Portland’s Rapid Economic Growth Leaves Poorest Oregonians Behind

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Wednesday, January 14, 2015

Annie Ellison, GoLocalPDX Reporter

Oregon had the second-fastest growing economy in the country from 2000 to 2013, but that progress is undermined by a growing income disparity throughout the state. 

The state’s economy rallied for 13 years, increasing its economic output by 88 percent while lower-income wages stagnated, according to a Jan. 12 report by the Oregon Center for Public Policy, a think tank dedicated to improving opportunities for low income Oregonians. 

The report, based on 2013 data from the Bureau of Economic Analysis, focused on Oregon’s rising Gross State Product (GSP), a measurement of the state’s economic gain.

Oregon’s GSP was the second-fastest growing in the nation between 2000 and 2013, surpassing the growth of Washington and California combined, outpaced by only North Dakota. That economic gain was driven by economic growth in the Portland metro area and Corvallis. 

Between 1997 and 2013, Oregon’s inflation-adjusted GSP grew from $113 billion to $211 billion, nearly triple the growth rate of the national economy. The value of goods and services produced in Oregon increased, too. In 2001, the average Oregon worker produced just over $62,000 in goods and services, which increased to roughly $93,000 in 2013.

But that growth widened the gap between Oregon’s highest and lowest paid workers. The median inflation-adjusted wage for workers in Oregon has not grown for 30 years, according to the report.

OCPP spokesperson Juan Carlos Ordonez said the data points to the need for a higher minimum wage, more funding for education, and an end to corporate tax incentives. 

Wage stagnation amid growth

In 2012, the top one percent of Oregon's earners made at least $340,470, while the median income for a taxpayer was $31,940, according to an OCPP analysis of data from the Department of Revenue.

The hourly wage of the average high-wage worker rose from $25.56 in 1980 to $29.09 in 2013, when adjusted for inflation, according to the data. But in the same time period, wages for lower income groups fell, when adjusted for inflation. In 1980, a low-wage worker made the equivalent of $11.04 per hour, but by 2013, the same job paid $10.19 an hour. The 2013 median wage of $16.71 would have been $17.28 in 1980.

“Oregon’s economic recovery bypassed working families,” said Service Employees Internation Union (SEIU) Executive Director Heather Conroy.

In 2012, 72 percent of the capital gains income in Oregon went to the top one percent of earners, according to an analysis of data from the Department of Revenue.

Ordonez said growth is not the challenge for Oregon. Instead, the challenge is sharing the benefits of that growth, he said.

Shift from rural to urban economies 

The urban economy grew while the rural economy shrank -- what Joe Cortright, an economist at Portland-based firm Impresa, called “a tale of two states.”

The transition from a timber and farming economy to a growing urban technology sector brought about a surge in the Portland Metro area's economic growth, Cortright said.

Cortright added it is Portland's property and income taxes that ultimately foot most of the state's bills, generating three quarters of the Oregon's tax revenue. 

However, Portland’s growth drove a wedge between urban and rural earners because while higher-income jobs sprung from knowledge and skill-based industries, Oregonians with less education did not qualify for them, said Portland State University Associate Professor of Economics John Gallup. 

Looking for solutions

The state is facing record income inequality, which threatens the stability of Oregon’s economy, according to Conroy. Comparatively lower wages strip median income workers of their spending power, advocates said.

“Today, a quarter of Oregon’s workforce is working in low wage jobs that don’t pay enough to support their families,” Conroy said. “Meanwhile, we are seeing record profits and CEO pay.”

Cortright said investing in education is the only long-term solution to narrowing the wage gap, and the disparity between urban and rural communities. 

“The biggest single determinant of economic success for individuals is education,” Cortright said. 

Gallup said raising minimum would help low-wage earners, but there is a tipping point after which employers are forced to cut back on hiring.

Although Oregon’s rapid recovery particularly highlights median wage stagnation, both economists said the crisis of income disparity is not a problem that is unique to Oregon. 

 

 

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