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Oregon Job Polarization, 2017 Update

As the economic expansion matures and the labor market tightens, it brings along with it the feel-good part of the business cycle. Wages and household incomes are rising while poverty rates are dropping. Employment has picked up in rural areas even as it slows in the large, urban centers that turned around first following the recession. Additionally, employment prospects are up for all levels of educational attainment. Now, in keeping with this pattern we’re finally seeing good growth again among middle-wage jobs here in Oregon the past few years. No longer is the economy only creating high- and low-wage jobs like it was early in the recovery. In fact, according to the latest occupational data released last week by BLS, Oregon’s middle-wage jobs in 2017 grew at a faster pace (2.8%) than both high-wage (1.4%) and low-wage (2.0%) jobs. This marked the largest middle-wage increase in the past 15 years, just edging out 2006’s gains.

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Oregon’s Unprecedented Growth?

A common refrain our office hears is that Oregon’s growth in recent years is unprecedented. Meaning that we’ve never seen population growth like this before. This is usually in the context of the housing market and explaining away our shortage more as a function of extremely high demand, and less about the supply issues. As such, I think it may be helpful to take a graphical trip down memory lane. The bottom line is that yes, in many places in Oregon, mostly urban, we’re seeing population gains that are better than in the 2000s but on par with the 1970s and the 1990s. Remember, people have been packing up and moving to this part of the world since before Lewis & Clark. Population growth and migration is nothing new. It is ingrained in our community and economy and remains our number one comparative advantage.

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Labor and the Trades

First, I want to define what I call classic blue collar occupations. We’re talking about occupational data here, based on what tasks and duties the workers actually perform, not industry data which mixes front line workers with back office staff. Classic blue collar occupations include four occupational groups: construction, installation, maintenance and repair, production, and transportation and material moving. Reminder that production jobs are, essentially, the manufacturing jobs that do the actual manufacturing. In the job polarization research all of these occupations are routine manual jobs, and are considered middle-wage jobs.

The most common issue our office hears is that it is hard to find workers. The labor market is getting tighter, due to both the strong economy and due to demographics as Baby Boomer retirements pick up. However, as I stress in these conversations and presentations, this demographic issue is widespread and impacting all industries and occupations. The trades, or the classic blue collar occupations are not facing worse demographics than other occupations. That does not mean, however, that it isn’t a problem and isn’t a challenge for businesses. The point is that the tight labor market impacts everyone. The good news, especially in places like Oregon with its migration trends, is that there are more warm bodies walking around today. The challenge is attracting them to come work for your firm.

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Behind the March Revenue Forecast

Since our office released the March 2018 economic and revenue forecast, we’ve been involved in numerous discussions about how exactly the forecast has evolved in recent months. In particular, how did the forecast go from seeing a hit to near-term revenues due to the impacts of the federal Tax Cuts and Jobs Act (TCJA) to actually showing higher total resources? What follows is an effort to clarify the underlying, and offsetting changes to the outlook.

It should be noted that there is a reduction in expected state revenues in 2017-19 from TCJA mostly due to the quirk in Oregon law related to repatriation, the bonus depreciation or expensing, and the 20% pass-through deduction. However, these declines have essentially been offset by four other forecast changes, as seen in the dark blue bar below. Year-end accounting, which includes unspent allocations from the previous biennium, increases total available resources via a larger beginning balance for the budget.

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City of Tacoma Minimum Wage

The Minimum Wage Ordinance (TMC 18.20) applies to all employees who have reached the age of 16 and work within the geographical boundaries of Tacoma for more than 80 hours in an employer-defined calendar year. Adverse action against employees who exercise their rights...

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