Introducing Oregon Insight, The Oregonian’s weekly look at the state’s economy numbers. See previous installments here.
Economic health is often measured by the unemployment rate, an easy-to-understand benchmark with easy historical comparisons.
However, economists and the public are increasingly aware of the limits of the unemployment rate. This excludes those who want work but have given up their search and those who work part-time because they cannot find full-time employment.
Federal economists therefore proposed the U-6 rate, often called the “underemployment” rate, which includes the conventionally unemployed as well as those who have recently stopped looking for work and those in part-time jobs.
The U-6 rate is higher than the conventional unemployment rate – sometimes much higher. And many, including analytics firm Gallup, consider that to be the “true” unemployment rate.
During the Great Recession, when unemployment in Oregon hovered around 10%, the U-6 underemployment rate was roughly double. Oregon’s U-6 rate hit 21% at the start of the pandemic in 2020, 8 percentage points higher than the standard measure.
The good news is that underemployment has fallen as fast as the standard benchmark over the past two years. The U-6 rate was 7.4% in March, the lowest point on record. (Official unemployment was 3.8% – close, but not quite, to a historic low.)
This is great news if you are looking for a job.
“If someone wants a job, they’re there, unlike the Great Recession recovery,” said Anna Johnson of the Oregon Department of Employment, who authored new analysis of the Oregon labor market. ‘Oregon. “And those vacancies tend to be full-time, permanent jobs.”
But here’s the downside.
Oregon has more than 100,000 job vacancies, with vacancies outnumbering unemployed. This labor shortage is limiting economic growth, in Oregon and across the country.
Economists and the Federal Reserve had hoped workers would pull back as the pandemic subsided. Now it looks like there’s hardly anyone seated – certainly not enough people to solve the labor shortage.
Josh Lehner of the Oregon Bureau of Economic Analysis addressed this question in an essay earlier this month.
With immigration plummeting and Oregon’s workers aging with the general population — “poor demographics,” according to Lehner — the state has a shrinking labor pool.
It’s a big part of why jobs are so readily available right now and why paychecks are rising as employers compete for workers. But with consumer demand continuing to rise and production constrained by labor shortages and other factors, inflation is rising even faster than wages.
Tighter monetary policy from the Federal Reserve could help calm demand, writes Lehner. But the labor shortage? He says this “will only change with broader societal changes or, say, increased immigration both international and domestic”.
-Mike Rogoway | firstname.lastname@example.org | Twitter: @rogoway |