A unique event occurred over the year 2023. Oregon’s population declined for the first time in forty years, according to U.S. Census data. If the decline continues, there could be fewer job seekers and slower economic growth in Oregon and the Salem area.
An economy grows when the production of goods and services increases over time. Increasing the production of goods has been done with fewer workers over the last four or five decades due to technological advances and automation. But increasing the provision of services generally means the need for more workers. And more than three-quarters of all private sector employees work in service-related industries.
If population decline continues, will employers get the workers they need?
The Oregon Employment Department provides information about the future industry and occupational needs of area employers. Every two years OED economists estimate industry and occupational employment growth for ten years into the future. The latest estimations are for the years 2021 to 2031.
The projection is that all industries in the Mid-Valley counties of Linn, Marion, Polk and Yamhill will need 10% more workers over the next ten years, an additional 28,530 workers (see graph below).
The top growth industries will be service industries, namely: transportation, warehousing and utilities; leisure and hospitality; and health care. Employment growth in these three industries will be 41% of all industry employment growth.
In addition to the 28,530 growth openings, OED also estimates that another 351,301 openings will occur due to replacement needs – that is, workers retiring, changing jobs, etc.
Twenty-five percent of all growth openings will occur in these occupations:
- Home health aides; registered nurses; medical assistants; and nurses assistants;
- Stockers and order fillers; heavy truck drivers; light truck drivers; and fork lift drivers;
- fast food workers; food prep supervisors; waiters; maids; and bartenders.
Twenty-two percent of replacement openings will occur in mostly the same occupations:
- Home health aides; registered nurses; medical assistants; and nurses assistants;
- Stockers and order fillers; freight and material movers; heavy truck drivers; and light truck drivers;
- Fast food workers; waiters; cooks; and supervisors of food prep workers.
What do all these occupations have in common? They are all service occupations and are commonly found in the top three growth industries of health care, transportation and warehousing, and leisure and hospitality. In addition, most pay on the lower end of the wage scale, and employers have a difficult time hiring for many of them.
Let’s start with wages.
According to OED’s Mid-Valley 2023 Wage Survey, the median wage for all occupations was $22.83 an hour. The median means that half of all occupations pay more, and half pay less.
All but two of the 14 occupations with large numbers of growth and replacement openings listed above pay less hourly than the overall median wage. One occupation, heavy truck and tractor trailer driver, pays somewhat more, and registered nurse, nearly double the overall median.
In 2022 nearly 5,000 employers participated in an OED survey about their experiences with filling job vacancies. Seven of the 14 above-listed occupations (including registered nurse) were among the occupations cited by employers as difficult-to-fill. Employers cited a lack of applicants as the primary reason for difficulty filling vacancies.
Why would there be a lack of applicants? Besides low pay, reasons could include irregular work schedules; strenuous and/or stressful job duties; and possibly something which seems to have developed over the course of the pandemic – a reluctance on the part of job-seekers to return to low-wage, stressful, and often strenuous jobs.
The occupation of registered nurse is unique. The median occupational wage is nearly twice that of the overall median wage. However, 60% of all registered nurses work in hospitals that bore the brunt of the pandemic. The work was stressful and dangerous, and one result has been nurses’ strikes around the country (including Portland) for better pay and safer worker conditions.
So, service industries and occupations are where many future growth openings and replacement openings are predicted. If population decline continues, this could be a problem.
Let’s return briefly to Oregon’s declining population. Recently, the Oregon Office of Economic Analysis released an publication about the possible continuation of population decline, titled “Zero Migration – A Demographic Alternative Scenario.”
The economic consequences are examined in detail in the report, in terms of state revenue, impacts on public policy, housing, etc. The labor market consequences are concerning here. The report states that “…the labor force likely would be smaller…and…hiring will need to come from existing Oregonians…”
In other words, Oregonians’ labor force participation would have to increase in order to meet workforce needs.
This is easier said than done. The overall labor force participation rate for all Oregonians is 62%. Reminder: the participation rate is defined as those working and those looking for work, divided by the civilian non-institutionalized population, and expressed as a percentage. The only group for whom labor force participation is above 62% are those with bachelor’s degrees. And the job openings in the service occupations discussed above don’t require that level of education with the exception of registered nurse.
The truth is that overall labor force participation in the U.S. and Oregon has been declining for decades. In Oregon, it has declined from a high of nearly 69% in 1998. And for some groups, the decline is steeper.
Men’s labor force participation has declined over the decades, especially for men with less than high school educational attainment. Participation for teens (aged 16-19) and young adults (20-24) has been declining (partly because they are in school, but not entirely). And for job seekers with criminal histories, and the homeless, labor force participation is daunting.
There are some bright spots. Currently, labor force participation rates for older people and women, even those with children, and individuals with disabilities, are at an all-time high. Only time will tell whether these high rates will become a permanent feature of the economy.
What would it take to increase labor force participation? Some incentives might include pay raises, and more family-friendly labor market policies, such as sick leave, other kinds of time off, regular work schedules, etc. In addition, social investments to help the formerly incarcerated, the homeless, and other groups who have become economically marginalized, become employed could raise participation rates.
There is evidence that these kinds of policies work, because many European countries do not have labor force participation declines anywhere comparable to those in the U.S. This is largely because family-friendly labor market policies have been in place in these countries for decades.
The population decline may not continue. Even so, investing in policies to help increase the supply of labor could still be a good thing to do.
Pam Ferrara of the Willamette Workforce Partnership continues a regular column examining local economic issues. She may be contacted at [email protected].
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Pamela Ferrara is a part-time research associate with the Willamette Workforce Partnership, the area’s local workforce board. Ferrara has worked in research at the Oregon Employment Department, earned a Master’s in Labor Economics, and speaks fluent Spanish.
