Last Friday, January 6th, 2016, Mark was the guest for the City Club of Portland’s Friday Forum. The event was titled “Recovery for some? Oregon Economic Review & Forecast”. He was interviewed by Marissa Madrigal, Multnomah County’s Chief Operating Officer. I am a little biased here but I thought it went really well and the discussion covered a lot of important topics and research. That plus Mark is funny, you know, for an economist.
The video below, from the City Club of Portland’s YouTube channel, lasts just under 55 minutes. For those looking for a shorter version, note that Mark and Marissa’s conversation starts at 2:25 and the meat of the conversation ends at 38:05.
Many of Mark’s talking points follow directly from our office’s underlying research. Below are a collection of links for those wishing to read more.
Opening Question and Remarks (video time stamp 2:25)
Oregon’s economy is pretty healthy. First came the recovery in Portland (and the Gorge), then the secondary metros came online a couple years later and now in the past few years, rural Oregon is growing again. The typical rural county has regained about half of its recessionary lost jobs. See our Rural Oregon report for more as well.
An economy approaching full employment differs from one digging out from a recession. The tightening labor market has different implications for workers, businesses and regional job growth. Rising wages and job openings are drawing more folks into the labor market, participation is rising. The combination of the higher wages and higher employment rates means that we are now seeing income gains for households in the middle and lower parts of the distribution who rely solely on wages and the safety net. Finally poverty rates are beginning to fall for areas of the state closer to full employment, which does not yet include every region.
Lastly what this means is that job growth is expected to slow moving forward. Oregon only needs 2-3,000 jobs per month to keep pace with population growth. Our office expects the state to transition down to this more sustainable rate of growth in the near future. And yes, there will be enough jobs.
Affordability is a statewide issue, not just a Portland or urban issue. (Our rural affordability work has not yet been published but will be). That said the focus solely on affordability itself can be a bit misplaced. As our work on the Housing Trilemma shows, there are some trade-offs associated with a strong regional economy, a high quality of life and housing affordability.
Overall the worst of the affordability crunch may be behind us, housing is at or near an inflection point. Supply is beginning to catch up a little bit and income gains are now seen among middle- and lower-income households as the economy improves and full(ish) employment raises wages.
As Mark notes the supply side of the housing market has been the issue. There are a number of suspected reasons, including land use laws, construction costs, labor shortages, uncertainty or fear among developers, bankers and/or regulators. Our office presented this discussion to the Legislature a number of months ago but have not yet written a summary.
New construction is always expensive and targeted to the upper-middle or upper portions of the market. Housing does filter over time. The key component is to ensure that supply continues to be added to the stock.
Job polarization — the concentration of growth among high- and low-wage occupations with meager trends among middle-wage jobs — has been shaping the economy for decades. See our report Job Polarization in Oregon for a more thorough analysis.
Automation impacts middle-wage jobs considerably. See here for our historical look at the wood products industry in Oregon. Also here to see how automation and technological change impacts women in middle-wage jobs just as much as it does men.
Business Cycle Trends and Recession (23:27)
Oregon’s economy is more volatile than the nation — we have stronger expansions and deeper recessions. This is for two primary reasons. First, Oregon remains a manufacturing state. Second, migration. People have been moving to Oregon in droves ever since Lewis & Clark.
Oregon sees the largest influx of new residents among the 20- and 30-somethings. These so-called root-setting years are very important for longer-run economic growth. As our office’s report details, many, and usually most of these young migrants have college degrees. In fact a majority have scientific, technical or medical degrees. See here for how Oregon’s young college migration trends compare with other states.
Impact of Affordability on Young Creatives (27:27)
Research indicates that the you get the best outcomes from homegrown businesses and industries. Focusing on investments that make a location a good place that young, creative entrepreneurs want to be helps drive some of this success. See our report on Start-Ups and New Business Formation.
Marijuana and Alcohol Clusters (31:21)
Recreational marijuana is still an infant industry. We do not have a lot of good data yet. Previously we looked at the border impact with Washington. However as Mark talked about we really care about the broader impact of ancillary industries and the high value-added products and services. A good example is the alcohol cluster here in Oregon. See page 4 of our beer report for a more complete summary. And here is a chart comparing employment growth for the the overall alcohol cluster in Oregon and the U.S.
The impact of the Cowlitz Tribe casino is detailed on PDF page 30 in our December 2016 forecast. See here for our report on the Great Recession and gaming, and an update on recent trends following the roll-out of new video lottery terminals across the state.
What Do Economists Talk About? (38:05)
You’ll just have to find out for yourself…
Public Q&A (39:45)
Questions include the impact of recent ballot measures on lottery funds, the state budget gap, federal policy expectations, the minimum wage, PERS, and labor/capital substitution.