As the United States climbs out of the great recession, challenges and opportunities exist for Americans as the country faces a new normal in the economy, leading economists said Thursday at the Oregon Economic Forum.

Economic indicators, unemployment and job polarization were among the themes at the 10th annual event, which was held at the Portland Art Museum.

Tim Duy, professor of practice in the University of Oregon Economics Department and director of the Oregon Economic Forum, said economic indicators for the state of Oregon have him "cautiously optimistic for 2014."

"Factories in Oregon are humming along," said Duy, who started the Oregon Economic Forum. "Manufacturing activity, measured by hours worked, has been near cycle highs. Companies are stretching employees to meet demands, and we should start to see more hiring for the next two to three years."

An example of positive movement in manufacturing came from Kevin Rask, senior vice president of KeyBank in Portland, which was the event's presenting sponsor. He noted that financial statements are improving, confidence is growing and many companies are moving forward with plans they previously had put on hold.

"As a business banking leader here in Oregon and southwest Washington, I have the privilege of hearing first hand from owners the opportunities and challenges they face – and, yes, we are seeing signs that the recovery is underway, particularly here in Portland," Rask said.

In particular, Rask described the current four-year expansion strategy of KeyBank client DWFritz Automation, a company in Wilsonville that produces automated systems for advanced manufacturing. With the help of a Small Business Administration loan, the renovation and expansion will give the company the ability to execute on large-scale manufacturing, assembly and testing.

"Through this renovation, the company's overall manufacturing process will be more efficient," Rask said. "It will help them expand into new markets and give them the capacity to handle larger projects." In the last three years, he noted, DWFritz has attracted skilled labor, tripling its workforce from about 60 employees to more than 180.

Even as the state's economy improves, people still wonder why the current conditions don't feel like a normal recovery.

Josh Lehner, an economist with the Oregon Office of Economic Analysis, said that is because of three primary reasons: the majority of the growth concentrated in the Portland metro area, lingering unemployment and lack of middle-wage jobs.

“All the growth has been in the high-end and low-end of wages,” he said. “Job polarization is most pronounced in a recession. Most of the job loss is in the middle-wage jobs.”

Lower middle-wage jobs are administrative support staff, production workers, truck drivers and others who make a medium income of $30,000, Lehner said. Upper mid-wage jobs include construction workers, teachers, firemen, clergy and designers, with a medium income of $45,000.

“The recovery is not gaining those jobs back. Different workers are being added, creating slower growth in expansion,” Lehner said.

Technology and globalization is leading to the reduction of these positions, with routine tasks being automated by computers. Low-wage jobs involve manual tasks, but require adaptation to a situation, such as cutting hair or taking a coffee order. Higher-wage jobs require problem solving, creativity and analytical capacity.

Both Duy and Lehner commented on the benefit of Oregon adding higher-wage jobs in science and technology industries. For each high-wage employee in the state, five lower-wage employees are added in service industries.

“Upward momentum in job growth forces our firms to have to pay higher wages to attract top workers, which tends to increase wages for workers in other sectors,” Duy said.

High unemployment levels remain a challenge, said Jeremy Piger, UO economics professor, who has been studying the "new normal" of Oregon unemployment rates.

While Oregon suffered high levels of unemployment during the recession, especially in areas such as Bend and Medford, its natural rate is comparable to neighboring states and the nation, he said. In looking at rates since the 1970s, he added, it takes 10 to 15 years for the natural rate of unemployment to come down after a recession.

The forum, attended by several hundred people, also featured keynote speaker Brad DeLong, professor of economics at University of California at Berkeley, and Jim Mullinax, former political and economic section chief for the U.S. Consulate General in Shanghai.

The Oregon Economic Forum is an initiative of the UO College of Arts and Sciences and Department of Economics. In addition to KeyBank, the Portland Business Journal, Port of Portland, Colliers International and Portland Business Alliance were event sponsors.

- by Heidi Hiaasen, UO Portland