffs also disproportionally impacted younger workers in their 20s and 30s, as well as those with lower levels of educational attainment.
An economic recovery in Oregon is intricately tied to management and control of the public health crisis. Most forecasts and projections anticipate a strong recovery from our most recent recession once a reliable vaccine or treatment becomes available for COVID-19. However, a full recovery
likely remains years down the road.
During the past three decades, Oregon made the transition from a resource-based economy to a more mixed manufacturing and marketing economy, with an emphasis on high technology. Oregon’s hard times of the early 1980s signaled that structural changes had occurred in the traditional resource-based economy centered on timber. The state worked to develop new economic sectors to replace older ones. Most important, perhaps, was the state’s growing high-tech sector, concentrated in the three counties around Portland. However, rural Oregon counties were generally left out of the shift to a new economy.
Oregon is one of the most trade dependent states in the nation, and to some extent, economic activity in other countries helps drive the state’s economy. The value of exports from Oregon to foreign countries was $23.5 billion in 2019. The state’s largest trading partners were China, Canada, Japan, Malaysia and South Korea. Of course, Oregon’s trade with other U.S. states far exceeds its trade with foreign nations.
The aging population will factor into the future of Oregon’s economy. Nationally, about half of the baby boom generation have retired, and many of the remainder will in the next 10 years. Nearly one out of four workers in Oregon is already 55 years or older. As the generation ages, employers will need to find new workers with the skills to replace their retiring workforce. At the same time, the growing number of retirees will demand more leisure and health care services.
More people move to Oregon than move out of Oregon. This in-migration is a response to job opportunities and quality of life in the state, and it is a cause of job growth because the expanding population needs more goods and services.
Oregon’s population grew by 41,100 people in 2019 to a total of 4.2 million. Natural increase contributed just 5,600 to population growth, while net migration was responsible for 35,500 of the increase, a clear indication that Oregon’s economic growth relies on people moving to the state.