Economic forecast projects gloomy future for key Oregon industries

Kyle Curtis

Economics are called "the dismal science" for a reason. Economic analysts require a particular personality that includes the necessary skills and patience needed to parse numbers and make sense of the world around us. And while there might be efforts such as Stephen Dubner and Steven Levitt from Freaknomics to apply a pop-culture fun or "sexy" spin to economic theory--literally, in some cases, as the chapter on "patriotic prostitutes" in SuperFreakonomics can attest--the reality is that the more we understand how the world operates, the more it becomes clear just how imbalanced and unfair the world is. Thanks for bringing everybody down, economics.

The most recent evidence proving this adage of just how dismal economics are would be last month's industry and occupations forecast provided by the Oregon Employment Department. Every two years, the Employment Department releases a ten-year industry and occupational employment forecast, and this most recent forecast is for the year 2020 based on Oregon's economy in 2010. To be sure, the forecast does include a one-sentence caveat that "every major industry is forecast to grow from the depths of the severe recession of late 2007 to mid-2009." While this might be considered good and very non-dismal news to celebrate for the state's economic future, the forecast continues to say that the jobs lost in the state's key industries of manufacturing and construction will not fully recover from the Great Recession, with fewer jobs in these sectors by 2020 than there were in 2008. Other industries in the state are also projected to decline over the next decade, including postal service, publishing, and telecommunications to name a few.

So, yeah, every major industry is expected to grow from the depths of the 2007-2009 recession, except for all of those that are listed. (And others that are not.) Forgive me if this report has me feeling just a lit bit dismal.

The forecast continues to specifically state just how many fewer occupations there will be in the manufacturing and construction industry:

"...in 2008 there were 5,550 welders in Oregon. The forecast for 2020 predicts 5,215 welders. In 2008, there were 9,323 production assemblers. The forecast is for 7,703 in 2020. In fact, there are forecast to be a total of 122,556 people working in all production-related occupations in 2020, down 2 percent from 2008."

In other words, as the state's population grows--with Oregon's projected population to be 4.2 million in 2020, an increase by nearly one-third of the state's population of 3.86 million in 2012--the number of jobs in manufacturing and construction will decrease. A marginal decrease, sure, but this indicates a stagnant construction and manufacturing sector in the state for the upcoming decade. And that does not bode well for the overall health of Oregon's economy.

While it might seem that a logical takeaway from this report is that one might be better off living in a state other than Oregon by the year 2020, this conclusion might actually be a bit rash. Although the Employment Department's forecast does not explicitly state which industries will fully rebound from the Great Recession, the best guess is that Oregon will follow the national trend, and that the disappearing construction and manufacturing jobs--which typically provide high-wage family jobs, complete with benefits--will be replaced by low-wage service jobs.

The culprit behind these trends that are preventing a full recovery in key high-paying industries in Oregon is automation. (Or, as the Employment Department calls it, "innovation.") These trends aren't exactly new, but have been occurring for decades--even centuries, as the use of a parable by Adam Smith of how a Scottish boy unwittingly used innovation to make his job redundant is used at the beginning of the forecast. Throughout the industrial age, every age of explosion in new technology has resulted in laid off workers and surplus labor. The current technological innovations has resulted from the commonplace use of computers at increasingly mechanized workplaces, which result in decreased workforces that still are able continue to maintain--if not even increase--workplace productivity. Robert Wolff provides a simple example in how mechanization and innovation has resulted in increased layoffs in his book Occupy the Economy:

"...once upon a time supermarkets needed an army of workers to keep track of how many much [sic] cereal, soup, paper cups and so on were leaving the shelves. With a computer, as we all know now, you have a scanner at the checkout counter, and nobody needs to keep track of it. There's one person at a computer somewhere in the middle of nowhere who can tell you exactly how many new boxes have to be ordered, in which supermarket, in what town, because it's all done automatically and you don't need an army of inventory replacers."

With such a gloomy economic forecast provided by the state's Employment Department regarding key manufacturing and construction industries, leaders such as Governor Kitzhaber and Mayor-elect Hales have their work cut out for them to maintain and expand these sectors and ensure the continued presence of these family wage jobs in Oregon. This perspective could help explain last week's special session in which Governor Kitzhaber sought--and eventually received--sole authority to negotiate a tax deal with Nike which will, the plan is, result in the creation of thousands of family-wage manufacturing jobs. (The more conspiratorial-minded might also suggest that this employment forecast also serves as a convenient excuse for such an executive power grab by the Governor to negotiate directly with companies, and bypass the legislative process. Again: only for the conspiratorial-minded.)

The Employment Department forecast attempts to end with a cheery message, saying that although "change is often difficult" it is important to recognize that the state's economy "values the skills that each worker brings to the job. But the most important skill a person can have is to learn new skills when the job changes." I'm just curious as to whether these "new skills" that will need to be learned are going to be coffee barista and cash register skills.

And that, my friends, is a dismal thought. Simply dismal.

By Kyle Curtis Dec. 18, 2012