This is Oregon Insight, The Oregonian’s weekly look at the numbers behind the state’s economy. View past installments here.
Economic health is often measured by the unemployment rate, an easy-to-understand benchmark with ready historical comparisons.
Economists and the public, though, have been increasingly aware of the limitations in the jobless rate. It leaves out those who want work but have given up their search and those working part-time gigs because they can’t find full-time jobs.
So federal economists came up with the U-6 rate, often called the “underemployment” rate, which includes the conventional unemployed as well as those who have recently stopped looking for work and those stuck in part time jobs.
The U-6 rate is higher than the conventional unemployment rate — sometimes a lot higher. And many, including the analytics firm Gallup, consider it to be the “real” unemployment rate.
During the Great Recession, when Oregon unemployment was running around 10%, the U-6 underemployment rate was roughly double that. Oregon’s U-6 rate topped out at 21% in the early days of the pandemic in 2020, 8 percentage points higher than the standard measure.
The good news is that underemployment has fallen just as fast as the standard benchmark over the past two years. The U-6 rate was 7.4% in March, the lowest point on record. (Official unemployment was 3.8% — near, but not quite at, an all-time low.)
That’s great news if you’re looking for a job.
“If someone wants a job, they are out there, unlike during the Great Recession recovery,” said Anna Johnson with the Oregon Employment Department, who wrote a new analysis of Oregon’s labor market. “And those job vacancies tend to be for permanent, full-time work.”
But here’s the downside.
Oregon has more than 100,000 job vacancies with open jobs outnumbering the unemployed. That worker shortage is constraining economic growth, in Oregon and across the country.
Economists, and the Federal Reserve, had hoped that workers would come off the sidelines as the pandemic faded. It now seems that there’s hardly anyone sitting out – certainly not enough people to resolve the labor shortage.
Josh Lehner with the Oregon Office of Economic Analysis addressed that issue in an essay earlier this month.
With immigration down sharplyand Oregon’s workers growing older along with the general population — “mediocre demographics,” Lehner calls it — the state has a dwindling labor pool.
That’s a big part of the reason why jobs are so readily available right now and why paychecks are rising as employers compete for workers. But with consumer demand still rising, and production constrained by the labor shortage and other factors, inflation is rising even faster than wages.
The Federal Reserve’s tighter monetary policy could help cool off demand, Lehner writes. But the labor shortage? He says it “will only change with broader societal shifts or, say, increased immigration both international and domestic.”
— Mike Rogoway mrogoway@oregonian.com | Twitter: @rogoway |