Once-booming Bend feels recession’s pinch

BEND, Ore. – This city in Oregon’s scenic high desert once had one of the nation’s hottest economies. Resort developers, bankers, construction workers and luxury car dealers rushed for a piece of the action.

Now some locals call Bend “poverty with a view.”

The county it anchors, Deschutes, shows some of the most serious recession pain in the land, as measured by the Associated Press Economic Stress Index.

The county ranked fourth this spring among American counties of more than 25,000 people in a measurement of the yearly rise in the AP index. The index measures unemployment, foreclosures and bankruptcies at the county level across the nation – the higher the index’s number for a county, the worse the recession’s impact.

Other Oregon counties were not far behind Deschutes. Some of the state’s most stressed counties have been hit by a double whammy: The general real estate boom was as lusty here as elsewhere, and its bust dragged down a particular Oregon sector, the factories that have long supplied the construction industry with 2-by-4s, plywood and windows and sashes.

In Bend, where the boom was spectacular, former waitress, bartender and clerical worker Angela Saldivar measures the recession’s impact by a personal statistic.

Sitting at a computer in the state employment office recently, she punched in 116 skills she thought would fit the needs of potential employers. The computer spat back exactly one job possibility.

“You don’t know how bad it is until you see something like that,” she said.

In Deschutes County, many high-end homes were built on speculation during better times but not sold. As of May, Deschutes led the state in bankruptcies and foreclosures, according to the AP index figures. Joblessness, not seasonally adjusted, was at 15.2 percent – up almost 9 percentage points in little more than a year.

Overall, the county had a stress index score of 19.35 – not even the worst among nearby counties but well above the national average of 10.

To the northeast, Crook County, with unemployment at 18.4 percent, had a stress index score of 20.03 in May, the state’s worst. The index score was 18.09 in Harney County to the east and 18.69 in lumber-producing Douglas County to the southwest.

Some of the regional problem boils down to wood: Who buys it? Who produces it? These days, hardly anyone.

Bend’s head-spinning growth spurt over the past several years echoes that of larger markets throughout the Southwest and in metropolitan Portland.

As builders and workers flourished because of housing demand, things picked up in rural Oregon counties with a long reliance on logging. Many made good wages in factories that turned out wood products for the boom.

When people stopped buying and building homes, it threw local construction workers out of work, and it squeezed wood products industries.

In Douglas County, local officials estimate that one in four jobs is directly tied to wood: cutting it, transporting it, making it into building material. State statistics show that the county lost a quarter of its wood products jobs since the start of 2008, most of them in the last six months.

Timber country is used to booms and busts tied to interest rates and construction booms. It’s used to feeling picked on, as when federal restrictions crimped timber harvests on federal land during the recession of the early 1990s. This time around, the economic pain feels more general, if harsher, says one Douglas County leader.

“It’s different in that we’re all in it together,” says Norm Gershon, president of the local work force development agency. “There’s no big bogeyman.”

Across the state, Oregon has lost jobs in a variety of sectors, heavily in manufacturing: from chip-making and printers to heavy trucks and recreational vehicles. State Employment Department analysts echo Gershon: The recession is broad and deep. The state’s jobless rate climbed steeply, now tops 12 percent and is second only to Michigan’s 13.9 percent.

In Bend, local officials are dealing with what the bust left: once-pricey lots left vacant, overbuilt and unsold subdivisions, jobless construction workers.

“That isn’t where we wanted to be,” said Roger Lee, director of the nonprofit Economic Development for Central Oregon.

He said 43 percent of area job losses in the past year came from the construction and manufacturing sectors. Land values have fallen by more than half, housing prices and office rents by maybe 30 percent.

But, bad as things seem, people are not fleeing Bend. The golf courses, forest hiking trails, trout streams, skiing, white-water rafting, off-road riding areas and abundant sunshine still are attractive.

Oregon’s population grew by about 1.2 percent in the past year. The Bend area grew three times faster.

In Bend, many people have come on a shoestring, chasing the lifestyle and hoping for work, said Carolyn Eagan, the regional economist for the Oregon Employment Department.

“We think this is still happening,” she said. “The region is importing unemployed labor. It’s still a desirable place to live.”

She said many younger couples planning early retirement now need to work as their retirement funds wither. Families who prospered with one wage-earner during the boom now find both adults have to work.

These people weren’t fired. They’re just new on the market. As a result, Oregon’s labor force has grown 3 percent in the last year.

Eagan said more people are working in Deschutes County now than were two years ago but that there are not enough new jobs to absorb the influx.

The area is called “poverty with a view” because living costs have traditionally been high and wages low, said construction worker Aaron Schlachter, 31, who has found steady jobs, often out of town, working on bridges, power plants and wind farms. He says such jobs are there for skilled workers willing to chase them.

Bend is generally free of boarded-up buildings and other outward signs of stress. If a business closes, another moves in, and the brickish downtown is clean, trendy and busy-looking.

But on some residential streets where buyers once rushed to submit bids above the asking price for new homes, nearly as many are for sale as not. Some are foreclosures.

Dream homes shattered by an auctioneer’s hammer? Maybe, maybe not. Many are held by investors.

Michael Hollern, chairman of Brooks Resources Corp., the region’s largest developer, said the Bend boom coincided with the one in the Sun Belt. Brooks once owned the massive Brooks Scanlon Lumber Co., which was founded in 1915 and basically built Bend.

The building boom began gradually in the 1960s and took off seriously a few years ago.

“We thought we were different, special, with real jobs and real people. It turns out we weren’t that different. And we realized prices were out of touch with reality. Now we need to work off our excesses.”

Much of the work force is still around, he said. The quality of life is off the charts, and few people want to leave.

“Where are they going to go? Hollern said. “Conditions are the same everywhere. There seems to be a sense that it is better to be unemployed in Bend than in other places.”