Current Labor Market Situation in South Central Oregon
October 02, 2025Since the beginning of this year, Oregon’s job market has cooled. Employers are not only slowing down hiring, but they’re also actively shedding jobs. Total nonfarm employment is declining, and unemployment rates are on the rise. Lake County’s saw this shift well before the statewide trend. Unlike other regions in the East Cascades, it never fully recovered to pre-pandemic employment levels, and since early 2021, total nonfarm employment in Lake County has been on a steady, long-term decline.
August’s year-over-year losses in Lake County were led by the public sector, which dropped 50 jobs. Local government accounted for the largest share of that decline, losing 40 jobs. Professional and business services followed, down 20 jobs compared with the previous August. Looking further back, public sector nonfarm employment peaked in 2023 at 1,230 jobs, falling to 1,050 this past June — a net loss of 180 jobs. The bulk of that decline also occurred in local government, which dropped from a peak of 810 jobs in June 2023 to 630 in June 2025. As of August, there are 620 jobs within the public sector. Professional and business services also saw a reduction of 40 jobs over the same period.
In contrast, Klamath County’s total nonfarm employment followed a more typical post-pandemic trajectory and rebound, only beginning to show signs of decline at the start of this year, more in line with the statewide trend. That said, as of August, total nonfarm employment in Klamath remains near pre-pandemic highs, even as it continues to decline.
As of August, Lake County’s seasonally adjusted unemployment rate is 6.2%. The last time it was this high, excluding the pandemic, was back in March 2019. Historically, though, that number isn’t as high as it might sound as most past rates have been higher. If we look at just the labor force, meaning residents who are either employed or have looked for work in the past four weeks, it’s been shrinking since early 2021.
While the number of unemployed residents has increased slightly, it’s still relatively low. The more significant change has been in the number of employed individuals, which began to fall in early 2021 and has driven the overall decline in labor force participation. What this suggests is that there is a growing number of people who are no longer participating in the labor market. Some of that could be due to retirement. According to the most recent ACS 5-year estimates (2019–2023), about 39% of Lake County’s population is either already of retirement age or will be within the next 10 years. That said, according to the most recent quarterly workforce indicators from the Census, overall employment hasn’t changed much, going from 703 in 2019 to 693 in 2024 for that age group (55+), and I would not expect the rate of change to differ significantly this year. So, I don’t think retirements are the primary reason and may in fact represent a much smaller portion.
Returning briefly to Klamath County, the unemployment rate is trending higher at 7.0%, a level not seen since 2016 (excluding the pandemic recession). However, the labor force continues to grow. While the number of unemployed residents has been increasing steadily since mid-2023, the number of employed individuals has only decreased slightly. In short, the number of individuals participating in the labor market, the available labor pool, is still growing.