Oregon’s unemployment just spiked past 8 percent. That means one out of every 12 members of the labor force is looking for a job. Some economists predict that Oregon’s unemployment rate could hit 9.5 percent in the next year.
Over the 32 years between 1976 and 2007, Oregon has been in the top 10 for unemployment in 18 of those years. The state has had the highest unemployment for 3 of those years.
Paul Krugman (PDF) explains how a welfare state and business regulations contribute to persistent high unemployment:
How might a welfare state create unemployment? Taxes (such as required employer contributions to social insurance funds) and regulations may raise the cost to firms of offering jobs, and thus reduce the wages they are willing to pay; simultaneously, benefits such as unemployment insurance may reduce the incentive for workers to accept jobs, and thus raise the wages they demand.
Other studies have found that a strong “sense of place” measured by things such a home ownership rates can contribute to higher unemployment. Individuals with a strong “sense of place” are less likely to move out of state to find work.
Oregon’s home ownership rate is slightly lower than the national average. Thus, it is not entirely clear that Oregonians have a stronger sense of place than anywhere else.
Studies have found that high levels of migration into an area contribute to higher unemployment. Oregon’s ratio of employment growth to population growth is slightly lower than U.S. average. This suggests that Oregon’s employment opportunities may not be keeping pace with population growth.
Oregon’s economic development policies tend to be focused on “picking winners” by offering tax credits and subsidies to whatever is the favored industry of the day. A broader pro-business and pro-employment policy would better diversify Oregon’s industries and improve employment prospects.