This morning our friends from the Oregon Employment Department released the July employment report. I think their title says it all: Oregon’s unemployment rate drops to 5.2% in July as Oregon creates 20,000 jobs. It was a banner report. As it’s been a few months since our last detailed rundown, let’s take a quick tour through five charts and end with some comments on the potential impact of the Delta variant.
First, the big monthly earnings of 20,000 jobs are huge. This means Oregon has recovered 70% of its initial pandemic job losses. Today, employment remains at 4.4%, or 86,000 jobs below what we were in February 2020, but progress is underway and much faster than in recent cycles. The latest data is slightly higher than our office’s most recent forecast, but in line with expectations. (Note that our next forecast comes out next Wednesday, August 25.)
Second, given the nature of the pandemic and its economic impact on in-person service industries, low-wage sectors continue to be disproportionately affected. The good news is that the recovery is underway. The leisure and hospitality industry added more than 7,000 jobs last month on a seasonally adjusted basis, although the sector is still down about 20% from pre-pandemic levels. As the total number of leisure jobs will reach historic highs in the coming years, our office has made downward adjustments per capita, as previously reported. Higher-paying jobs are being strengthened today, in part due to their greater ability to work remotely and are therefore less disrupted by the pandemic itself.
Third, in July, the largest sectoral increases were in local communities. Much of this nationwide has had to contend with seasonal factors related to education where these summer school districts have not laid off their normal numbers of workers as their numbers of jobs are already declining. during the pandemic with e-learning and others. I suspect this is partly happening in the Oregon data. Just a reminder that employment in local government is declining in much the same way as in the private sector, largely because of the pandemic. Education is on the decline as districts use fewer surrogates, bus drivers and nutrition workers with e-learning. Public sector recreation and hospitality (zoos, community centers, etc.) are on the decline due to the virus and health restrictions. Tribal employment is down by a larger percentage, probably due to the leisure and hospitality components (casinos and hotels). Here is our office tracking table based on the latest detailed data up to March.
Fourth, speaking of education and contrary to popular belief, the data continues to show that lack of in-person schooling is not a macroeconomic constraint. This is undoubtedly a micro strain for affected families, but at the top of the line it’s hard to see any real impacts when it comes to basic stats like do you have a job or not. For example, here in Oregon, the unemployment rate for women is lower than that of men. A more precise look can be found in Updated analysis by economist Jed Kolko which finds that employment rates for mothers now surpass childless women nationally. These findings are surprising to some and go against popular belief. The good macro and micro news is that students will be returning to the classroom and to college campuses next month. This will increase the direct number of jobs in the education sector and any lingering indirect effects on parental participation in the labor market.
Fifth, the number of unemployed in Oregon continues to decline as employment increases. The same is true for the number of Oregonians who receive unemployment insurance benefits. As our office has reported in the past, the number of jobs, the number of unemployed in Oregon, and the number of people receiving UI benefits all move together. This doesn’t mean that job growth couldn’t be faster in the absence of improved benefits, but neither does it mean that there is a large pool of potential workers who are unresponsive to the current dynamics. of the labor market. Another thing to note is that the number of Oregonians who are not in the workforce – who are not actively looking for work – specifically due to the pandemic is also continuing to decline.
Finally, our office is increasingly asked about the impacts of the Delta variant given the increase in cases and hospitalizations in Oregon. On the one hand, what really moves the economic needle are the closures. Stricter health restrictions are not currently in place and have not been announced. Of course, given the state of the pandemic which could change. On the flip side, there will likely be some decline in consumer demand for certain in-person activities, be it air travel, bowling alleys, movie theaters, etc. Given that household income is strong and the stock of excess savings remains, any slowdown in spending today will likely be pushed back into the coming months when the state of the pandemic improves. Any weaker growth in the short term is likely to lead to stronger growth in the medium term. This will be more of a change in the timing of consumer spending than a shift in the overall trajectory.
Looking at our office’s COVID tracking page, you’ll see that over the past week, we’ve seen the slightest drop in OpenTable video lottery sales and sit-down diners as the Delta variant grows. Nationally, air passenger numbers are also declining (we don’t have real-time data for Oregon here). Last week was the first truly massive week of cases and hospitalizations, or massive enough to really grab public attention, it seems. As such, I’m interested to see how it affects Oregon’s behavior this week. Will it remain modest or will we see more significant declines in certain activities? We’ll have a better idea next Monday or Tuesday when the data becomes available.