Weak Jobs Report Suggests Oregon is in Recession

News Release
September 15, 2008 Download PDF

OCPP urges state to update its unemployment insurance system

There were fewer jobs in Oregon this August than during the same month last year, an indication that the state may have slipped into a recession, according to the Oregon Center for Public Policy.

Figures released today by the Oregon Employment Department showed that the state had 3,400 fewer jobs in August than a year earlier, and the unemployment rate rose to 6.5 percent. Seasonally adjusted payroll employment has declined in four out of the last six months.

With the latest losses, Oregon has shed 9,900 jobs from its peak in February of this year.

In the past, the only times when Oregon has found itself with fewer total jobs compared to the same month in the prior year has been during recessionary periods, said OCPP policy analyst Michael Leachman. He cautioned that economists consider more than just jobs numbers when determining whether to apply the recession label but said the jobs trend is a key indicator.

“Based on the official state economic forecast, we can expect the current jobs downturn to be roughly equivalent to the mild recession of the early 1990s,” Leachman said. “Whether the current downturn is officially called a recession matters little to Oregonians who are out of work. They need help, whether it’s official or not.”

Leachman projected that the number of jobs in Oregon for every 100 working-age Oregonians will be lower this year than it was in 2002, during the last recessionary period.

“When you compare today’s job numbers to the growth in working-age Oregonians, the picture isn’t pretty,” he said. “The mismatch results in workers losing bargaining power, making wage gains more difficult to achieve.”

Leachman said the jobs picture highlighted the need for Oregon to upgrade its unemployment insurance system.

Last month, 30,359 Oregonians filed initial unemployment insurance claims, a figure nearly 35 percent higher than in August 2007, according to OCPP’s review of Employment Department data. The Silverton-based think tank also found that the growth in initial claims has been trending higher for nearly a year.

Unemployment insurance benefits not just laid-off workers but also businesses, because it cushions the downturn by keeping some money flowing to families, which they spend in the local economy, said Leachman. The system enjoys the support of employers because it preserves job skills and the labor force.

“Regrettably, the state’s unemployment insurance program has not kept up with changes in our economy and technology,” said Leachman. “Because the system has not been modernized, some workers losing their jobs will be forced to survive without the unemployment benefits they helped pay for.”

Applicants for unemployment insurance must meet certain employment hours or wage thresholds. According to Leachman, some laid-off part-time and intermittent workers cannot meet those thresholds.

He said the current system dates from an earlier era, when employers did not count on as many part-time and intermittent workers as it does today and before computers made verifying recent job activity easier.

“We must update our unemployment insurance system to reflect the changes in our economy and in technology, so that it fulfills its intended purpose of providing a bridge for workers who lose their jobs through no fault of their own and allows employers to be able to get those employees back,” he said.

The Oregon Center for Public Policy is a non-partisan research institute that does in-depth research and analysis on budget, tax, and economic issues. The Center’s goal is to improve decision making and generate more opportunities for all Oregonians.

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