What the Data Show
A region’s economic performance is measured in a number of different ways. Three important measures are:
- Gross Metropolitan Product (GMP) (the equivalent of the gross domestic product for a Metropolitan Statistical Area);
- Employment, and
The following sections will take a closer look at how the Portland-metro region is faring in each area. For last year’s report, the job loss data were based on the peak and trough of the recession. This year, the data show economic changes for August of each year from 2008 through 2012. This timeframe gives us the most recent look at the economy, while avoiding issues related to seasonal employment.
Gross Metropolitan Product: Growth
GMP is the market value of all the goods and services produced in a Metropolitan Statistical Area (MSA). Out of the top 100 MSAs in the United States, Portland-metro is second only to New Orleans in the growth of GMP during its recovery. From its low point in mid-2009 up to mid-2012, Portland-metro’s GMP grew by 20.6 percent, as seen in Figure 1.
GMP is a function of employment, income and productivity. Employment and incomes have remained relatively low during Portland-metro’s recovery, so the growth in GMP is primarily due to increased productivity. This increase may be largely attributable to the growing semiconductor industry.
Employment: Recovery slow and uneven
Employment in the Portland-metro area has grown since its low point in 2009, but remains below its 2008 level. Between August 2008 and August 2009, Portland-metro lost 72,400 of its more than one million non-farm payroll jobs. However, between August 2009 and August 2012, Portland-metro added back nearly 42,700 jobs, with nearly all of this job creation occurring in 2011 and 2012.
The recession hit Portland-metro’s employment slightly later than average compared to other metro areas, but when the recession did hit in 2008, Portland-metro’s employment fell farther and faster than other metros. When Portland-metro’s recovery began, employment increased at the same rate as the U.S. average, although starting from a lower level, through 2010. Between 2010 and 2012, Portland-metro’s recovery picked up steam and made up the lag with the U.S. metro average, although both remain two to three percentage points below their 2008 level.
Looking deeper, some important patterns emerge in the employment recovery among different sectors of the economy.
Year-to-year employment changes by sector, 2009-2012
In general, the economic recovery began in 2009, but it was not evenly distributed among economic sectors, as seen in Figure 2. Sectors associated with the consumption of goods and services (education, healthcare, leisure and hospitality, retail and wholesale trade and manufacturing) saw more net growth between August 2009 and August 2012 than other sectors. The professional and business services sector experienced positive (but weakening) job growth over this period, driven largely by an increase in hiring through temporary employment services in the early stages of recovery.
Government, finance, information, mining and logging, and other services sectors experienced net job losses during the recovery. The largest losses occurred in the government sector, which ended August 2012 with 3,900 fewer jobs than in August 2009.
The private “Eds & Meds” sectors shown in Figure 3 comprise all non-public education, health care and social assistance employment. Employment in private educational services grew between August 2009 and August 2011, adding a net 3,400 jobs, but growth slowed between 2011 and 2012 to just 100 net new jobs. Many under-employed and unemployed workers returned to school during the downturn, which helps explain the growth in this sector early in the recovery.
In “Meds,” job growth in hospitals, nursing and residential and ambulatory care facilities remained relatively steady between August 2009 and August 2012. The non-public social assistance sector, which includes family, housing, emergency, vocational rehabilitation and child care services, grew by 500 jobs each year between 2009 and 2011, but then dropped sharply. Job trends in medical and social assistance sectors are explained in part by the timing of federal stimulus payments.
The comeback of consumer spending started in 2009, as shown in Figure 4. Employment in the arts, entertainment and recreation sectors remained flat between August 2009 and August 2010, but 1,300 jobs were added by August 2011, and another 2,100 jobs by August 2012. Accommodations (hotel and lodging) employment grew, but added fewer jobs than other leisure sectors.
The most growth occurred in Portland-metro’s food services and drinking places sector, which added 5,600 jobs between August 2009 and August 2012. Retail trade made a similarly strong comeback, especially in the past year, adding a total of 4,300 jobs between August 2009 and August 2012.
Employment in Portland-metro’s construction sector continued to shrink through August 2010, as seen in Figure 5. Portland-metro lost about 15,600 construction jobs between August 2008 and August 2010. To date, construction employment has recovered nearly 6,000 jobs, but remains 15 percent below its 2008 level.
Job growth among the construction sectors was somewhat uneven, with specialty trade construction experiencing the greatest fluctuations. Between August 2009 and August 2011, specialty trade construction lost 2,800 jobs, but by August 2012, this sector gained 4,700 jobs, for a net gain over the three-year period of 1,900 jobs. Specialty trade contractors perform a specific activity on job sites, such as site preparation, plumbing, painting or electrical work. This gain may be mostly attributable to the construction of Intel’s new research facility in Hillsboro that shifted into the final phase of construction in 2012. The boost to construction jobs may continue as Intel has announced it will expand this new facility (the D1X development fab).
Portland-metro employment by comparison
Last year’s report introduced Sacramento, St. Louis and Cincinnati as Portland-metro’s peer metro areas because they have very similar per capita income for cities of similar populations. As seen in Figure 6, Portland-metro’s job recovery has outpaced two of those three cities.
Portland-metro’s long-standing metro comparators are Seattle, Minneapolis and Denver, and because they have outpaced Portland-metro, particularly in the critical area of income, these regions are now defined for these reports as “aspirational peers.” As seen in Figure 7, Denver, as a regional center for the growing energy sector, has almost fully returned to its August 2008 employment level. By August 2012, Portland and Seattle had both recovered to within three percentage points of their 2008 levels, while Minneapolis was slightly further ahead.
As demonstrated in earlier reports, manufacturing is a relative strength for Portland-metro, as employment in both the durable and non-durable manufacturing sectors fared better than the U.S. metro average during the recession. Durable goods are defined as goods that yield use over time, while non-durable goods are those that are quickly consumed.
While durable goods manufacturing employment in both Portland-metro and the U.S. fell by about 15 percent from their 2008 levels, Portland-metro recovered at a faster pace, as shown in Figure 8. By August 2012, Portland-metro was within eight percent of its 2008 level, while the U.S. average still lagged by 11 percent.
Portland also outperformed the national average in non-durable goods manufacturing, as demonstrated by Figure 9. By August 2009, Portland-metro and the U.S. metro average each lost about eight percent of their 2008 levels. However, by 2012 Portland-metro rebounded to within one percent of its 2008 level, while the U.S. metro average still sat 10 percent below its 2008 level.
Portland-metro’s employment in the traded sector—firms that sell goods and services outside the region—declined further and faster than local sector employment between 2008 and 2009. Traded-sector jobs fell by nine percent and local sector jobs fell by six percent during that same period, as shown in Figure 10.
Since August 2009, however, both sectors regained jobs at about the same rate. By August 2012, Portland-metro’s local-sector employment was two percent below its 2008 level, while traded-sector employment was four percent below 2008. About 47 percent of the 42,700 jobs added back to the Portland-metro region are in manufacturing and professional and business services, key traded-sector industries.
The return of these traded-sector jobs must be watched for two reasons:
- Portland-metro traded-sector jobs pay on average 42 percent more than local-sector jobs, and
- Traded-sector jobs stimulate activity in other parts of the economy, with one traded-sector job, on average, creating 2.5 local-sector jobs.2
Portland-metro’s median household income fell 10.5 percent between 2008 and 2011, from $61,400 (2011 dollars) in 2008 to $54,900 in 2011, as seen in Figure 11. Portland-metro’s peer cities—Sacramento, Cincinnati and St. Louis—experienced similar declines in median household income: Cincinnati fell by 7.3 percent, St. Louis by 7.9 percent, and Sacramento by 13.5 percent.
In 2008, median household income in Portland-metro was already lower than Seattle, Minneapolis and Denver metros. Seattle and Minneapolis were nearly equal at about $69,000, and Denver’s median household income was $63,000, compared to $61,400 in Portland-metro (in 2011 dollars). But while Seattle, Minneapolis and Denver all lost income during the recession, Portland-metro’s median household income fell further and faster (while leveling out in 2010), increasing the income gap with these cities, as shown in Figure 12. By 2011, Portland-metro household income lagged Denver by more than $4,000, Minneapolis by more than $8,000 and Seattle by more than $9,000 per year.
The economic health of a community depends on a combination of employment levels, wages and income. Median household income is one measure of income; another is per capita income, which we have examined in previous reports. While we are seeing positive trends in employment, wages and income are a different story.
In the mid-1990s, the Portland-metro area’s per capita personal income was about four percent higher than the average for the top 100 U.S. metro areas. Per capita income has declined fairly steadily since then, dipping below the U.S. metro average in 2003, continuing to its low point in 2008 at four percent below average. It now sits at about two percent below the U.S. metro average, as seen in Figure 13.
Per capita personal income is based on the sum of wages, investment earnings and transfers, such as Social Security payments. The uptick between 2008 and 2009 is explained by a jump in just one of those factors, investment earnings; transfers remained steady, but wages continued to decline during that period. After the jump in investment earnings waned, the decline in per capita income continued at about the same pace as before.
2 Portland-Metro’s Traded Sector: A source of good jobs, higher wages and small business growth, 2012 Value of Jobs Coalition.
3 Per capita income is the sum of all earned income, investment income, and transfer payments (such as Social Security) averaged across all residents of the area