Oregon How Unemployment Has Affected

Oregon

How unemployment has affected the Oregon economy

How unemployment has affected the state of Oregon

How unemployment has affected the state of Oregon

'Times are hard.' This cliche is true all over the United States. However, in the state of Oregon, this phrase has proved to be an especially difficult economic 'pill' for residents to 'swallow.' According to Richard Read of the Oregonian, Oregon's unemployment rate is currently hovering at a "seasonally adjusted" 10.6% figure (Peak 2010). Seasonally adjusted unemployment means that the figures are adjusted for predictable, regular seasonal changes from month to month, based on past data (What is a 'seasonal adjustment,' 2007, Labor Market info). "For 11 months, state officials said Tuesday, the rate has remained stuck between 10.5 and 10.7%. September's 10.6% rate is the same as in August -- and the same rate logged by Slovenia" (Read 2010). This sobering statistic is only a small improvement over the nearly 11% unemployment rate of a year ago. "Leisure and hospitality gained 2,800 jobs in September, seasonally adjusted. Professional and business services added 1,400 jobs, the same number gained by other service-industry categories" (Read 2010).

What is particularly alarming about Oregon's unemployment rate is that the state is continuing to lose jobs: 1,800 payroll jobs were shed in September 2010, even more than originally predicted. The biggest losses were in state government, which has been trying to downsize, and in the manufacturing and construction sectors. Ironically, the most numerous payroll jobs that have been added in the public sector are in a single sector of government: there has been an increase in the numbers of workers needed in state government who must to handle unemployment claims and social services for the indigent.

Why is Oregon's economy so 'soft?' While the reasons for the impact of the recession in some states, such as Michigan (which is heavily dependent upon the auto industry) or California (with its fiscal crisis, requiring massive government layoffs) seem obvious -- why is Oregon so negatively affected? Some have suggested blaming California, "which has suffered a strong economic hit with the bursting of the housing bubble, [and] is likely dragging down Oregon's economy…the housing bust also has affected demand in Oregon's lumber and wood products industry" (State unemployment spike, 2009, EconomPic). The state legislature did pass an economic stimulus bill, focusing on the construction industry. Currently, Oregon has a 24% unemployment rate among construction workers and is continuing to 'shed' jobs in the industry. But the $175 million in funding for new projects has had little overall effect upon the economy: the fact is that construction projects take a long time to begin. "It may take months to years for many unemployment construction workers to see work from the state version of the economic stimulus which just was not as well focused as the federal version" (Hooson 2009). Development projects were begun, and then abandoned when the money ran out. However, the reliance upon the construction industry does not fully explain why neighboring Washington State, which is equally reliant upon the construction industry, is suffering comparatively less than Oregon, and hovering at only a 9% rate (Read 2010).

One hope for Oregon is provided by the technology behemoth Intel's projected 6-8 million dollar expansion of its Oregon and Arizona facilities, which will not only bring new technological jobs, but also new construction jobs. "The Intel project is going to take a lot of these guys who probably have been out of work for two years and give them a paycheck" observed one industry insider (Manning 2010). A Portland -- based construction firm will be handling the work, and Intel officials said 6,000 to 8,000 construction jobs will be needed to complete the ambitious project. "It's believed that the lion's share of those jobs will be in Hillsboro, where the company is building a new semiconductor factory" (Manning 2010).

Yet while Intel's expansion locally will certainly help state employment figures go in the right direction (upward), U.S. residential construction as a whole will likely continue to lag given the extent to which homes were over-built. The lack of construction jobs means that people do not have enough money to buy other items, and this hurts other businesses, who must also lay off their workers. Unemployment, although it is entrenched in the construction industry, has been spiraling out of control in all sectors, in Oregon. "Thousands more of the unemployed will exhaust their jobless benefits in coming months…This region, and others like it around the state and nation, face the prospect of growing hunger and homelessness this winter as our neighbors run out of benefits and lose their ability to provide food and shelter for their families" wrote Read in the Oregonian (Read 2010).

"Nationally in terms of monetary policy, the Federal Reserve appears ready to act…quantitative easing" or steps to increase the money supply seem likely in the near future (Read 2010). When the Fed wishes to expand the money supply, it expands its purchase of Treasury bond on the open market. By buying up government bonds, the Fed infuses dollars into the economy. Projected Fed purchases "could be anywhere from $50 billion to $200 billion (Read 2010). Given the recent losses in the mid-term elections, widely attributed to dissatisfaction with economic growth, the Fed may act even more aggressively. Although a nonpartisan entity, the Fed clearly should have 'read' from the results how much people are suffering, particularly in construction-dependent areas like Oregon. It is also hoped in Oregon that the Fed will tolerate higher inflation, in an effort to stimulate the economy overall. What is needed is more money for people to spend, to fuel economic growth.