After plunging into a deep recession in 2020, Oregon created a record number of jobs in 2021 and is on track to fully recover by the end of 2022, according to the latest forecast from the Office of Economic Analysis (OEA).
All major industries will add jobs this year due to a combination of pandemic rebound and underlying economic expansion. Growth rates will vary significantly depending, in part, on the state of each sector’s recovery.
Leisure and hospitality (e.g. restaurants, bars, hotels) will experience a meteoric growth of 14%; nearly four times faster than the economy as a whole. This industry has been hammered by the pandemic, losing nearly half of total jobs. In January 2022, there were still 17,500 jobs (8%) below pre-pandemic highs, so much of the projected growth falls into the “rebound” category. Although the OAS predicts historic highs in the coming years, they stress that structural changes will keep growth below what is generally expected given population growth.
Public and private education will be the second fastest growing industry (5%) as schools continue to ramp up staff after an extended period of remote learning and limited school operations. However, this sector still has some way to go on its way to a full recovery and despite the strong growth expected, the year will end with employment still below pre-pandemic levels. Schools are struggling to find workers and college enrollment is down.
Professional and business servicesa large and sprawling industry that includes temporary help, legal and accounting firms and other clerical type jobs, will be the third fastest growing industry in 2022. As this industry is almost fully recovered from losses related to pandemic, which were relatively mild, the OAS attributes much of the gain to economic expansion.
Health care and social assistance is still in recovery mode and will experience above-average growth this year. Employment returns to pre-pandemic levels in 2023, after which growth resumes tracking demographics.
Transport and storage suffered just one month of pandemic job loss that was quickly erased as Oregonians turned to e-commerce and buying goods instead of services. This sector is clearly in the “economic expansion” category, and growth will continue as more distribution centers open or expand.
The OAS believes the biggest challenge facing Oregon’s economy today is on the supply side. Not just overloaded supply chains, but, more importantly, labor. Businesses are struggling to find workers and vacancies are at an all-time high. Employers have responded by raising wages, especially in lower-paying occupations.
Potential workers are sitting on the sidelines for a few main reasons:
- Strong family finances in the form of accumulated savings, growing assets, and reduced debt provide a cushion if people are unable or unwilling to return to work right away.
- Wage increases reduce the need for a second breadwinner in the household.
- Rising wages also allow some people who had a second job to make ends meet to have only one.
- The lack of available and affordable child care can keep some parents at home.
As the pandemic subsides and savings decline, more people will return to the workforce and seek work. That said, the OAS expects the labor market to remain tight for the foreseeable future as companies continue to hire and baby boomers retire.
Note: The OAS produced its forecast before Russia’s invasion of Ukraine and the ongoing economic fallout.
The biggest risk to the economic outlook is persistent inflation. Last year’s inflation was largely tied to semiconductor shortages and the reopening of the economy, and seen as transitory. Since then, its reach has expanded. The risk is that Federal Reserve policy may not be able to strike a balance between too much and too little tightening, leading to a boom/bust cycle and eventual recession. For now, the OAS expects the Fed to be able to stage a soft landing.