How much is the Oregon Legislature to blame for Deschutes County’s 12 percent unemployment rate?

Former House Majority Leader Tim Knopp, R-Bend, surprised hobby political watchers on filing day when he announced he’d take on fellow Republican and state Sen. Chris Telfer, R-Bend, for the Central Oregon district.

Knopp left the Oregon House in 2005, after serving three terms. He said that when he left the Legislature, the state, and Central Oregon, were in much better shape. For example, unemployment in the area was 6 percent.

"Today unemployment has been running near 12 percent or more for the last four years and the Legislature has stalled on critical job legislation, additional PERS reforms, school choice expansion, and efforts to protect small businesses, seniors and veterans," Knopp writes on his campaign website.

On one level, this is a statement of fact. When Knopp left the House, unemployment was much lower. On another level, he’s criticizing his opponent, Telfer, for failing to do anything about unemployment. Is that fair? How much of the high unemployment can be blamed on the Legislature? On the flip side, can he take credit for lower unemployment?  

In a phone interview, Knopp confirmed he is calling out the Legislature and, specifically, Telfer, for failing to focus on jobs. Knopp criticized Telfer for running for state treasurer after winning her state Senate seat in 2008; there wasn’t much jobs action in 2011, he said, and just a little more in 2012.

"There are 27 counties that are doing better than Deschutes County right now," Knopp said. "We need to do better and the focus needs to be on jobs, and that’s a good portion of why I’m running."
 
Senate District 27 is wholly within Deschutes County. Central Oregon includes Deschutes, Jefferson and Crook counties.

You can see by the unemployment numbers that Bend/Deschutes suffered during the recession.

Knopp is correct that when he left office in January 2005, unemployment for both Bend and Deschutes County were at 6 percent. Jobless figures started creeping up in 2008. The recession officially started in December 2007 and ended in June 2009. Oregon tends to lag the nation in downturn and recovery.

Knopp is largely correct in saying that in Deschutes County, unemployment hovered at 12 percent or more for the last four years. (We will give him the 11.6 percent in January 2012, although we should note that it’s dropped to 11.3 percent in February 2012.)

But again, just how much sway do state legislators have in the face of a global recession?

We turned to the Oregon Office of Economic Analysis, where they have a good description of the region’s economic history. Basically, Central Oregon has enjoyed large growth. Employment grew 4.8 percent per year, on average, from 1983 through 2007. By contrast, Oregon grew 2.4 percent per year. The region benefited from more people moving in and a boom in housing. Then the bubble burst, spectacularly.

Tom Potiowsky, who did two tours as Oregon state economist, says Deschutes County was caught up in the national housing frenzy. Home prices soared. Anyone could get a loan, with hardly any credit. He doesn’t know how legislators could have foreseen that and stopped the building boom -- or, in the aftermath, shed the oversupply of homes.

"Deschutes County was probably one of the hardest hit counties in the housing problem," he said.    

Richard Read, a reporter at The Oregonian, wrote in May 2009 of Bend’s rise and fall:

"Fair or not, Bend -- the nation's sixth-fastest-growing metro area early this decade -- soared the highest and crashed the hardest of any community in Oregon. The city's volcanic housing market of just a few years ago has collapsed into a sea of foreclosures, bankruptcies and plant closures."
   
Here’s the evidence. Residential construction permits went from 922 in 2005 to 220 in 2008, and to 97 in 2010, according to Deschutes County.

Carolyn Eagan, regional economist with the employment department, says that the jobless rate peaked in 2009, "but we still have a lot of people who were unemployed in fields that were related to housing that continue to look for work."

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We’re not sure what the Legislature could have done. Certainly some lawmakers, including Knopp, will argue that they could have done something to buck up the area.

Knopp was in office during the 2001 recession. Unemployment crept up to 8.2 percent in Bend, but Oregon’s economic analysts say that recession didn’t affect the area that much. "Both the 1990 and 2001 recessions had little net impact on local employment, partially due to continued strong population growth and also the industrial structure … However the collapse of the housing bubble brought extreme levels of job loss to the region."

In 2010, PolitiFact Oregon analyzed a similar claim by then-GOP gubernatorial candidate Chris Dudley, who said that unemployment rose 65 percent under the watch of former Gov. John Kitzhaber. We found that while Kitzhaber didn’t help the situation -- businesses could have used help navigating land-use regulations -- there wasn’t much a governor could do about the 2001 recession. (We gave it a Half True.)

We think the same way here. Knopp appears to be as responsible for a 6 percent unemployment figure as Telfer is for a 12 percent unemployment rate, and that’s not very much. His figures are correct, making the statement partially accurate, but there’s important information missing: The context of a global recession.

We rate the statement Half True.