Four Years for Oregon’s Job Recovery? Not Likely

Right From the Start

The January 15, 2011 edition of The Oregonian carried a front page article headlined “Oregon has four-year wait for jobs to reach 2008 level.” The article contained the musings of Tom Potiowsky – the Oregon State Economist – in a speech to the City Club of Portland.

To put Potiowsky’s comments in context, let’s remember that he is the same state economist that has missed the revenue projections for state government for at least seven straight quarters. He is the same state economist upon whom the state legislature relied to build its 2009-11 biennial budget that has had to be revised, reduced and bolstered by federal aid infusions at least three times. He is the same state economist who, at the conclusion of the last legislative session estimated that the budget shortfall for the 2011-13 budget would be about $2 Billion.

And he is the same state economist who said all of this at the same time some dumbass lawyer – me – was pointing out how wrong his projections were and why they were wrong and who estimated that the 2011-13 budget deficit would be closer to $4 Billion than $2 Billion. (Right now the projected budget deficit is about $3.75 Billion and there are two more quarters to go before the budget is actually adopted.)

And now the same state economist is being cited by The Oregonian as telling the City Club of Portland that 1) the 1980-82 recession actually hit Oregon harder, and 2) it will take about the same amount of time to recover the jobs lost this time as it did in the aftermath of the 1980-82 recession. And I’m here to tell you that he is no more accurate with regard to his projections about job recovery than he was about the decline in revenue or the size of the budget deficit. In fact, you might even wonder whether the state economist even looked at the jobless data from Oregon’s Department of Employment.

So let’s do the numbers.

I cannot find employment statistics from 1980-82 but I find it hard to believe that the situation was more dire than what Oregon is currently experiencing. But there is a more recent comparison that would suggest that the state economist is again wide of the mark in his prediction of a four-year job recovery.

In Oregon’s previous recession, total employment peaked in December of 2000 at 1,630,000. It hit its nadir in July of 2003 at 1,565,800. That is a loss of 64,200 jobs. It took until December of 2005 to regain the 1,630,000 jobs. That is a period of five years for the full cycle and twenty-nine months from the bottom to recovery. When you look at just the private sector job loss you will note that employment peaked in November of 2000 at 1,352,700 and hit its nadir in April of 2003 at 1,287,600 – a loss of 65,100 jobs. The governor at that time was John Kitzhaber and it is not surprising that more private sector jobs were lost than total jobs – government just keeps growing under Democrat administrations. It took until February of 2005 for the private sector to recover to 1,630,000 jobs.

In this recession, total employment peaked at 1,739,100 in February of 2008. It reached its nadir in March of 2010 at 1,590,100. That is a loss of 149,000 – two and one-third times as many as in the previous session. When you look at just the private sector jobs loss you will note that employment peaked in February of 2008 at 1,444,200 and reached its nadir in March of 2010 at 1,290, 300. That is a loss of 153,900 jobs. The governor was Ted Kulongoski and again there were more private sector jobs lost than total jobs lost – government continued to grow despite the massive job loss for those in the private sector.

It is doubtful that Oregon is going to recover two and one-third times as many lost jobs in 48 months than it recovered in 29 months.

And more importantly, none of the state economist’s predictions take into account the growing workforce available in Oregon. According to the United State Bureau of Labor Statistics, Oregon’s available workforce grew from 1,935,823 in February of 2008 to 1,987,561 in November of 2010 (the most recent statistics available). In essence that means that in addition to finding the 153,900 private sector jobs lost during the last recession another 51,738 must be found to just break even.

Given that the accuracy of my predictions have proven to be significantly better than that of the state economist, let me give it a shot at what is a more likely scenario for Oregon. It will take closer to seventy-two months to recover the 153,900 private sector jobs lost and it is unlikely that, in this decade, Oregon will ever recover enough jobs to provide employment for those who have entered the workforce availability since February of 2008.

Gov. Kitzhaber proved to be incapable or uninterested in making job creation a priority in his last eight years in office and there is no reason to believe that he is any better or more interested in doing so now – unless you conclude that weatherizing schools is the key to Oregon’s jobs crises.

As things stand now – with Oregon’s public employees unions still in full control of Oregon state government and armed with $80 million each biennium to spend on Democrat politics – Oregon is facing another round of tax increases, a refusal to deal realistically with the number of, pay for and benefits to public employees, and a continuing outward migration of those businesses which have a choice as a result.

But then again, Washington, Idaho, Colorado, Utah and Arizona all stand to benefit from Oregon’s political myopia – and they know it which is why they are actively recruiting Oregon based businesses.

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Posted by at 05:00 | Posted in Unemployment | 6 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Rupert in Springfield

    I think another factor being left off here is in previous recoveries Oregon might have been doing some things right, some wrong, but in no way was Oregon as interested in job exports as they are now.

    Oregon has made its priorities quite clear – private sector job creation is anathema to the current political winds. I don’t think that was the case in previous recessions. If anyone out there thinks Oregon will be getting its act together anytime soon they are fooling themselves. It’s a pretty state and if you can somehow make a living here that’s great. However for someone just starting out, get your education, preferably paid for by taxpayers, and move the hell out. Seems that’s what a lot are doing. Good for them.

    • Economist

      Agree, agree, agree. When will they ever figure out that without private industry the state will not have any money? You can’t run the state on taxes paid by people the state is paying. We can’t all deliver pizza to each other. Someone has to make something that can be sold at a profit. Simple as that, but obviously too much for the knuckledraggers in Salem.

  • Outofwork

    Oregon will not ever get back to previous employment levels as long as the Dems and the union thugs run state government, which they do now. Why do you think Freightliner left? Why does anyone leave? Unfriendly business atmosphere. Period. Oregon is so out of touch with the business community it is a wonder anyone is left. Salem is insane. None of those crazy fool politicians could ever run a successful business in Oregon at the present. Not a one.
    This guy is nuts.

  • Bob Clark

    I think the next recession will come sooner than seventy two months, causing job recovery not to be full or short in longevity. Since the early 90s, Oregon seems to underperform the national economy during slow periods, and only equal national performance during cycle tops. Kind of a version of what the auto unions did to Detroit over the course of some 60 years, gradual slow decline from protectionist measures designed to protect the rank and file from competition. The unionized economic activity becomes so expensive and inflexiable at a certain point, it collapses under heavy legacy burdens and over regulation. Kitzhaber sure doesn’t get economics. Dudley was too inexperienced but he had a certain upbeat attitude and ability to work with the private sector. The federal government bailed out Portland and Multnomah county, blinding Multnomah county voters to economic reality. So, we get retread by a hair.

    • Rupert in Springfield

      >The federal government bailed out Portland and Multnomah county, blinding Multnomah county voters to economic reality. So, we get retread by a hair.

      Yes, but you know, thats a positive sign. I mean when a Democrat in Oregon has to wait a couple of days after the election because its that close, that says a lot. When it takes the kind of money the federal government had to spend to accomplish that feat, that says even more.

      In the future people will become more aware of how they have been ripped off by the union corruption that plagues this state. I would say that just a short advertising campaign about how the state doubles down on pension payments to allow PERS recipients to effectively pay no income tax would go a long way. These people are ripping us off, and the fact is, there is only so long you can hide that.

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