Posted by: Josh Lehner | March 24, 2016

Salem has GREAT Demographics

Legend has it that the answer to an old exam question asking why Salem grew slowly was that it was too close to Portland. There’s a kernel of truth to that answer. Being a mid-sized city that is close to a big one has its advantages and disadvantages. Similar dynamics play out across the country. Think Olympia and Seattle, or possibly Colorado Springs and Denver, and the like. However, I am now very bullish on Salem for one big reason: demographics.

I have been digging into regional demographics and trying to gauge potential economic and workforce growth in the coming 10-20 years. This will be folded into a few different projects in the near future, including a number of upcoming housing and/or regional presentations on the books. All of which brings us to the latest Graph of the Week.

SalemDemographics

A few notes:

  • Portland, and other popular metros, have ideal demographics today. The bulk of the population is in their twenties and thirties. Once a region attracts folks in their root-setting years, they rarely leave as migration rates fall with age. The region, with its strong working-age population, is poised for growth today and in the future, which is great.
  • Absent being a root-setting magnet, the best situation for future growth is to have a lot of kids. Many, if not most, will stay local even if they go off to college. Today’s children represent tomorrow’s prime working-age labor force. Salem has this in spades. In fact, the largest age cohorts in Salem today are all younger than 20 years old.
  • Salem is projected to significantly outperform the rest of the state when it comes to future labor force growth, based on the demographics and our office’s population forecast. In fact, Polk County ranks 1st and Marion County ranks 7th best among the state’s 36 counties.
  • Compare these demographic trends with those seen in Rural Oregon (see graph on slide 10) where there is a very large Baby Boomer population that is aging into their retirement years right now. The size of the potential labor force is, or will be, shrinking due to demographics.
  • The big caveat here regarding Salem and any other place with a lot of children, is whether or not they stay into adulthood or move somewhere else. I believe the answer is largely a yes for Salem, even more so than in the recent past. While Salem’s housing affordability isn’t great, it’s still much better than places like Portland, which in a relative sense makes Salem more attractive provided the jobs are available. Job growth is Salem is booming today, growing at its fastest rates in 25 years.
  • Finally, when looking across the state and regions, the places with higher birth rates today — and better future growth potential down the road — do have a more diverse population. Salem is no exception. Statewide, 13% of Oregonians identify as Hispanic or Latino. In Salem the figure is 23%. Other regions like the Gorge or Northeastern Oregon also have better demographic outlooks, at least in part due to their diversity.

Responses

  1. […] Salem has GREAT demographics | Josh […]

  2. […] economy is booming and has great forward-looking demographics. Job growth in recent years is across all industries and is the strongest the region has seen in 25 […]

  3. […] When trying to look at a regional economy’s longer-run potential, one key driver is population growth, and the underlying demographics. Specifically, if an area is able to see a growing working-age population, the region is obviously better poised for growth. Our office calls the root-setting years, 25-34 years of age, the gold standard for economic development. The reason is migration rates plunge considerably as folks age into their late 30s and 40s and beyond. So once a region is able to attract 20- and 30-somethings, the region generally has them for their peak working years. Historically, this has been one of Oregon’s comparative advantages — the ability to attract and retain young, working-age households. However, working-age population gains can also be due to higher local birth rates and not just due to migration patterns (e.g. Salem’s bright future.) […]

  4. […] The light blue bars show the expected change in the number of households in the area over the next 8 years. The largest increases are seen among the 65-74, and 75+ year old households. The vast majority of these households are not new Salem area residents. Rather they are households that already live here, and are simply aging into these age groups. Conversely, many of the 25-44 year old households would be new residents moving into the region, even as local demographics are great. […]

  5. […] All told, these patterns may be at least in part driven by affordability problems in the Portland region. But they are also at least in part driven by the benefits and amenities of the Salem area. The Salem economy is booming, experiencing the best economic expansion the region has seen in at least 25 years. The job growth is strong and broad-based across industries. Household incomes are outpacing other Willamette Valley metros. Salem’s downtown is noticeably more vibrant than at any point in the past decade based on foot traffic and building remodeling activity. The region also boasts great demographics. […]


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