The industries selected for analysis comprise 85 percent of Salem’s private sector employment, which totals 140,800 workers. 

Beginning the analysis with the Health Care and Social Assistance industry is appropriate for several reasons. It has led all industries in growth, increasing employment by 17 percent. It’s an important industry not only for the obvious reason of keeping us healthy – it is also the largest share of total employment in the Salem MSA (Metropolitan Statistical area, Marion and Polk counties combined) at 24 percent of private employment.

One caveat here – some of the industry’s employment growth was due to several thousand home care aides, previously tallied as state employees, being re-classified in the private sector Health Care and Social Assistance industry. Even after accounting for this change, employment growth in the industry was in double digits.

This industry lost several thousand jobs over the first few months of the pandemic and struggled to regain them. Pre-pandemic employment levels weren’t reached until late in 2022.

In addition, the several components of the industry haven’t recovered jobs equally. The laggard is the Ambulatory Care component – doctor’s and dentists’ office personnel, clinics and the like. It has recovered jobs slowly, showing approximately six percent in employment gains over the last two years. Nursing and Residential Care employment rose 11 percent, and Social Assistance, nearly 30 percent (some of this due to the reclassification of home health aides). 

The only other industry to post employment gains from July ’22 to July ‘24 larger than overall gains was Professional and Business Services. This industry, comprising 13 percent of private employment (17,000 jobs) is composed of services such as accounting, advertising, legal services, research and development, and engineering. More than half the employment in this industry is in Staffing Services, which posted healthy job gains.

The Construction and Manufacturing industries, at 19 percent of private employment, experienced employment growth over the two-year period at 4.4 percent and 3.3 percent respectively, slightly below total employment gains. However, neither industry experienced large pandemic-related job losses, and those were quickly recovered.

Of the last three industries to be analyzed, employment in two, Leisure and Hospitality and Retail Trade, was extremely affected adversely by the pandemic and one, Warehousing and Transportation, actually benefited, at least for a time.

Leisure and Hospitality comprises 12 percent of private employment in the Salem area and from March to April of 2020, half of these jobs disappeared. In fact, this industry’s employment level took two nosedives, the first as cited above, and then another in January of 2021 as a second brief business shut-down was mandated to slow the spread of Covid. The industry hasn’t recovered as robustly as total employment – it has grown only 3.1 percent over the last two years.

Retail Trade, at 13 percent of employment, lost 14 percent of its employment in the first few months of Covid. It recovered the losses pretty quickly. But over the last year or so, employment levels have been on a downward trajectory. From July of ‘22 to July of ‘24, employment was down 4.1 percent. The increase in on-line shopping begun during the pandemic is at least part of the reason for the decline. 

The Transportation and Warehousing industry, five percent of employment, actually added jobs early in the pandemic and by the end of 2020 had added nearly 1,000 jobs – that’s all those FedEx, UPS and Amazon drivers delivering goods packaged by workers in Salem area warehouses.  However, industry employment growth has slowed since then and was 2.9 percent from ‘22 to ‘24.

An analysis of Industry wage trends over the last couple of years, and how they fared against inflation, adds another dimension to employment trends (see table below).

From 2019 through 2023, wages overall increased by 24.4 percent. This put wages ahead of inflation, which was 19.4 percent over the four-year span. Going back to 2019 (pre-pandemic) captures the effects of pandemic job shortages, specifically, that employers in some industries needed to raise wages to attract workers.

But, like employment growth, wage changes varied by industry. The largest percentage wage increases were in the two industries affected most by early pandemic job losses, Leisure and Hospitality, and Retail Trade. That these industries led in wage increases isn’t surprising, as employers needed to raise wages to get employees to come back to work. Leisure and Hospitality wages were nearly 10 percent ahead of inflation, and Retail Trade wages, ahead by five percent. 

But recall that employment growth in Leisure and Hospitality is below the average of total employment growth, and Retail Trade employment has actually declined over the several years, in spite of experiencing the largest wage growth. Higher wages don’t seem to be enticing more workers into these industries. Factors other than wages are likely at work here.

Overall wage increases in Health Care and Social Assistance, while experiencing an overall wage gain of 19.2% over four years, still didn’t quite keep up with inflation. Analyzing wage trends in the various sectors of the industry tell a different story however.

Workers in both Nursing and Residential Care, and Social Assistance sectors of the Health Care industry saw wage gains of more than 37 percent, putting them substantially ahead of inflation. And recall that both of these saw substantial employment growth – so raising wages helped.

Wages in the Ambulatory Care component of Health Care actually declined slightly over the time period. Recall that Ambulatory Care also experienced the smallest employment growth of the Health Care industry components. Another year or two of employment and wage figures may clarify the situation.

Some of the slow employment growth in the Transportation and Warehousing industry may be due to slower wage growth as well. Again, more months of employment and wage figures will be helpful.

To sum up, in September 2024, Salem’s economy seems to be on a track of sustained employment growth (borrowing a phrase from Josh Lehner’s blog of August 28th at the Office of Economic Analysis). Some industries are doing better than others, and all, with the exception of Retail Trade, are adding jobs.

Lastly, large wage increases are stimulating employment growth in some but not all pandemic-affected industries.

There won’t be another analysis of the Salem area’s economy until after the first of the new year. But there’ll be five more months of economic information to sift through, and it’s bound to be interesting, so stay tuned!

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