Tuesday, April 13, 2021
April 13, 2021

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Clark County Economic Forecast for 2021

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I boldly predict that 2021 will not be as bad as 2020. Yes, that’s a low bar, but I believe the local labor market will see only a modest improvement at best.

First, a recap of 2020. COVID put the global economy into a steep dive last March. The recovery that began in May was just as steep, but only partial. Here in Clark County, we lost 19,700 jobs in March and April, more than in the Great Recession of 2007-08. By November, only 7,200 jobs—just more than a third—had come back. That means more than 12,500 local workers were still unemployed eight months later. That same proportion held for the Portland metro area. Some industry highlights regarding percentage of losses or gains: total jobs, -7 percent; health care, -2 percent; retail trade, -3 percent; manufacturing, -4 percent; construction employment, -8 percent; business services (like staffing services, janitorial, landscaping), -11 percent; food services, -17 percent; K-12 education, -21 percent; hotel/motel, -36 percent. A notable employment gain was in finance, which grew 1 percent.

Unemployment remains a big concern, as does underemployment—people still working but at greatly reduced hours—and therefore, income. In mid-December, even after seven months of recovery, here’s the breakdown of county residents who filed unemployment claims: almost 2,500 food service workers, 1,800 managers, 1,300 office workers, 1,200 sales workers and 1,200 personal care workers. Claimants were predominantly women—54 percent, despite only 46 percent of the workforce was female. Although a third of the county workforce hold a bachelor’s degree or higher, only 18 percent of claimants had that much formal education. A preliminary analysis indicates that in Clark County, lower-wage workers were disproportionately unemployed—38 percent of claimants were paid less than $18 per hour in the last quarter of 2019, versus 27 percent of all jobs paying in that range.

The pace of economic recovery depends largely on three factors: the purely health component (vaccine development, COVID mutation); people’s behavior and federal policy. First off, the approval of vaccines is a huge positive. On the flip side,  the discovery of new strains of the virus and its presence in the wild are worrying. Second, economic activity will not return to “normal” until we reach herd immunity, with (according to Dr. Fauci) 90 percent of the population vaccinated. Current polling shows an improvement in public acceptance of the vaccine, but it is still well below that 90 percent level. Additionally, public health experts predict it will take many months to vaccinate that many people. Until then, in order to reduce infection rates, we must continue to mask up and be social distanced—probably through much of 2021. As a nation we haven’t had a good track record at following basic public health guidelines. If unsafe behavior continues into the new year, it will hamstring any economic recovery.

Some perspective: an employment growth rate of 3 percent would be a pretty good year. That would get us back to 165,000 jobs—still more than 7,000 jobs short of last February. We’d have to see an 8 percent growth rate to get us back to pre-COVID employment levels—a rate which has never been attained in Clark County.

In terms of federal policy, the recent signing of the second CARES Act will bring welcome support to individuals and small businesses, but more assistance will be needed for state and local governments, including public schools, which have suffered enormous job losses due to the pandemic.

COVID is not the only economic issue in Clark County. The Board of Commissioners recently identified institutional racism as a public health crisis. Here are some examples of how institutional racism is evident in the county economy (all data pre-COVID).The average wage for African Americans, Native Americans, Latinx, Pacific Islander and multi-racial workers was 20 to 30 percent below the average for all workers—a condition that has persisted going back to 1990 (when the dataset first became available). The median income for African American households was 68 percent of the median for all householders; for Latinx households, it was 75 percent. Only 34 percent of Latinx, 44 percent of African American, and 52 percent of Native American householders were homeowners, versus 66 percent for all households. We have no measures of other forms of wealth (chiefly, financial wealth), but these are undoubtedly skewed even worse. These measures have lasting significance. As a group, the next generation of white and Asian-American children start life and transition into adulthood with more resources and economic opportunity, enabling them on average to afford a college education and buy a home.

Of course, there are also large and growing disparities in income and wealth within racial groups as well. One source of these disparities has been the massive increase in CEO pay, made possible in part by the growing monopolization in key industries, and enhanced further by the opaqueness of our financial system. The recent lawsuits filed by states and the Department of Justice to hold some of the tech giants accountable is a welcome trend, as is the recent law passed by Congress to outlaw shell corporations. Even so, the gap between the “haves” and “have nots” has widened during the pandemic.

Finally, the biggest threat to our economy—climate change—continued to make itself known in 2020, with growing and obvious impacts on our lives. While carbon emissions dropped this past year due to the economic downturn, they have already risen to their previous dangerously high levels in China. Let’s hope COVID will not distract us from taking decisive action going forward.

So, here’s the call for 2021: a slow recovery that could accelerate in the latter half of the year, depending on virus distribution and acceptance; a recovery that, barring major policy changes, will perpetuate inequities and continue to send us towards a climate reckoning.

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