Forecast Panelists Bullish But Challenges Include Shrinking Labor Pool
Central Oregon’s economy is decidedly on the upswing after weathering some eight years of the recession and slow recovery, but faces challenges including a shrinking labor supply as part of the new narrative, regional business and community leaders heard at a recent annual conference.
Panelists at the Bend Chamber 2015 Economic Forecast Breakfast, held at the Riverhouse Convention Center, also highlighted other key issues needing to be addressed on the horizon including a lack of affordable housing options – with many median wage workers barely able to afford an apartment locally – and a perceived skills set shortage which could curtail progress in this emerging new expansionist phase.
Attendees heard that the region finally entered a period of expansion within the last year as the local economy regained the more than 10,000 jobs lost during the Great Recession, and Deschutes County’s economy was in significantly better shape than prior to the downturn through being more diverse and stable and less reliant on the twin pillars of construction and tourism.
But this growth cycle was beginning to see a shortage of labor due to the expanding job market – though this was offset to some extent by continuing positive in-migration – and employers were finding it increasingly difficult to find quality workers.
Ferguson Wellman Capital Management Portfolio Manager Mark Kralj started by laying out a global perspective, and described the U.S. consumer as a “shining star” in leading the world economy.
Americans have kicked spending into higher gear after years of caution and saving in part due to the precipitous drop in oil and gasoline costs, as evidenced by strong auto sales in the light of rising cumulative net worth, a return of home equity valuations to pre-recession levels and a widespread expectation of rising incomes.
He did not expect China’s evident slowdown to derail the U.S. expansion as its proportion of exports was not a significant proportion of Gross Domestic Product, and foresaw Fed rate hikes to be slower and lower than in previous eras.
Indeed, the Federal Reserve, supported by other international financial institutions, continued to do everything in its power to keep the economy going and avoid deflation after ending “quantative easing” a year ago, and was still cautious regarding raising interest rates even a quarter point.
Kralj pointed to many positives on the national jobs front in the context of growth in leading sectors such as leisure and hospitality and some 5.4 million job openings representing the highest number since 2000 – though consequent rising wages would inevitably prove a precursor to an uptick in inflation. The combination of weak oil prices and a strong dollar were also a “double-edged sword” to the economy.
Oregon Department of Employment Economist Damon Runberg confirmed Deschutes County was in a period of economic expansion, with a chart showing it had taken 94 months to get back to pre-recessionary peak employment levels, with trends in Bend particularly increasing and confidence high, led by sectors such as health care, transportation, professional services and tourism.
But due to a shrinking labor force, businesses were going to have to start thinking about how they could attract and retain the “best and brightest” employees.
He said: “We’re seeing labor shortages across the board in different industries, diverse industries.
“We’re starting to see the tightening of the labor supply diminish the ability of businesses to expand because they can’t find the right workers.”
He said the supply of labor was diminishing, related to the number of jobs in the economy. But on the other hand, he said the demand for labor is increasing very rapidly.
He attributed the shortage to a number of factors including the aging population in the county and the amplification effect of a lack of affordable housing options for a typical median single-family wage earner in Deschutes County.
In how to address building a skilled workforce he prescribed options from offering higher wages, switching the onus to employers to train up their workforce and tapping into education resources such as COCC and OSU-Cascades, to a more macro approach to attracting and retain young employees and keeping up in-migration levels to help maintain a thriving economy.
Charley Miller, president of 104-year-old family company Miller Lumber, took a historical perspective and recounted that many of the issues the Central Oregon community was struggling with today were fundamentally the same in the 1900s.
Despite the challenges over the years, he said Bend in particular had been able to succeed because of a proud tradition of visionary people in the community being engaged in the dialog and coming up with creative answers to ensure continued growth and prosperity
Urging newer generations to continue that legacy, he said: “Bend has been led by positive people who come up with solutions to challenges. They don’t sit idle. They just make things happen. And they don’t do it for now, they take the long view.”
Miller said it was a critical time in Central Oregon with upcoming big decisions surrounding issues like the new urban growth boundary, transit and multi-family housing set to influence what Bend looks like in the future, adding: “Bend will grow. Bend will change. Be involved,”
Tech sector specialist and Seven Peaks Ventures Director Dino Vendetti suggested that the tech sector was at or near the top of its current cycle and that industry transplants had continued to arrive aided by increasing telecommute options, especially in light of a tight labor market encouraging employers to offer flexibility in location for qualified workers.
These in-migrants were typically good for the economy, with relatively high incomes and spending power and a propensity for starting new tech businesses, and Bend continued to attract such professionals in spite of Oregon’s somewhat weaker tech recovery relative to other states.
He said challenges for the future included how to hire key talent and train and grow young tech workers, with the help of programs such as those offered by OSU-Cascades, COCC and the fledgling “Bend Poly” which provided “augmentative” 6-8 week courses designed for undergraduates, graduates, and early stage professionals, sponsored and taught by internationally recognized experts in their field.
Other main ingredients in nurturing the local tech industry were access to capital to scale startups and the continued promotion of local civic infrastructure to support growth.
Bend Chamber website: bendchamber.org.
