Portland in Transition

The region is far from over; there is no “Next Portland.”
Josh Lehner
Oregon Office of Economic Analysis
September 28, 2017

The Portland metro area is in a state of transition. The apartment boom and neighborhood changes in
the urban core are highly visible. Residents see and feel the shift. However, the economic changes run
even deeper. Over a decade, Portland’s high-wage job growth, household income gains, and rising levels
of educational attainment have been transformational. Portland has pulled away from its former
economic peers. Even so, Portland has yet to catch the nation’s upper tier. Such gains are undoubtedly
good but come with some societal growing pains. Regions and economies are always evolving. However,
for some, Portland is now unrecognizable from its past. As such, efforts exist to find the “Next Portland,”
or the next up-and-coming metro area. Fortunately, the reasons for Portland’s growth and appeal are
far from finished. The future remains bright. Furthermore, none of the most commonly cited “Next
Portland” contenders compare even reasonably well to the real one. Each is lacking an important
ingredient or two.

New Census data reveals how astonishing the Portland region’s growth has been since 2007. Among the
nation’s 100 largest metros, Portland ranks 5th best in both high-wage job growth and educational
attainment increases. Today, 40 percent of Portland’s working-age population holds a college degree.
Portland’s six percentage point increase over the decade is more than twice the typical gain.

Importantly, economic growth has translated into income gains and improving well-being in recent
years. This has not always been the case. The region’s poverty rate is now lower than before the Great
Recession. Even as large racial disparities remain, whites and communities of color have both seen
improvements. Additionally, median household income is now nearly nine percent higher than before
the Great Recession, after adjusting for inflation. The typical large metro has not recovered its losses.
These gains place Portland’s rising income as the 4th best since 2007. Portland now has the 19th highest
median household income among the large metros. In 2007 Portland ranked 32nd highest.

The region’s high quality of life and strong economic foundation drive some of this growth. Portland
excels at apparel and design, food and beverage, and semiconductors. More broadly, Oregon’s strengths
also include renewable energy, wood products, and unmanned aerial vehicles. The region likewise
boasts old-school assets in terms of its geographic location and infrastructure for air, rail, and water.

However, Portland’s most important strength is its ability to attract and retain talent. Only a few select
metros see such strong migration rates among young college graduates. Portland is right there with the
Bay Area, Denver, Raleigh, Seattle, and Washington D.C. These metros tend to have higher levels of
educational attainment, higher incomes and a major research university. And yet, Portland has not only
kept pace, it has made up a little ground. Portland now ranks 16th highest for the share of working-age
residents with a college degree. In 2007 Portland ranked 27th highest. In recent years there has also
been a clear shift toward scientific, technical, and medical degrees.
Unfortunately, in keeping with the Housing Trilemma, a strong regional economy and high quality of life
come at the cost of housing affordability. The demand to live in the area outstrips supply. Portland, like
other growing regions, has underbuilt housing in the past decade, worsening the problem. That said,
even against this dire backdrop two hopeful trends emerge.

Improving incomes in recent years mean housing affordability has stopped getting worse. As apartment
construction catches up and rents slow, some affordability improvements are likely. Ownership,
however, remains a huge challenge. Secondly, displacement and affordability issues push lower-income
households out of the urban core and toward the suburbs. So far such households are not leaving the
Portland region entirely, unlike in some other high-cost metros.

As the real (not Maine) Portland transitions, some look to find the “Next Portland.” Typically hard-to-
define concepts like cultural cachet or the strength of the local hipster scene determine the contenders.
While subjective measures matter when choosing where to live, they remain in the eye of the beholder.
Across standard socio-economic measures, all of the most commonly cited “Next Portland” contenders
fail in at least one important way. In order to truly be the “Next Portland” each will have to overcome
these deficits.

Boise and Salt Lake City come the closest to matching Portland’s economic and population growth.
These metros also have relatively young populations. However, internal dynamics drive much of Salt
Lake City’s demographics. Boise attracts young families, but few root-setting individuals. Boise also lags
considerably on high-wage job growth. Furthermore, both have average or below average rates of
educational attainment for a large metro area.

Conversely, Portland, Maine and Pittsburgh look a lot like Portland, Oregon in terms of educational
attainment. However, both see net out-migration among people in their root-setting years. Their age
profiles, along with Asheville, NC, resemble a retirement community. That said, young migrants are now
moving to Asheville in greater numbers. But art, design, and entertainment occupations in Asheville are
half that seen in the real Portland. In fact, all of the “Next Portland” contenders have a smaller share of
such jobs than does Portland, except for Missoula, MT.

Importantly, one thing most contenders do share with the real Portland is poor housing affordability.
Costs are already high compared with local incomes. The exception being Pittsburg, and possibly Boise.
As such, for most areas, housing is likely a major hurdle to becoming the “Next Portland.”

“Old Portland” may be dead as Willamette Week diagnosed, but it is clear the region is far from over.
Portland’s high quality of life and strong regional economy remain, for now. Efforts must be made to
ensure their continued success. That said, Portland is transitioning. The changes run deeper than the
built environment alone. The regional advantage and outlook largely rests on the ability to attract
young, skilled households. Historically this has been no problem. However, affordability issues can
eventually stall growth, and increase displacement. The region’s biggest long-run challenge is ensuring
an adequate housing supply. This includes options within existing neighborhoods, close to transit, and
also some new suburban development.