Oregon Employment and the Benchmark

Every year along with the January employment estimates, the Oregon Employment Department releases the annual benchmark for total nonfarm employment and also updated seasonal adjustment factors. During the course of the year, the Employment Department releases monthly employment estimates based on a sample of reporting firms. These estimates are not based on every single company in Oregon, but a select sample. Once a year, these monthly estimates are revised (the benchmarking process) based on employers’ unemployment insurance tax reports. These reports include information on all employees, such as the number of employees and also the wages they earned, and once this information is compiled, it represents a nearly universal count of the number of employees in the state. The annual revisions are based upon this universal count. For a  more detailed look at the benchmarking process, please see this release from the U.S. Bureau of Labor Statistics.

For the U.S. overall, the 2010 benchmark was negative (i.e. the monthly estimates in real time were too high). This resulted in a downward revision to the March 2010 employment numbers of -378,000 or -0.3 percent. While this is at the lower edge of the typical range of a U.S. benchmark, it was still to the negative. Conversely, Oregon’s annual benchmark was to the positive. Using seasonally adjustment employment data, Oregon’s revision to March 2010 was +4,900 or +0.3 percent. For December 2010, the Oregon benchmark was +3,000 or 0.2 percent.

Given that Oregon’s revision was to the positive and the U.S. revision was to the negative, Oregon’s relative ranking among all states and Washington D.C. improved. Pre-benchmark, Oregon’s 2010 employment change from 2009 was -0.99 percent, ranking 38th best in the country. Post-benchmark, Oregon’s 2010 employment change from 2009 is -0.74 percent, ranking 29th best. For comparison purposes, Washington’s pre-benchmark numbers were -0.80 percent, ranking 32nd best, and post-benchmark is -1.55 percent, ranking 49th best or 3rd worst. In fact, Oregon had one of the largest positive revisions, while Washington had one of the largest negative revisions. The two tables below illustrate the year-over-year figures for both Oregon and Washington on a monthly basis. The first table highlights the growth rate changes to both states that the benchmarking process had on the employment estimates.

One can see how nearly every single month since January 2010, Oregon’s Y/Y percentage rate has improved, following the benchmark, while every single month for Washington has worsened.   The second table shows the relative rankings for both states on a monthly basis for both pre and post benchmarked data. Note that a ranking of 1st indicates the strongest growth, thus in the far right columns, the negative values for Oregon’s change are actually a good thing. Based on this information, the two states’ rankings have clearly moved in opposite directions following the employment data revisions.

Notice that Oregon’s nonfarm employment rankings for the past two months (December 2010 and January 2011) are in the top 14 states in the country. This is to be expected, given that Oregon’s employment is typically more volatile than the U.S. employment overall. Oregon loses more jobs during recession than your typical state, however Oregon gains more jobs during the expansion than your typical state. What the new, updated employment numbers tell us is that Oregon’s employment has turned the corner with strong gains in the past four months. Our state’s initial estimates for 2010 under-counted the number of actual jobs in Oregon and the nation’s initial estimates over-counted the actual number of jobs. Overall the jobs numbers are undoubtedly a good thing while the relative ranking increase is also a positive. Oregon is currently outperforming the majority of the nation in terms of employment and has actually been doing much better than we had previously thought based on the initial estimates.

 

Note 1: Preliminary February data and revised January figures will be released for Oregon on March 15th.

Note 2: Make no mistake, Oregon has suffered a very difficult recession and our employment currently remains 7.15 percent below pre-recession peak levels, or 124,400 jobs. Similarly, Oregon’s unemployment rate remains far above what one would expect in a healthy labor market environment. This post does not discount these facts; it highlights the most recent activity, which is strongly positive.

Note 3: Washington’s Employment Department benchmarks its employment series on a quarterly basis, unlike both the U.S. and Oregon, which are only annual. There is a minor discrepancy between the data released on Washington’s Employment Department website and the BLS data for the State of Washington for this reason. The large downward revision to Washington’s employment actually took place following 2010 Q1, thus the state incorporated the downward revision in its own data much sooner than the official BLS data showed. The above post is strictly related to the BLS data, which serves as the primarily data provider when conducting cross-state comparisons and the state level benchmarks for all states only became available this morning (March 10th, 2011).