Worker Shortage Looms as Economic Growth Barrier

 Oregon state economists say worker shortages, especially in skilled trades, have bedeviled the state’s economy for some time, but that shortage may become more serious and long-term as retirements outstrip new job market entrants and immigration is curtailed.

Oregon state economists say worker shortages, especially in skilled trades, have bedeviled the state’s economy for some time, but that shortage may become more serious and long-term as retirements outstrip new job market entrants and immigration is curtailed.

When you think of impediments to economic growth, you don’t typically think of worker shortages. But Oregon state economists say that is becoming one of the most pressing problems job-creators here face.

“The labor market is tight,” says Josh Lehner with the Oregon Office of Economic Analysis. “The difficulty finding and retaining workers is the biggest challenge many businesses face today.”

After nine consecutive years of US economic expansion, a tight labor market isn’t a huge surprise. But the availability of labor is being impacted by non-economic factors such as demographics. Baby Boomers are retiring and immigration is being restricted.

“Yes, the working-age population in Oregon is continuing to increase,” Lehner writes in his blog. “There are more warm bodies available to work, or potentially available to work, however that increase is smaller today due to the uptick in retirements.”

Nearly 80 percent of the prime-age working adults (ages 25-54) in Oregon have a job, which is the same level as pre-recession employment levels. Lehner says there is still a little more leeway. The average employment level for this age group between 1993 and 2001 was 82 percent. But it may not be enough to offset the sheer number of retirements.

Employers have faced skilled worker shortages for some time and retirements could aggravate that shortage even more. Automation in manufacturing and service sectors may relieve some pressure, but at the same time may increase the demand for workers who know how to operate and maintain robotic systems.

In-migration and immigration could help. Oregon has benefitted from an influx of younger people working or seeking work in creative fields, but not so much in skilled trades. Some Oregon employers are redoubling efforts to create opportunities for under-represented populations in manufacturing and other business sectors, but that could take years to realize and still not meet demand.

The cost of housing is another factor influencing worker availability. Portland is a hot housing market, which has driven up rents and home values. Some potential workers, especially at entry professional levels, may seek elsewhere with lower costs of living.

Of course, a recession could impact the labor market by shrinking the number of jobs. Lehner says Oregon has reached a tipping point where even an economic downturn may not reverse a tight labor market.

“The cyclical issues will come and go,” he says. “However, the demographic crunch is finally upon us and here to stay for the foreseeable future.”