Here’s the Oregonian’s weekly look at the numbers behind the state’s economy. See past payments here.
Wage growth generally slows down during an economic downturn. As unemployment rises, competition for jobs weakens and employers can attract workers without raising wages.
This is what happened during the Great Recession. Average wages fell briefly in Oregon, then rose 2% or less for several years during the state’s long, slow recovery.
The pandemic recession is quite different. Average wages in Oregon actually increased right after the COVID-19 hit. This was mainly because tens of thousands of low-paying service workers lost their jobs, which increased the state average by removing low-paying jobs from the equation.
Now, however, wages remain high even as the economy reopens. Oregon is rebounding quickly and economists expect the recovery to allow workers to lock in those gains, especially at the lower end of the wage scale.
Workers in Oregon earned an average of $ 29.81 per hour in May, according to the latest federal data. That’s up 7.7% from February 2020, the month before the pandemic. The hourly average increased by $ 2.12 during this period, or $ 4,400 more per year for a full-time worker.
Workers in all industries are returning to work, and economists say the distortion in wage data created by low-wage workers retiring from the workforce has faded. This means that the wage gains are real.
“Wages are sticky,” Josh Lehner of the Oregon Bureau of Economic Analysis wrote in a report last month. “This is good news for workers. Employers rarely cut wages up front, so recent wage increases are expected to hold for years to come. “
The squeeze on the Oregon workforce is a big part of the reason for the wage increases. The economy is rebounding quickly and employers want to take part of this resurgence. This means that they have to recruit staff and quickly.
Although the state’s unemployment rate remains high at 5.9%, all hiring is done at the same time. It pits employers against each other and gives workers a way to demand higher pay and choose where they work, or whether they want to work at all.
A $ 300 weekly unemployment premium continues through Labor Day, and Oregon won’t start forcing unemployed people to actively look for work until the end of July. Despite this, the number of Oregonians receiving unemployment benefits is declining – which could indicate that rising wages are effectively pulling workers from the sidelines.
Reopened restaurants and bars are fighting over workers even as major employers offer hiring bonuses or raise their starting wages. Amazon is sending postcards throughout the metro area, offering $ 20 an hour in hopes of attracting workers to its warehouses.
Rising wages could push up inflation, which would hurt the economy and devalue the higher wages workers bring home. But analysts believe inflationary pressures will be short-lived, reflecting supply constraints created by the rapid economic rebound, while wage gains are expected to persist.
“Competition for workers is expected to remain fierce even as some of the unique pandemic circumstances that hold back labor supply fade in the coming months,” Lehner wrote. “Companies will have to get used to this dynamic.
– Mike Rogoway | email@example.com | Twitter: @rogoway |