Report: Portland should have 66K more private sector jobs

Portland has a conspicuous lack of major downtown private employers

This Tuesday, Jan. 27, 2015 photo shows the "Portland, Oregon" sign in downtown Portland, Ore. (AP Photo/Don Ryan)
This Tuesday, Jan. 27, 2015 photo shows the "Portland, Oregon" sign in downtown Portland, Ore. (AP Photo/Don Ryan)

PORTLAND, Ore. (PORTLAND TRIBUNE) — For about the last decade of his 21 years studying Portland’s economy, Robert Whelan has been asking himself and others this question:

“Can anyone name the largest new employer to locate here and grow here?” he wonders. “Other than restaurants and some hotels, what’s grown?”

So recently the ECONorthwest economist looked into employment data and found that, according to his calculations, Portland should have 66,000 more private sector jobs than it does.

Whelan says Portland has a conspicuous lack of major downtown private employers, and he finds it puzzling in contrast to Seattle, New York City or other cities where urban cores tend to concentrate and nurture private sector employment.

In the Portland area, the two biggest private sector employers, Intel and Nike, are far outside of the city, and most of the largest employers inside the city get funded largely by taxpayer money — governments and health care institutions.

“You can’t grow just on (the) public sector — unless you’re Salem or Washington D.C., you could —but that’s not what Portland could do,” Whelan says.

“Portland’s a doughnut hole,” he says, describing Washington, Clackamas and Clark counties’ impressive private sector growth and Multnomah County’s relative stagnation. “You cannot say the same thing about New York City. The better (private) job growth (in the Portland area) is outside the city, by a huge margin.”

Whelan analyzed employment data from 429 counties in the West from 1997 to 2015. He found Multnomah to be an outlier — just 7 percent private sector job growth while the West’s average was 24 percent. Ada County, home of Boise, Idaho, had 44 percent private sector job growth and Seattle’s King County had 23 percent growth.

Whelan offered a few guesses why this might be — expensive development costs, a slow ripple effect from the timber industry collapse and a general anti-corporate attitude. But overall he said the issue deserves more study.

“It’s like having a patient with a high fever and you’re not exactly sure why,” he said.

Skeptic says conclusions aren’t valid

Joe Cortright, a Portland urban economist, says Whelan is cherry-picking the data to paint a gloomier picture than the reality.

Cortright says he finds ECONorthwest has an “excessively pessimistic message that they continue to repeat. Somehow, ‘we’re a lousy place for business,’ when I don’t think we are and I don’t think there’s data to support that.”

Cortright questions Whelan’s use of counties to make assertions about growth in downtown cores. He says Ada County in Idaho as well as King County in Washington include suburban areas’ corporate headquarters.

Counties are “very poor units for making that sort of comparison,” he says.

If Multnomah County extended west to include Hillsboro instead of east to include Gresham, the story might be very different, he argues.

“There’s a flourishing entrepreneurial culture here,” Cortright says.

As part of his work with City Observatory, an urban economics think tank, Cortright says he’s found consistently that cities’ growth is determined by the education level of their populace. Now that the “Portlandia effect” is attracting lots of well-educated professionals here, he expects Portland to do well.

But Cortright adds that Portland does have work to do.

“It’s very much in our interest to make sure our kids are extremely well-educated, because smart people from all over the country, in fact all over the world, want to live here and compete,” he says.

Private sector is the ‘engine’

The Portland Business Alliance has long been complaining that the region has too many barriers to job growth and private sector employment.

But Marion Haynes, the alliance’s vice president of government relations and economic development, says she thinks the metro-area economy should be looked at as a whole, rather than as individual counties.

“We’ve always felt like we are one economic region,” Haynes says, adding that if jobs grow in Washington or Clackamas counties, “that’s good for everyone.”

She points out there are large, private employers in Portland, such as insurance company The Standard and utility company PGE.

But Haynes agrees with Whelan that Portland could use more large businesses.

“Portland does tend to be a small-business town, and that’s great,” she says, but adds: “Having a healthy ecosystem that has both (large and small employers) is really kind of the ideal environment.”

Now that the economy is climbing out of the recession, Haynes says the PBA is particularly focused on growing middle-income jobs. A different sort of “doughnut hole” has developed in the Portland economy in which low- and high-income jobs are growing faster than middle-wage jobs.

“Those are those family-wage jobs that allow families to prosper,” she says.

Portland’s recent employment growth is at 3.4 percent, the same as San Francisco, according to the Metro regional government. The tourism industry has grown the most rapidly.

From 2010 to 2014, Multnomah saw the largest share of job growth in the tri-county area at 87,580 jobs.

But Whelan found that since 1997 only a net of 26,420 jobs had been created in the private sector in the county.

Nationally, governments employ only 16.7 percent of the workforce, according to The Business Journals.

“It’s really critical,” Haynes says, “that we’re creating those private sector jobs that provide that engine for funding all those services we all care about.”

The Portland Tribune is a KOIN media partner.