Washington’s neighbor to the south is having its own economic boom, with its epicenter in Portland.
This week, let’s look at the state in the Pacific Northwest with one of the nation’s best economies, where its biggest city is seeing the country’s fastest housing-price appreciation — and no, this is not about Washington.
Welcome to Oregon, 2016.
With its dependence on durable-goods manufacturing and housing, Oregon suffered in the Great Recession. In May 2009, the unemployment rate nearly touched 12 percent, a high not seen since the nasty downturn of the early 1980s.
Fast forward to this year. In May its unemployment rate was 4.5 percent, the lowest since modern record keeping began in the 1970s. June’s rate ticked up 0.3 points, a modest rise signaling discouraged workers re-entering the rising labor force.
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By contrast, Washington’s June unemployment rate stood at a seasonally adjusted 5.8 percent. Nationally, unemployment was 4.9 percent in June.
Other yardsticks are impressive, too.
The state’s labor force is at a record high and jobs are keeping pace with population growth.
Real gross domestic product rebounded early past its pre-recession peaks and has reached new records, too. It grew by 3.9 percent in the first quarter, tied with Washington and Arkansas for the fastest growth in the nation.
According to the Census Bureau, real median household income shot up to $58,875 in 2014, the latest year for which data are available. That’s just shy of Washington’s number. It’s a convergence not seen since the end of the 1990s boom; historically Oregon trailed Washington.
Nationally, median household income was $53,657. It’s also worth noting that while income for Oregonians hit a record in 2014, Washington was down nearly $9,800 from its peak in 1998.
The epicenter of the Oregon boom is Portland, which has seen the hottest housing market in the nation for months.
Last year, 11 percent of the metropolitan workforce was in advanced industries, the 15th strongest out of 100 metros nationally. This is no longer simply “the city where young people go to retire,” if it ever was.
I don’t want to compare apples and cattle. Washington and Oregon share many characteristics but are not economic twins.
Oregon is less populous, 4 million in 2015, vs. 7.1 million for Washington. Although Portland is nearly as large as the city of Seattle (632,309 vs. 684,451 in 2015), metro Seattle is much larger.
The Seattle area also boasts two of the most valuable companies in the country, Amazon and Microsoft, as well as such major headquarters as Starbucks, Nordstrom, Weyerhaeuser and Expedia. It is home to one of the nation’s leading public universities, a major biomedical cluster and the Bill & Melinda Gates Foundation. And don’t forget Boeing and the aerospace sector.
Portland lost container shipping service while Seattle and Tacoma remain major seaports.
Beyond Nike and Columbia Sportswear, PDX’s headquarters are less well known. Its big deal is semiconductor engineering and manufacturing, especially with Intel and its approximately 19,500 workers.
But this undersells a shift in Silicon Forest to a constellation of younger homegrown tech companies, according to a 2014 report in The Oregonian.
Like Seattle, Portland has also been a beneficiary of Silicon Valley companies opening outposts there.
It’s more affordable than the Bay Area, but growth and rapidly rising house prices are causing local angst (sound familiar?). The housing-cost problem is made worse by the little new construction seen after the recession.
So, what’s driving Oregon’s economy?
Population growth is a big factor, especially of college-educated young people. Job increases are broad-based, but especially in health care, business and professional services, and leisure and hospitality.
Still, the state has a history of volatility, especially in construction and manufacturing jobs, including those connected to chipmaking. In May, Intel warned employees they could see more layoffs if enough don’t take buyouts.
Which state has the better wine? That’s beyond my tippling expertise: I enjoy both.
Like all states, Oregon shows sharp differences among its regions, especially between metro and rural areas.
For example, nonmetro areas in southern Oregon “still have a long way to go to regain all of their lost jobs,” according to Josh Lehner, an economist in the Oregon Office of Economic Analysis, who writes an illuminating blog on the state economy.
Most of rural Oregon is growing again but still suffers from the decline of the timber industry that started in the 1980s. The population is older and less likely to be of prime working age.
On the other hand, nearly all of the state’s counties have seen population growth. The resort-retirement area of Bend, savaged by the housing crash, is booming again.
Without the cushion of the Puget Sound aerospace cluster, Oregon manufacturing remains weak. Among its head winds are loss of demand for material in the Oil Patch because of falling petroleum prices and a strong dollar.
Job polarization — the loss of middle-wage jobs — is another common problem found in Oregon. For example, factory employment remains well below pre-recession levels. The workforce in accommodations and food services, which typically pays less, has been at record highs.
Lehner told me the state’s fast growth should ease off as it reaches close to full employment.
“The problem is the economy does not typically then transition down to something sustainable,” he said. “It slams down into recession and you start the cycle over. But we are approaching full employment and there aren’t too many worrisome things on the horizon at the moment.”