Looking back at the Salem area economy over the last four years brings a lot of good news to report.
Salem area industries employed 184,200 individuals in December 2023. And employment has increased by more than 5% from December 2019 (pre-Covid).
Salem’s recovery is the most robust of any area of the Willamette Valley, better than the state as a whole, and better than the U.S. (see table below).
Multnomah County’s employment is still 2% behind where it was in December 2019, as the leisure and hospitality industry is short a substantial number of jobs from pre-pandemic levels. Lane County’s leisure and hospitality industry, and local government (where University of Oregon employment is tallied) haven’t recovered from pre-pandemic levels as of December 2023.
The mix of industries in the Salem area contributes to the healthy recovery of jobs (see pie chart).
Two examples stand out. Due to the fact that Salem is the state’s capital, half of all state jobs (some 20,000) are located here, and state government employment was stable during the pandemic.
Also, Llisure and hospitality employment is a somewhat smaller percentage of total employment than in other parts of the Willamette Valley. These two factors together kept Salem employment from falling as drastically, and recovery didn’t have as far to go.
Let’s take a closer look at industry employment in the Salem Metropolitan Statistical Area – that’s Marion and Polk counties – and then examine some other factors that contribute to Salem’s economic health.
The largest industry in terms of share of employment (after government) is health care and social assistance.
The industry lost some jobs in the early pandemic as doctors and dentists closed offices or limited hours temporarily. Most of the jobs came back fairly quickly and overall, employment in the industry has recovered. But further examination reveals problems.
The employment numbers cited above are from a monthly survey. Looking at the Oregon Employment Department’s actual count of jobs, the Quarterly Census of Employment and Wages, allows examination of health care industry detail. As of the third quarter of 2023 (the most recent report available), ambulatory health care employment, doctors and dentists’ offices, were down by several hundred jobs from pre-Covid. And nursing and residential care facilities employment was barely ahead by a handful of jobs.
An important aside – not only did health care workers bear the brunt of Covid, but many worked in low wage jobs. According to the Oregon Employment Department’s 2019 wage survey, 40% of health care workers earned less than the median wage for all occupations ($19.27 an hour) and another 8% earned just pennies more. There have been pay raises – discussed later in the column – but the stress of health care jobs hasn’t subsided.
Another large industry in terms of employment is trade, transportation and utilities, and the trends here are mixed. The industry as a whole is down a handful of jobs from pre-Covid to the end of 2023. That’s because its largest sector, retail trade, (62% of this industry’s employment), is down nearly 1,000 jobs. Retail was struggling pre-Covid, and the increase in online shopping during Covid hasn’t helped job recovery.
The bright spot in the industry is the warehousing and transportation sector. According to the Quarterly Census of Employment and Wages, from the third quarter of 2020 to the third quarter of 2023, this industry sector had increased employment by more than 50% Truck Transportation also increased employment over this time period by 30%.
A large share of Salem area workers is employed in the construction and manufacturing industries, and both industries weathered the pandemic’s economic turmoil fairly well.
Construction employment is up by 1,000 jobs over the last four years. Whether or not these gains are sufficient to gear up for possible funding from the governor’s budget to build additional housing remains to be seen. According to the National Association of General Contractors, the entire country is seeing critical shortages of construction workers.
Manufacturing employment is down about 1,000 jobs, mostly due to the shrinkage of the food processing industry over the last few years in the Salem area.
The leisure and hospitality industry, while a smaller part of the Salem economy in terms of employment, lost half its jobs during the early months of 2020, far more than any other industry. Job recovery happened quickly, but was then stymied by a second brief business shut-down when Covid surged again at the end of 2020. Still, employment is almost 4% above pre-pandemic levels.
And finally, a sector of professional and business services, administrative and support Ssrvices, mostly staffing agency employment, has grown substantially over the last twenty years, nearly doubling from 5,500 workers in 2001 to 9,200 workers in 2023. As of December 2023, staffing agency employment is up from pre-pandemic levels by 1,400 workers.
So, employment is doing well – what about unemployment?
During most of 2023, the unemployment rate was below 4%, an historic low (see graph below). Since the year 2000, the only other instance of a Salem unemployment rate below 4% occurred in the few months just before the pandemic hit.
Wage trends are more good news, especially for lower-wage workers. It was mostly low-wage workers that bore the full stresses and strains of the Covid economy – they were laid off the most, and worked in jobs that couldn’t be done from home so consequently were constantly exposed to Covid. As Covid waned, employers found that wages needed to be raised in order to attract these workers back to their jobs, and raise wages they did. (see table two)
From 2019 through the third quarter of 2022, the percentage of workers in Marion County working for less than $15 an hour fell dramatically, as the percentage of workers earning more, up to $30 an hour, increased. This is literally a picture, in numbers, of lower-wage workers moving up the pay ladder.
There were slight upward shifts in higher pay ranges as well, but not nearly as dramatic as in the lower ranges.
In addition to great job recovery, low unemployment, and wage increases, there’s one last bit of good news. Consumers are no longer feeling gloomy about the economy, according to the University of Michigan Index of Consumer Sentiment. Gloom was the order of the day, according to the index’s numbers, over the last few years, even last year as the economy was dramatically improving. Consumer sentiment has finally caught up with a healthy economy.
And one more – January’s national job gains, which are published the first Friday of the month for the previous month, are nothing short of astonishing. It is likely that Oregon and the Salem area will post healthy job gains as well.
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.
