Oregon Employment Department. (Amanda Loman/Salem Reporter)
Around 5,200 Marion County residents stopped receiving unemployment benefits almost a month ago, but the impact, if any, on the Salem economy remains unclear.
All pandemic-related federal unemployment programs ended Sept. 4. Those included an extra weekly $300 payment for people seeking benefits, and eligibility for self-employed people, freelancers and others not eligible for regular unemployment benefits, according to the state Employment Department’s website.
The number of people filing for continuing, regular state unemployment benefits in both Marion and Polk counties declined from January to August, state data showed, before benefits expired.
Continuing claims in Marion County dropped from around 4,700 in January to less than 3,200 by March, steadily declining to around 2,350 in August.
In Polk County, those claims fell steadily from around 1,000 in January to around 500 in August.
The loss of benefits comes at a time when local employers are offering bonuses to attract new hires and referral incentive programs for current workers amid a national labor shortage.
But those programs aren’t making much of a difference in hiring rates, said Kim Parker-Llerenas, executive director for Willamette Workforce Partnerships.
“The sense is that people are still concerned about Covid, may be staying home with children because of the child care shortage, have figured out how to live on less, or have gone into the gig economy,” she said in an email.
State economist Pat O’Connor said it is too early to tell what impact the loss of pandemic unemployment benefits will have on employment in the Salem area. But employment in the mid-valley region and the rest of the state is in keeping with the national labor shortage.
“We have all this hiring taking place at once and just not enough workers to fill it all in,” he said.
Compared to the rest of the state, O’Connor said the Salem and the Albany areas are tied for recovering fastest in terms of employment since the pandemic.
The Salem metro area’s unemployment rate in August was 4.4%, slightly higher than the pre-pandemic rate in February 2020 at 3.8%, state data showed.
Smaller metro areas have recovered faster than larger metro areas in large part because leisure and hospitality is a more prominent industry in large cities, O’Connor said.
The pandemic-induced recession disproportionately impacted low-wage workers in leisure, hospitality and retail trade, industries that now are seeing the most hiring nationwide, he said.
Those employers are largely competing for the same workers, many of whom have moved on to other jobs, he said. As a result, most of the workers they hire won’t be the same ones they laid when the pandemic hit Oregon, and low-wage workers are in a position to be more selective with the high number of job openings.
“In a past recession, if you lost a job at a restaurant, maybe no one was hiring and you'd push to get back in a restaurant,” he said. “You can imagine this time if someone lost a job at a restaurant, they would have applied at Amazon and be making 17 bucks an hour and benefits.”
O’Connor said he expects that low-wage jobs will be filled by less experienced workers. “For young workers and teens,” he said, “the employment market’s never been better.”
State Employment Department data showed that between February and April 2020, the total non-farm employment in the Salem metro area fell from around 173,000 to around 153,000 before steadily rising to 168,000 in October 2020. Employment then dipped to around 162,000 by January 2021 then steadily rose to 171,700 this past August.
In Marion County, more than 2,000 claims for pandemic unemployment assistance – a program created by Congress in spring 2020 to extend unemployment benefits to self-employed and gig workers out of work due to Covid – were projected to lose benefits Sept. 4, O'Connor said. Also losing benefits were around 3,200 claims for pandemic emergency unemployment compensation, a program for people whose regular unemployment insurance benefits ran out.
In Polk County, around 450 pandemic unemployment assistance claims and around 750 pandemic emergency unemployment compensation claims were projected to expire Sept. 4.
O’Connor said 80% of people who received pandemic unemployment assistance in Oregon were self-employed, with many unlikely to become job seekers.
“There are a lot of people that don't want to work for other people and enjoy whatever they do in terms of their self-employment,” he said. "I wouldn't be quick to assume that all these people that were self-employed are going to want to go and be normal W2 workers.”
Claimants of the two programs make up around 3% of the pre-pandemic labor force in both counties.
The reasons people were unemployed changed dramatically during the pandemic, O'Connor said. People would normally make unemployment claims after being furloughed, laid off or otherwise losing their jobs.
“This is one of the few times that if you had kids out of school and didn't have anyone to stay with them, that would have been a valid reason to have a claim,” he said.
The unemployment rate both statewide and in the Salem metro area is less than 5%, “which is pretty low by any historic norm,” O’Connor said. Turnover in the labor market is also high, with many employed people being lured away by the number of job openings available.
While Oregon employment data since the loss of Covid benefits is not yet available, a review by economists at Columbia University, Harvard University, the University of Massachusetts Amherst and the University of Toronto of the 26 states that withdrew from federal pandemic unemployment assistance in June and July showed those states didn’t fill jobs at any faster rate than those who didn’t stop offering benefits at that time.
In the two-month period that followed, about one in eight people across those states who lost benefits became employed by early August, he said.
Previous recessions have rarely led to both a high number of job vacancies and what has now cut back to a low number of unemployed people in the 26 states that cut off benefits early, he said.
“At least the early numbers,” he said, “that doesn't look like it's gonna be some avalanche of workers that are going to spontaneously fill all those job openings."
Contact reporter Ardeshir Tabrizian: [email protected] or 503-929-3053.
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