July 25, 2023

But employment started to recover almost immediately. From April (the employment low) to December, 12,000 jobs were recovered.

In spite of substantial job recovery in the last half of 2020, the Salem area had still lost six percent of employment from December 2019 to December 2020.

The worst post-WW II recessions occurred in the early ‘80s, and in 2007-2008. As a comparison, the largest year-over-year job loss in the early ‘80s was nearly three percent. The largest loss during the recession of 2007-08 was 3.5 percent of jobs.

Recovery during the Covid years was also unprecedented. The largest employment gain in the Salem area occurred from December 2020 to December 2021, a five percent gain. A smaller increase of three percent followed the next year.

As a comparison, the largest gain during the great recession of 2007-08, just under four percent, occurred nearly six years into the recovery period, in 2014.

It shouldn’t be surprising that the employment recovery of Salem’s major industries displayed different patterns. (see graph below)

The largest industries involved extensive contact with the public, namely Retail Trade and Leisure and Hospitality. These industries experienced business shut-downs to slow the spread of Covid, and substantial job losses were the result.

Both industries also experienced hefty job gains by the end of 2020, but hadn’t recovered to pre-pandemic levels. In fact, by December of 2020, no major industry had recovered to these levels, with one exception – I’ll explain later.

By December of 2021, the industry employment picture had improved.

Retail Trade had fully recovered to pre-pandemic levels, plus a handful of jobs. Construction, which lost 1,000 jobs from March to April of 2020 – six percent of its employment- was recovered. And Professional and Business Services (includes lawyers, accountants, and staffing agency employment) and Other Services (hair salons, auto repair, etc.) were also recovered by the end of December 2021.

However, Health Care and Social Assistance, Leisure and Hospitality, and Local Government Education (K-12) still were short a substantial number of jobs – not surprising as these were hard hit by the pandemic.

By December of 2022, most major industries had recovered. Leisure and Hospitality and Local Government Education were still short a small number of jobs.

Employment in the Transportation, Warehousing and Utilities industry was a different story throughout the three years. (see graph below)

This industry added jobs in 2020, as consumers took to on-line shopping in a big way. The industry saw a nearly 10 percent employment increase that year. Employment stayed at that level during 2021, and then declined during 2022, as pre-pandemic consumer shopping behavior began to resume. By May of 2023, the industry was a few jobs short of its pre-pandemic level.

Now about unemployment – It has been setting records.

First, the unemployment rate increased from 4.4 percent in March of 2020 to 12 percent in April of 2020, and the number of unemployed persons soared from 8,000 to 23,000. The 12 percent rate set a record, matching the highest rate of the recession of the ‘80s.

Then, in December of 2020, the rate set another record – it nearly halved, dropping to 6.1 percent in eight months. In the recessions of the ‘80s and 2007-2008, it took years for the unemployment rate to come down from double digits.

And, in June of this year, the Salem area unemployment rate was at a near-record low of 3.6 percent, down from 3.8 in May. The record low for Salem, going back to the early ‘70s, occurred in December of 2019 at 3.5 percent.

What about inflation?

The consensus is that the inflation rate of eight percent in 2022 was due in large part to the federal aid packages to businesses and individuals, which accelerated spending (increasing demand), and factors that constrained supply, the war in Ukraine being one.

Eight percent inflation didn’t set a record. That record occurred in the recession of the early ‘80s, at 13 percent.

Even though inflation has recently fallen to three percent annually, the Federal Reserve Board is still concerned. The U.S., Oregon and the Salem MSA have been experiencing healthy job increases monthly, unemployment is at rock bottom, and wage increases have been substantial, especially for lower-paid workers, although increases have slowed. But the Fed and many economists see all this as signs of an “overheated” economy. So, more interest rate hikes from the Fed are being predicted.

Whether or not a recession will result is anybody’s guess. If recession appears, it is believed that the resulting unemployment will be “mild” – perhaps in the five percent range.

At least two industries are still struggling to hire, Health Care and Social Assistance, and Leisure and Hospitality, although employment in both is back to pre-pandemic levels.

Hiring is always difficult when unemployment is low, and it is more so now. After three years of pandemic, quit rates are still high and job seekers seem to be more selective about the types of jobs they are willing to take. How long the economy will display the after- effects of the pandemic, only time will tell.

Pam Ferrara of the Willamette Workforce Partnership continues a regular column examining local economic issues. She may be contacted at [email protected]