Portland economy a drag on county

Official: Rose City's woes worsen unemployment here

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A report released Tuesday suggests that Portland’s economy has not kept pace with comparable cities, and that our neighbor to the south may be dragging Clark County down.

Issued by a consortium of Oregon business groups, the report found Portland faces a crisis situation, lagging behind other metro areas — specifically Seattle, Denver and Minneapolis — in wages, per capita income, investment income and the ability to create private-sector jobs. Portland’s economic shortcomings have influenced Clark County since the 1980s, and more recently, Portland’s economy has worsened Clark County’s high unemployment rate, said Scott Bailey, regional labor economist for the state Employment Security Department.

But some local business leaders say Clark County may be able to control its own economic destiny, despite its dependence on Oregon-based jobs.

Clark County reported the highest jobless rate in Washington, at 13 percent, in October, compared with a statewide rate of 9.1 percent and 9.6 percent nationwide. In Oregon, the seasonally adjusted unemployment rate stood at 10.5 percent in October.

Tuesday’s report, compiled by ECONorthwest for the Portland Business Alliance and four other Oregon-based business organizations, also found:

• Multnomah County has lost more than 26,460 jobs since 1997 and ranked 198th out of 199 U.S. counties and metro areas in job creation.

• Per capita income in the Portland area lagged that of Seattle, Denver and Minneapolis by between 16 percent and 21 percent.

• Portland-area residents generated 9 percent less investment income than Denver-area residents; 15 percent less than those who live in the Minneapolis area; and 25 percent less than Seattle-area residents.

The same issues affect Clark County’s economy and the estimated 60,000 residents who cross the Columbia River to work in Oregon, said Tim Duy, an economics professor at the University of Oregon.

“My sense is that if you’re going to view Clark County as essentially a bedroom community, they’re going to be very dependent on the job market in Portland,” he said.

Duy also said Portland workers who reside in Clark County are more at risk for job cuts.

“Some people were forced into less expensive housing in the outer regions, like Clark County, and their jobs were more vulnerable too,” Duy said.

“(Unemployment) claims filed by Clark County residents because they lost a job in another state have grown substantially faster than regular claims since the beginning of the recession,” Bailey said.

According to the report, Portland also lags behind other cities in numbers of high-wage jobs from “traded-sector” firms, those that sell goods or services outside of a local geographic area.

“They’re the firms that provide the depth, variety and high-wage jobs that are characteristic of a dynamic employment market,” Duy said.

But instead of attracting growing businesses such as the Seattle-area’s Microsoft, Boeing, Starbucks and Amazon, Portland lost traded-sector employers, starting in the early 1980s when its timber-based economy crashed with a slump in housing tied to high interest rates.

Portland’s timber economy never recovered, according to Bailey.

“The mills got a lot more efficient so that cut back the need for workers as housing came back,” he said.

On the other hand, Seattle-area companies, such as Boeing, grew. And that helped the Puget Sound area attract knowledge-based firms. The Denver area has also grown by attracting aerospace and defense companies; Minneapolis is home to a growing segment of companies that make and sell medical devices, said Bart Phillips, president of the Columbia River Economic Development Council, comprised of 130 business investors focused on stimulating job growth and investment in Clark County.

But Phillips thinks Clark County can improve its situation, despite its close ties to Portland.

“We’re not totally beholden to what Portland does or doesn’t do to address the issues raised in that report,” Phillips said.

Phillips pointed out that Portland and Clark County are separated by diverse governing bodies and each have separate economic development agencies.

“The report outlines some issues that Portland has, but we don’t have to wait for them to address these issues. We can take action in the companies we recruit. We’re autonomous and what we do over here can benefit Portland just as what they do can be a benefit to us,” Phillips said.

He also said the two states use different tax sources to pay for their schools, a reason Portland schools tend to suffer.

“Portland schools are dependent on income taxes,” while Clark County’s public school funding is a portion of property taxes, Phillips said.

The report found that Portland schools would receive $86.8 million in funding each year if the region’s per capita income was the same as Seattle.

That funding gap could be either the result of Portland’s economy or the cause of its economic troubles, said Joe Cortright, president of Impresa Inc., an economic consulting firm in Portland.

“They’re absolutely right. The fact that we have lower income means Portland has less revenue to support schools and other public services,” he said.

Cortright said Portland wages would likely continue to lag the other three cities singled out in the report — Seattle, Denver and Minneapolis — all of which have a higher number of college-educated adults.

“My point is, the reason those areas have higher incomes is because their populations are better educated,” he said.

In Clark County, 25.5 percent of people age 25 or older have at least a four-year college degree, compared with 36.3 percent of the population in Multnomah County.