Disparate Impacts of the Pandemic Recession in Oregon

The pandemic recession came upon a healthy economy with record high total employment and a record-low unemployment rate in spring 2020. Within two months’ time, Oregon lost 286,000 jobs and unemployment spiked to an all-time high of 13.2%. Job losses were not distributed evenly, affecting some industries and workers to a greater degree. These disparate employment impacts are detailed in a new report released by the Employment Department today. (Check out the podcast version too!)

By industry, three service-related sectors bore the brunt of the pandemic. Leisure and hospitality was impacted the most by far – losing half of its employment, or about 110,000 jobs between February and April 2020. The other hardest-hit sectors initially were other services – things like barber shops and hair salons, tattoo parlors – and also the education sector.

Leisure and hospitality in particular employed more women, more of Oregon’s young workers, and more Black, Indigenous, and workers from communities of color than Oregon’s economy overall. Other hard-hit sectors also tended to have more women and more low-wage workers. These are the Oregonians who experienced disparate job impacts of the pandemic recession in 2020.

These impacts are reflected in changes in unemployment claims activity during the pandemic. Regular unemployment (UI) claims activity rose dramatically across all demographics in Oregon. That said, the volume increased to an even greater degree for women and for younger workers.

Although workers of Hispanic or Latino origin were more likely to be working in leisure and hospitality than other sectors, their claims volume did not increase to a greater degree than for non-Hispanic workers. There's a combination of possible reasons: it could be Hispanic or Latino workers were less likely to be laid off, or that they were laid off but less likely to seek unemployment benefits, or possibly did seek benefits but had some difficulty accessing them. It's also noteworthy that their over-representation in leisure and hospitality was not as pronounced as for all young workers (who made up 27% of sector employment), or women's in education (where they held two out of three jobs).

The focus of any economic downturn often falls first on those who lost their livelihoods. The pandemic recession also created disease exposure risks to those who remained working at in-person or high-contact jobs. Much like those who were more likely to suffer pandemic-related job losses, data suggest that lower-wage earners, younger workers, and workers from communities of color who remained employed appear to have had relatively less opportunity to telecommute. This creates another disparate impact of the pandemic on the workforce.

More information about the disparate job impacts of the pandemic recession can be found in the full report.

Why Oregon's Labor Market is Tighter Than You Think

We've been hearing more in recent days about employers' challenges finding workers. Over the past week, we've teamed up with the Office of Economic Analysis to publish a summary of reasons Oregon's labor market is tighter than you might think.

The pandemic recession -- just like all economic downturns -- is unique. During this recovery labor demand remains strong. At the same time, several simultaneous factors are constraining the supply of labor for those job openings. They include:

1. Concentrated Nature of the Shock
Last spring, many businesses with similar labor pools shut down overnight. The economy experienced record-setting job losses and the unemployment rate increased nearly 10 percentage points in April 2020 alone. Those who remain unemployed are also largely on temporary layoff. In the previous recessions, the job losses were largely permanent, and the economic nadir did not occur until more than two years into each cycle, so businesses hiring during the recession and recovery had excess labor supply for a while. During this recovery the jobless numbers have dropped much faster.

Oregon’s unemployment rate matched the nation’s at 6.0% in March, below the average of 6.8% over the past two decades. Currently, hiring employers are facing a typical or slightly lower-than-typical available labor pool for their job openings. The available labor force is not evenly distributed either. While all sectors lost jobs in the initial COVID downturn, some have bounced back rapidly or hit new employment highs (such as transportation, warehousing and utilities, and professional and technical services). Depending upon the types of jobs employers are hiring for, there may be no excess labor. 

2. Pandemic Concerns
The unemployment rate doesn’t include would-be workers who are out of the labor force, meaning they neither have a job, nor are they looking for one. Supplemental information from households in the Current Population Survey shows an estimated 45,000 people in Oregon said they were prevented from looking for work due to COVID-related reasons during the first quarter of 2021. While vaccinations have accelerated, only about half the adult population has received at least one vaccine dose for COVID-19 as of mid-April. COVID case counts are also rising in many areas of Oregon again this spring.

3. Lack of In-Person Schooling
Heading into the pandemic, one out of every six Oregonians in the labor force had kids, worked in an occupation that cannot be done remotely, and also did not have another non-working adult present in the household, according to research from the Office of Economic Analysis. As of mid-April, three-fourths of Oregon’s K-12 schools have students learning remotely from home either part- or full-time, according to Oregon Department of Education records.

Even with the anticipated return of full-time, in-person learning for the 2021-2022 school year, child care slots, which were already too scarce in most areas of the state prior to the pandemic, and summer programs will likely continue operating with reduced capacity for some time. These constraints limit workforce options for some parents of younger children.

4. Federal Aid and Unemployment Benefits
Total personal income in Oregon today is about 15% higher than before the pandemic. Strong federal fiscal policy response via recovery rebates alone added $12 billion to personal income in Oregon. Although this has brightened the overall economic outlook, a stronger safety net where incomes are higher today than pre-COVID can temporarily reduce labor force participation in the short term for some workers. 

Federal Pandemic Unemployment Compensation (FPUC) adds $300 onto weekly unemployment insurance benefits through September 4, 2021. In the first quarter of 2021, the weekly regular unemployment (UI) benefit has averaged $370 per week. With the additional $300 FPUC payment, that adds up to an average payment of $670 per week. That’s roughly the same as earning $16.75 per hour for someone working full time. During the first quarter of 2021, that has also represented full wage replacement (between 100% and 104%) relative to regular UI claimants’ pre-pandemic earnings on the job. 

Some perspective here: earning $670 per week, working year round would total $34,800 in gross earnings for a worker. By comparison, the median earnings for full-time workers in Oregon in 2019 was $50,712. With “Now Hiring” signs in many business windows and stronger wage offerings as employers compete for available workers, it’s unlikely that this benefit, in itself, is keeping a vast number of workers on the sidelines.

 

Furthermore, unemployed workers cannot refuse job offers or a recall to their previous job (if temporarily laid off) because of their unemployment benefit amount. Refusing work solely due to weekly unemployment benefit payments would be considered fraud. The Employment Department provides ways to report job refusals.

Last but not least, Oregon has a long-running record of adding labor force through net in-migration of workers from other states and areas. While Oregon continued to attract migrants in 2020, net migration fell to its lowest level since 2013 in Oregon, and was 20% lower at 28,600 than in 2019.  

More information on Oregon's current labor market dynamics can be found in the full article and OEA blog post, written by State Economist Josh Lehner and State Employment Economist Gail Krumenauer.

The CARES Act and Claimants on the Benefits Cliff in Oregon

The CARES Act signed into law in March created new programs to expand Unemployment Insurance coverage during the pandemic. Two of these programs -- Pandemic Unemployment Assistance (PUA), primarily for the self-employed, and the Pandemic Emergency Unemployment Compensation (PEUC) 13-week benefit extension -- are currently scheduled to expire on December 26, 2020. While most PEUC benefits recipients could roll into the existing Extended Benefits program, those receiving PUA benefits have no other unemployment benefit options when that program ends. 

While negotiations are underway to extend or replace CARES Act programs into 2021, many are wondering how many Oregonians could be impacted by the loss or interruption of these benefits. We estimate that there will be 72,000 people receiving benefits from the Oregon Employment Department under these programs as of December 26. That’s about 3.4% of the entire state’s workforce when the pandemic began. 

Women are slightly more likely to be affected by the loss or interruption of these benefits, as well as workers ages 65 and older. People facing the potential loss of this financial support in Josephine, Curry, Coos, Lincoln, and Jackson counties are expected to be the hardest hit by share of overall labor force. 

More information about the characteristics of unemployment benefit claimants is available at https://www.qualityinfo.org/covid-19.

Initial Claims and Unemployment Benefits in Oregon

During the week of May 3 to May 9, 2020, the Oregon Employment Department received 14,100 initial claims for unemployment benefits. The agency has received 396,000 initial claims since COVID-19 business closures began in mid-March.

Initial Claims
The Employment Department has detailed information for about 25,000 of the 32,000 initial claims processed during the week of May 3 to May 9. The greatest number of initial claims continued to come from the accommodation and food services sector, with 68,400 initial claims filed in the industry since March 15. Other sectors with the largest number of initial claims totals since March 15 include health care and social assistance (43,100) and retail trade (36,400). However, every sector of the economy has seen increased claims activity.

Multnomah (5,500), Washington (3,200), and Clackamas (2,400) counties had the largest number of claims during the week of May 3 to May 9. More initial claims data by industry and area can be found on the QualityInfo.org COVID-19page.

Helping Oregonians
Almost nine out of 10 (86%) initial claims for regular unemployment benefits received between March 15 and May 9 have been processed. For each of the past five weeks, more claims for regular benefits have been processed than received in Oregon.

The record-level claims processing by the Employment Department continues to help communities across Oregon as the economy transitions to re-opening. If measured by dollars paid, Unemployment Insurance would now be the largest paying subsector of Oregon’s economy. By comparison, unemployment benefits would have ranked 37th by payroll prior to the COVID-19 closures.

Still, tens of thousands of unemployment claims remain unprocessed, and some have been waiting for benefits for six or seven weeks. The Employment Department recognizes the importance to getting benefits to everyone who needs them. The agency continues expanding its capacity, with a new contact center now open, and a total of 690 employees processing claims. Claims processing continues seven days per week. The Employment Department also continues to make thousands of call-backs every day to Oregonians who need to have their claims processed.

Next week the Employment Department plans to issue two news releases. Oregon’s unemployment rate for April is scheduled to be published at 10:00 a.m. on May 19. The Employment Department also expects launch of the Pandemic Emergency Unemployment Compensation (PEUC) program next week. PEUC provides 13 weeks of additional benefits for those who have run out of regular benefits, and remain out of work due to COVID-19 closures.

Initial unemployment claims data will continue to be updated each Thursday on the QualityInfo.org COVID-19 page. Information about new unemployment benefit programs, questions about resuming business operations, and other resources continue to be updated regularly on the Employment Department’s COVID-19 page.

Read the full press release here.

Initial Claims and Unemployment Benefits in Oregon

During the week of April 26 to May 2, the Oregon Employment Department received 19,600 initial claims for unemployment benefits. The agency has received more than 381,800 initial claims since COVID-19 businesses closures began in mid-March.

Initial Claims
The Employment Department has detailed information of about 30,300 of the 45,100 initial claims processed during the week of April 26 to May 2. The greatest number of initial claims continued to come from the accommodation and food services sector, with 64,700 initial claims filed in the industry since March 15. Other sectors with the largest initial claims totals since March 15 include health care and social assistance (39,700) and retail trade (33,100).

Every sector of the economy has seen increased claims activity. Accommodation and food services’ share of total claims is declining, although the industry still accounts for 28 percent of initial claims since mid-March. Shares of total initial claims are increasing in retail trade, manufacturing, administrative and waste services, and wholesale trade.

Multnomah (6,500), Washington (3,900), and Clackamas (2,900) counties had the largest number of claims during the week of April 26 to May 2. More initial claims data by industry and area can be found on the QualityInfo.org COVID-19 page.

Helping Oregonians
Four out of five (83%) initial claims for regular unemployment benefits received between March 15 and May 2 have been processed. For each of the past four weeks, more claims have been processed than received in Oregon.

The Employment Department has also processed more than 10,000 applications for Pandemic Unemployment Assistance benefits for the self-employed, contract, gig, and other workers not eligible for regular unemployment benefits.

The agency continues expanding its ability to process more claims for unemployment benefits. There are currently 635 employees working unemployment claims, with more hiring underway and a new contact center opening next week. Claims processing continues seven days per week.

In addition to more staffing, the Employment Department also continues working to implement more unemployment benefit programs. Programming and testing is underway for the Pandemic Emergency Unemployment Compensation (PEUC) program. This provides up to 13 weeks of extended unemployment benefits for those who have run out of benefits and remain out of work due to COVID-19 business closures. Program eligibility and more details for this and other programs are available in the CARES Act section of the agency’s COVID-19 page.

Read the original press release here.

Who Are the COVID-19 Unemployed in Oregon?

One of the most visible and devastating impacts of the state’s stay-at-home order to protect us from the human health crisis presented by COVID-19 has been mass layoffs. More than 30 million initial claims for unemployment insurance were filed across the nation in the first six weeks of the crisis. Here in Oregon about 362,000 initial claims were received in the first six weeks, roughly 17 percent of the statewide labor force. We now have enough data to start drawing some conclusions about industries, areas, and populations most impacted at the onset of the crisis.

Not surprisingly the most populated counties have the largest number of initial unemployment insurance claims, with Multnomah (52,358 claims) and Washington County (27,520 claims) in the Portland Metro area topping the list of counties with the highest number of claims processed. However, we can see a clearer picture of the hardest hit counties by looking at the number of initial claims as a share of the total labor force. Here we see that counties with large accommodation and food service sectors and tourism destinations were the hardest hit. The number of initial claims processed in both Lincoln and Clatsop counties on the Oregon coast represented more than 17 percent of the labor force. Deschutes County accounted for the highest share of unemployment insurance claims processed of Oregon’s metropolitan counties, accounting for more than 14 percent of the Bend MSA labor force.

As would be expected, accommodation and food services has been the hardest hit industry during the current crisis, with initial claims processed over the past six weeks representing roughly 32 percent of statewide employment in the industry. Arts, entertainment, and recreation was the next hardest hit as museums, ski resorts, zoos, and other recreation companies have closed or seen their operations significantly curtailed. Another hard hit industry is “other services,” which includes personal care services like fitness instructors, childcare workers, barbers/ stylists, massage therapists, and pet groomers.

Perhaps more surprising has been the large number of initial unemployment insurance claims being processed in construction, health care, and manufacturing. These were industries that on first glance would seem more insulated from the initial COVID-19 restrictions. Health care posting large numbers of layoffs during a health crisis may seem puzzling; however, there are many health-related businesses that are not serving on the front lines of the COVID-19 response such as dentist offices, ambulatory health services, medical labs, and surgery centers. Many elective procedures are being postponed until the health crisis diminishes and there is less strain on the hospital system. Layoffs in construction and manufacturing are likely a result of an inability for many of these businesses to implement effective social distancing requirements. However, as this crisis continues, layoffs are increasingly due to a demand shock from less consumer spending. The one commonality among these hardest hit industries is an inability for many of the jobs to transition to work from home and the design of workplaces that makes social distancing difficult.

The Most Vulnerable Oregonians Are the Most Heavily Impacted

Although these COVID-related layoffs are spread across all industries it is becoming clear that the most vulnerable Oregonians are being impacted more significantly. Lower paying occupational groups posted notably higher shares of layoffs than higher paying occupational groups. The occupational groups with a median hourly rate of less than $20 an hour represent around 62 percent of total initial claims for unemployment insurance processed over the first six weeks. This represents a higher share than the 57 percent of statewide employment these lower paying occupations account for. Meanwhile, the highest paying occupational groups, those with a median hourly rate greater than $30, represent only 12 percent of initial claims processed, but 22 percent of total employment.

When comparing the level of education for today’s unemployment insurance claimants compared with the educational attainment of the entire labor force, we see that those with lower levels of education have been hit particularly hard. This is likely a reflection of the industries that have been hardest hit, such as leisure and hospitality, construction, retail, and manufacturing that have a higher concentration of workers with a high school diploma or less. Around 58 percent of recent unemployment insurance claims were by individuals with a high school diploma or less, a significantly higher share than the 28 percent of the labor force they account for.

The age distribution of the unemployment insurance claimants is fairly typical of the labor force more broadly, with a few exceptions. Those ages 25 to 34 have been particularly hard hit. They accounted for roughly 29 percent of all unemployment insurance claimants in the past six weeks, but only 23 percent of the total labor force. This age group accounts for a larger share of the jobs in industries that were particularly hard hit. It could also be that this group represents workers earlier in their career and they were more susceptible to layoffs than higher level managers or supervisors. The youngest workers (ages 16 to 19) seem to be the least impacted, accounting for only 2 percent of total claimants. However, this is likely a reflection of lack of unemployment insurance coverage for these young workers who have fewer covered hours in the system. 

Helping Oregonians

This is a difficult time for many of us. In addition to the emotional toll this global pandemic is taking, many of our fellow Oregonians are also struggling with the economic realities of becoming unemployed. The Oregon Employment Department is here to serve in this time of need by administering unemployment insurance. Due to the record increase in claims, it is taking longer than usual for claims to be processed. The Unemployment Insurance Division is working as fast as they can to process every claim, and they continue to add staff. They ask that you continue to file weekly and you will be notified when your claim is processed. For additional information about unemployment insurance and updates regarding new federal programs go here.

Read Regional Economist Damon Runberg's full article here.