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.