As we approach a new year, we can move forward knowing that Portland’s economy is showing progress. The 2013 Check-Up on the Portland-Region’s Economic Health
, produced by the Alliance-led Value of Jobs coalition, revealed the good news that the Portland-metro region has recovered almost all of the jobs we lost in the recession. Digging deeper, however, it’s clear that we still aren’t where we want to be, and we must continue focusing on the job-creating strategies we have prioritized over the last five years.
The new economic report, released just before Thanksgiving, focused on three measurements we have found to be important indicators of the regional economy: productivity, jobs and wages. Once again, we compared Portland-metro’s performances against the national average for metropolitan areas. We also measured Portland’s performance against three “peer” Cincinnati, St. Louis and Sacramento, which have characteristics similar to Portland-metro, as well as to a group we call “inspirational peers,” Seattle, Denver and Minneapolis, which are larger and economically stronger than Portland.
On the first measurement, productivity, the news was quite good. Looking at the nation’s largest metro areas, Portland-metro ranked second in growth of Gross Metropolitan Product (GMP). A lot of this growth in GMP can be linked directly to our region’s strong electronics industry, especially Intel. Our GMP is truly an economic bright spot for Portland, and has captured national attention from entities like the Brookings Institution, which see that something very positive is occurring in the Portland-metro economy. A strong GMP indicates that we are poised to compete effectively in a global marketplace, so we need to work hard to hold on to that advantage.
At the same time, however, growth in Portland-metro’s jobs and incomes has not kept pace with the improvements in productivity. As I mentioned earlier, there was good news on the jobs front: We have gained back nearly 90 percent of the jobs lost in the recession. We’re outperforming our peer regions of Cincinnati, St. Louis and Sacramento, but we lag behind our aspirational peers, Seattle, Denver and Minneapolis. Each of the latter three regions have gained back all of the jobs they lost in the recession – and then some.
Another important distinction is the kind
of jobs we are growing back. Much of Portland-metro’s job recovery has been in local-sector jobs – employment tied to companies like banks, utilities, restaurants, hospitals and others that serve the local economy. Portland-metro’s local-sector jobs have recovered to the point where they actually exceed their pre-recession levels. On the other hand, looking at the important traded-sector industries -- companies that sell outside our region bringing new dollars to our economy, we still fall short of the pre-recession job numbers. Why is this important? Because they bring new dollars to the local economy, trade-based companies have a multiplier effect as they purchase goods and services from local suppliers. Our Value of Jobs reports found that for every new traded-sector job in our region, there are 2.5 local sector jobs created. Traded-sector jobs are the most important building block of a strong regional economy and, therefore, they are the focus of our economic development strategies.
Traded-sector jobs, on average, also pay better than their local-sector counterparts, which brings us to the final factors we look at in our economic report: wages and incomes. On that front, this year’s report again had good news: Between 2012 and 2013, the region saw the first increase in median household income – almost $900 – since 2008. That was great news, but we still lag significantly behind those aspirational peers, Seattle, Denver and Minneapolis, and have considerable room to grow.
Wages and incomes have been a primary focus on the Value of Jobs coalition for one key reason: Oregon is an income-tax-dependent state. If we want to grow more revenue to pay for important public services like schools, parks, public safety and social services, we must grow incomes that, in turn, can be taxed by the state. The most effective way to do that is the focus on job creation, with an emphasis on those high-value traded-sector jobs that lead to job creation in the local economy.
I started this piece by saying we are ending 2013 on a good note. Our annual economic report showed positive trends. In addition to that, we used the recession years well to sharpen our focus on what it takes to build a strong economy, and we started addressing areas where we know we needed improvement. We are proud of the work of the Value of Jobs coalition has done to shine a light on the areas where we excel and those that need attention. As I look ahead to 2014, our resolution must be to stay focused. Things are improving, but that doesn’t mean we can start taking it easy. If anything, this is a time to work harder to ensure our regional economy stays strong and competitive in a global market. I hope you will join me in that effort.
Happy New Year.
To see the 2013 Economic Check-Up and the other Value of Jobs reports, please go to www.valueofjobs.com.