Oregon Office of Economic Analysis

High-technology is a pillar of Oregon’s economy. Overall it accounts for about 5% of statewide jobs, but due to its higher productivity and pay, the sector is 11% of overall wages paid and 11% of state GDP. Given the strong growth in recent years, the sector’s employment today is now at an all-time high, surpassing even the bubbliest of peaks of the dotcom era more than two decades ago.

Much of the gains seen in the past decade are driven by the fast-growing software side of the industry. Even as Oregon as a whole has a smaller concentration of jobs at software firms than the nation, that is not the case in Portland. And when it comes to tech talent, a look at software and related occupations, the Portland metro area consistently ranks around the 90th percentile. That means the share of the local workforce in these types of jobs is larger than it is in 90% of all metros around the country. Even so, such jobs are growing across the state, and possibly more so in the years ahead due to increased working-from-home opportunities.

Oregon’s relative high-tech strengths continue to be in hardware where our local concentration is among the highest in the entire country. For much of the past 20 years, hardware manufacturing has seen large investments in new technologies, but on net has not added many new jobs. To the extent some local firms were hiring, others, mostly from the older generation of firms, were contracting. Then the fact that Oregon has been passed over for the 4 major announcements for new fabs certainly seems like a missed opportunity. And it is a missed opportunity, with the final impacts still to be determined depending upon the ultimate nature of these new facilities in Arizona, New York, Ohio, and Texas.

Now, what may have been missed in all of this is the fact that Oregon’s hardware sector, and semiconductors in particular are booming today. As pointed out by Christian Kaylor from the Employment Department, since the beginning of 2021, semiconductor firms in Oregon have added well over 4,000 jobs, an increase of nearly 15 percent. To help frame that number, that’s equivalent to if Oregon got 2 of the 4 new fabs located here. So the overall strong demand for chips, and increased importance of domestic manufacturing during global supply chain struggles and geopolitical upheaval certainly seems to be bearing fruit for our regional economy.

Today, Oregon semiconductor employment is about 1,000 less than the all-time high reached in 2001 just as the bottom dropped out. Oregon’s share of the national semiconductor workforce today is 9%, whereas we were 5% back then. In general, it is clear that Oregon has been gaining marketshare over the years, even before the recent strong growth.

Looking forward we know that durable goods manufacturing is typically very volatile over the business cycle. Even with the strong underlying demand, underproduction of automobiles, and increased importance of domestic manufacturing and supply chains, we know households usually have the ability to time their durable goods purchases. Most of us do not need to buy a new car, computer, or house tomorrow even if we may want one. In times of economic uncertainty, and the fact that higher interest rates make big ticket purchases more expensive, and high inflation eats into household budgets, some cyclical declines whenever the next recession comes should be expected. Even so, these gains are not being driven by irrational exuberance or bubble-like dynamics.

Bottom Line: Expectations are for steady hardware employment in Oregon in the years ahead. Even as the new fabs elsewhere come online, Oregon’s share of the national industry will remain high, and likely higher than it was pre-COVID. All of that said, software will continue to be the major driver of growth in terms of new firms, employment, and overall tech talent.

Update 7/21: The huge rise in start-up valuations nationwide in recent years, followed by the more recent crash and decline in VC funding is starting to impact the software side of the industry with some layoff announcements. This is something to keep any eye on, but should be more of a short-term issue than a fundamental, long-term issue. On one hand, with Oregon receiving a slightly below average share of VC funding, it means the fallout could be less severe locally than, say, in the Bay Area. On the other hand, the main risk our office identified back in 2015 is that when your local economy has a lot of outposts or satellite offices and not as many HQ operations, you may be more vulnerable in a downturn when businesses cut the spokes and consolidate at the hub.

The full set of high-tech slides from our office are below.