How Portland-metro measures up

Traded goods

In past economic studies, the coalition has compared Portland-metro to a number of other metro regions that either have similar characteristics or that we traditionally benchmark our economic performance against. For the purpose of this study, Portland-metro is compared to Seattle, Minneapolis, Denver, Cincinnati, St. Louis and Sacramento metros. Seattle, Minneapolis and Denver are seen as Ďaspirationalí metros since Portland-metroís economy once kept pace with those three metros, but, since 1990, has fallen behind them significantly.

Across metro regions, the traded sector typically makes up 35 to 40 percent of total employment; however, the industries that comprise each regionís traded sector differ. As a result, differences in traded-sector industries across regions explain much of the variation in economic performance across cities.

Over the past 40 years, Portlandís traded-goods sector Ė such as manufacturing Ė has performed relatively well, increasing employment and wages at a rate faster than the U.S. metro average. Inflation-adjusted wages in Portland-metroís traded-goods sector grew by 60 percent over that period, faster than the U.S. metro average and all of the comparison regions except Sacramento. Portland-metro lost ground, however, on both employment and wages to Seattle, Minneapolis and Denver over the past decade.

Today, the average wage in Portland-metroís traded-goods sector is approximately $56,000 per year. This amount exceeds the U.S. metro average of approximately $52,000, but falls below the average in some of the other comparison metros such as Seattle ($67,600), Denver ($63,700), Minneapolis ($60,600) and Cincinnati ($59,100).

In previous studies, the Value of Jobs Coalition explored the potential reasons for the wage differential between Portland-metro and other metros. These factors impact wages in both the traded-goods and traded-services sectors.

While multiple factors contribute to the differences, the coalition identified three main factors:

1) SIZE: The aspirational metros are larger than Portland-metro, and there is a strong relationship between larger size and higher wages (although the coalitionís 2011 economic study indicated that Portland underperforms even when accounting for size).

2) EDUCATION: The aspirational metros have a higher share of their population with college degrees and there is a strong relationship between education levels and wages.

3) COMPOSITION OF INDUSTRIES: The aspirational metros have a higher share of their employment in higher-paying specialties such as aerospace and advanced electronics in the case of manufacturing, and finance and management in the case of services.

Traded services

From 1970 to 2010, Portland-metroís traded-services sector Ė such as insurance, architecture and investment consulting Ė has grown rapidly. In this sector, Portland-metroís performance is relatively typical for U.S. metro areas, but falls below several standout regions. Relative to all U.S. metro areas, Portland-metroís traded-service sector saw greater employment growth, but slightly slower wage growth. Portland-metroís wage growth, however, significantly trails behind the metro areas of Seattle, Minneapolis and Denver, particularly since 1990.

In previous economic studies, the Value of Jobs Coalition pointed to concerns about Portland-metroís wage and income levels falling below the national average and lagging behind Seattle, Minneapolis and Denver. This traded-sector study reveals that a significant portion of the Portland regionís declining income relative to some metro areas is the result of lagging wage growth in the traded-services sector.

In 2010, wages in Portland-metroís traded-services sector fell below the U.S. metro average ($47,200 vs. $52,300) and all of the comparison areas. While Portlandís wages were close to Sacramento, St. Louis and Cincinnati (all in the $47,000 to $49,000 range), Portlandís traded-service wages are significantly below Seattle ($61,400), Minneapolis ($56,700) and Denver ($56,200).