Overview of the Portland Economy

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							                                 Overview of the
Appendix 2-2                    Portland Economy
                          The current national and state forecasts reported in Appendix 2-1 predict,
                      as expected, long-term growth despite near-term setbacks. If one accepts the
                      general thrust of these forecasts (as most forecasters do), then a question
                      regarding the Portland economy is: Are there any substantial reasons to
                      believe that the Portland region would not grow in a world where both the
                      U.S. and Oregon economies are growing? The rest of this appendix explains
                      why the answer to that question is “No.”

                          In fact, there are reasons to believe just the opposite. West coast
                      metropolitan areas have been growth areas for 50 years for both strict
                      economic and quality-of-life reasons that should continue. Moreover, it is
                      difficult to perceive how a state economic forecast of growth could be correct
                      at the same time that the Portland economy (with over half the people and
                      employment in the state) was stagnating.

                         Thus, despite short-term economic problems for certain sectors and
                      households, the long view for the Portland economy, from today’s viewing
                      point, is a healthy one. The rest of this section provides some information in
                      support of that conclusion.

                         Metropolitan Portland serves as an employment, commercial, and service
                      center for most of Oregon and southwest Washington. It provides retail
                      shopping, wholesale distribution, and business, financial, and health services.
                      Specialized manufacturing in the Portland region includes high-tech
                      equipment, software, primary and fabricated metals, and transportation
                      equipment. Portland is also an institutional and corporate center for the
                      region, with the Bonneville Power Administration, the U.S. Army Corps of
                      Engineers, the U.S. Forest Service, Portland General Electric, and Northwest
                      Natural Gas headquarters located here.

                         Portland has historically developed around its transportation facilities,
                      and Portland’s growth has reinforced its status as a West Coast distribution
                      hub.

                         The Portland regional economy has four major components, which depend
                      on one another.

                          •   Residents provide a pool of labor and it is their work that is the basic
                              engine that drives our economy. Residents purchase goods and
                              services, demand services from governments and non-profits, and,
                              both directly and indirectly pay taxes.

                          •   For profit businesses employ most of the workers in our economy,
                              sell goods and services to residents, government, non-profits, and



Appendix 2-2: Overview of the Portland Economy                July 2002                     2-2 page 1
                                   other businesses. They are also a major source of tax revenues, but
                                   also rely on government to provide it with educated workers,
                                   infrastructure (such as roads and water), and an array of essential
                                   services.

                               •   Non-profits mostly serve residents and in doing so, they fill in gaps
                                   in areas where businesses and governments cannot fulfill all the needs
                                   of the population. In some parts of the local economy, such as social
                                   services and health care, non-profits are the largest providers.

                               •   Government provides services, infrastructure, and a legal system
                                   that serves the other components of our economy.

                               Together, these four components are responsible for nearly all of the
                           employment and spending activity in Portland. This section compares parts
                           of each component in Portland to that of the region, state, and nation as a
                           whole to illustrate similarities and differences.


              RESIDENTS
                  POPULATION
                              The 2000 Census reports 529,000 people lived in the City of Portland on
                           and about 1,918,000 lived in the Portland-Vancouver metropolitan area. The
                           Census term for such metropolitan areas is PMSA.1 The Portland-Vancouver
                           PMSA, which we will refer to the “PMSA” or, with less jargon “the region,”
                           comprises six counties: Clackamas, Columbia, Multnomah, Washington, and
                           Yamhill Counties in Oregon plus Clark County, Washington.

                               The population of the City of Portland rose from 437,319 in 1990 to
                           529,121 in the 2000 Census. Part of that growth was due to annexations.
                           Nonetheless, certain trends can be seen in the data. The population of the
                           City grew 17 percent while the rest of the PMSA saw a 22 percent gain. The
                           rest of the PMSA started off the decade with well over a million people. Thus,
                           in pure numbers its growth was much larger than the City’s (310,755 more
                           people compared with 91,802 for Portland).

                               Figure 1 shows how the population grew by age category. In the PMSA
                           and elsewhere in the country there was a large increase in the residents ages
                           45 to 64—a result of the aging of people born during post-war baby boom.
                           Half of the City’s population growth is in that age group.




1   PMSA stands for Primary Metropolitan Statistical Area.



2-2 page 2                               July 2002            Appendix 2-2: Overview of the Portland Economy
                      Figure 1: Percent Change in Population by Age, Portland and the
                      Rest of the PMSA, 1990 - 2000

                            Total


                         Under 5


                          5 to 24


                         25 to 44


                         45 to 64


                         Over 64


                                    -5%    0%      5%        10%   15%    20%    25%    30%   35%   40%

                                                              Portland   Rest of PMSA


                      Source: 2000 Census and 1990 Census.


                          The City and the rest of the PMSA both showed gains in the 5 to 24 and
                      the 44 to 64 age groups at rates that were higher than their overall
                      population growth. Where the areas differ, and dramatically so, are in the
                      youngest and oldest age groups. Portland experienced only a modest increase
                      in the population of children under the age of five, while the remaining parts
                      of the PMSA saw a 21 percent gain. Between 1990 and 2000, we calculated
                      that for every 100 new children under five recorded by the Census, just nine
                      resided in Portland. When we look at the population over 64 years of age we
                      find that the City of Portland lost population, but the rest of the PMSA saw a
                      14 percent increase.

               OCCUPATIONS
                          Table 1 shows the percentages of workers in the construction,
                      manufacturing, wholesale trade, and retailing are all higher in Oregon than
                      in the U.S. For all four of those industries, the shares held by Portland
                      residents are less than that of the state and rest of the PMSA. For example,
                      while about 8 percent of the working residents in the rest of the PMSA work
                      in construction, only 6 percent of those in Portland do. In manufacturing the
                      difference is about 16 percent of the rest of the PMSA residents versus about
                      13 percent of Portland residents).




Appendix 2-2: Overview of the Portland Economy                       July 2002                  2-2 page 3
             Table 1: Where Residents Work, Various Areas, 2000
                                                                          Portland            Rest of Part
                                                                     Persons    % of Total   of the PMSA*    Oregon      US
             Persons 16 and older employed in:
              Farming, Forestry, Fishing & Hunting                       1,043       0.38%          1.68%       2.89%     1.43%
              Mining & Utilities                                         2,400       0.88%          1.11%       0.84%     1.29%
              Construction                                              15,463       5.67%          7.59%       7.37%     6.77%
              Manufacturing                                             34,864      12.78%         16.01%      14.42%    14.13%
              Wholesale trade                                           11,236       4.12%          5.29%       4.74%     3.82%
              Retail trade                                              30,585      11.21%         11.51%      12.62%    11.84%
              Transp., Warehousing, Information & Communication         20,894       7.66%          8.39%       5.91%     7.38%
              Finance, Insurance, Real Estate & Leasing                 21,090       7.73%          8.00%       6.25%     6.84%
              Services                                                 125,857      46.14%         37.25%      40.53%    41.21%
              Public Administration                                      9,120       3.34%          2.92%       4.38%     4.71%
              Armed forces                                                 244       0.09%          0.25%       0.05%     0.58%
             Total working population 16 & over                        272,796     100.00%        100.00%     100.00%   100.00%
             Source: U.S. Census 2000. Rest of PMSA calculated by ECONorthwest and excludes Yamhill and Columbia
             Counties.


                 Table 2 shows that within the Portland metropolitan area, higher
             percentages of residents in the transportation, warehousing, information and
             communications industries and in the finance, insurance, real estate, and
             leasing industries live outside of the city. Other evidence suggests that a
             disproportionate number of employees in those industries live outside the
             City and commute in to work.

                 There are only two industries where the percentage of residents working
             in them is higher in Portland than it is elsewhere in the PMSA: services and
             public administration. Among the major subcategories in services are hotels,
             restaurants, health care facilities, schools, employment agencies, and
             professional service businesses such as law firms.

             Table 2: Types of Workers and their Occupations by Residency,
             Various Areas, 2000
                                                                       Portland          Rest of Part
                                                                  Persons    % of Total of the PMSA*         Oregon      US
             Class of worker:
              Private wage & salary workers                         221,026       81.02%         81.14%       76.71%     79.09%
              Government workers                                     31,960       11.72%         10.62%       13.54%     14.61%
              Self-employed workers                                  18,041        6.61%          7.16%        8.75%      5.56%
              Unpaid family workers                                   1,769        0.65%          1.09%        1.00%      0.75%
             Total working population 16 & over                     272,796      100.00%        100.00%      100.00%    100.00%

             Type of occupation:
              Management, professional & related                     99,578       36.50%         35.12%       32.53%     33.12%
              Service occupations                                    43,404       15.91%         12.62%       15.63%     15.02%
              Sales & office jobs                                    72,047       26.41%         28.81%       26.17%     26.52%
              Farming, fishing & forestry jobs                          497        0.18%          0.97%        1.57%      0.73%
              Construction, extraction & maintenance jobs            18,809        6.89%          8.02%        8.72%      9.43%
              Production, transportation & shipping jobs             38,217       14.01%         14.20%       15.35%     14.61%
              Military occupations                                      244        0.09%          0.25%        0.05%      0.58%
             Total working population 16 & over                     272,796      100.00%        100.00%      100.00%    100.00%
             Source: U.S. Census 2000. Rest of PMSA calculated by ECONorthwest and excludes Yamhill and Columbia
             Counties.


                The previous two tables showed in what businesses and occupations
             people living in the City and elsewhere worked. Table 3 shows how many
             people worked at establishments inside the City and elsewhere in 2000. More
             people worked inside the City than lived in the City in 2000 (Portland got




2-2 page 4                     July 2002                           Appendix 2-2: Overview of the Portland Economy
                      more workers commuting into the City for jobs than commuting out to work).
                      Thus, the totals in these tables differ.

                      Table 3: Average Annual Employment by Type and Location of
                      Employment, Various Areas, 2000
                                                                                                      Rest of the
                                                                                     Portland           PMSA                Oregon
                       Type of establishment or employment:
                        Businesses with paid employees                                   311,910            462,743         1,238,813
                        Non Profits                                                       40,943             36,802           124,340
                        Civilian Government                                               55,425             62,009           244,844
                        Military                                                           1,029              1,325             1,748
                        Farm workers                                                          29              6,679            21,534
                        Self employed persons                                             18,041             49,526           140,307
                        Unpaid family workers                                              1,769              7,190            16,037
                       Total employed                                                    429,146            626,273         1,765,089

                      Sources: based on ES 202 tapes for Clark, Clackamas, Multnomah, Washington, Columbia and Yamhill
                      Counties, geocoded data to determine Portland City numbers, and 2000 Census data to estimate farm, self
                      employed and unpaid family workers. Military FTEs estimated by ECONorthwest. Breakdown of non-profit,
                      government, and for-profit employment for Clark County estimated by ECONorthwest.


                          The average number of people employed in Portland during 2000 was over
                      429,000. Like the rest of the PMSA, about 73 percent were paid employees of
                      businesses. There was a large difference in the employment pattern for non-
                      profits. Ten percent of the people working in the City of Portland were
                      employed by non-profits in the year 2000. This compares to only six percent
                      in the rest of the PMSA and seven percent in Oregon. Thus, workers in
                      Portland are over 50 percent more likely to work for a non-profit than
                      workers elsewhere in the region. An even more dramatic difference is evident
                      in self-employment. In the City, four percent of those working in 2000 were
                      self-employed. In the rest of the PMSA, and in Oregon, the self-employed
                      accounted for eight percent of the workers.

               INCOME
                          Table 4 shows the percentages of families according to their annual
                      incomes. Family income in Portland averaged $63,514 in the year 2000,
                      which is just about $100 more than the U.S. average and more than five
                      thousand dollars higher than the Oregon average. Outside of Portland,
                      average family incomes in the PMSA were much higher.




Appendix 2-2: Overview of the Portland Economy                             July 2002                                2-2 page 5
             Table 4: Distribution of Family Incomes, Various Areas, 2000
                                                               Portland              Rest of
                                                        Families     % of Total      PMSA         Oregon          US
             Annual family Income range:
              Poor & near poor (less than $15,000)           11,972       18.85%         8.14%        10.41%       10.38%
              Low income ($15,000 to $25,000)                14,000       22.04%         9.58%        12.72%       11.23%
              Lower mid income ($25,000 to $35,000)          13,116       20.65%        10.38%        12.79%       12.11%
              Middle income ($35,000 to $75,000)             46,026       72.47%        39.12%        40.19%       38.74%
              Upper mid income ($75,000 to $100,000)         14,053       22.13%        14.72%        11.58%       12.30%
              Upper income (over $100,000)                   17,166       27.03%        18.07%        12.31%       15.25%
             Families                                        14,053       22.13%        14.72%        11.58%       12.30%

             Average family income ($/year)                 $63,514                    $70,280       $58,163       $63,411
             Sources: U.S. Census 2000 (based on a supplemental survey over the course of a year, thus the number of
             families is slightly different than in Table 2. Rest of PMSA estimated by ECONorthwest using family income
             distribution projections for Columbia and Yamhill counties from Claritas, Inc.


                 The distribution of families by income in Oregon closely matches that of
             the U.S. For example, 10 percent of the all Portland families were either poor
             or near poor (earned less than $15,000 in the year 2000). In the U.S. the
             percentage of families in the poor and near poor income range was the
             same—10 percent. Oregon, on the other hand, has larger percentages of
             families in the income ranges below $75,000 a year and fewer of those
             making more than $75,000 when compared to both the U.S. and the City of
             Portland.

                There is a difference between the distributions of family incomes in
             Portland compared to the rest of the Portland-Vancouver PMSA. While 10
             percent of Portland families are either poor or near poor, only 8 percent of
             those living in the rest of the
             PMSA are.
                                                                  Figure 2: Difference in the distributions of family
                                                                  income between the City of Portland and the rest of
                 Figure 2 illustrates these                       the Portland-Vancouver PMSA, 2000
             differences for all six of the           3%

             income categories. It shows that         2%

             Portland has a higher proportion         1%

             of families in the poor to middle-       0%

             income ranges, but far fewer            -1%

             upper- and upper-middle-income          -2%
             families compared to the rest of        -3%
             the PMSA. Thus, while the City of
                                                     -4%
             Portland has a family-income                 Poor & near    Low     Lower mid    Middle Upper mid  Upper
                                                             poor       income     income    income   income   income
             distribution much like the United      Source: Calculated using data from Table 4.
             States, within the Portland
             metropolitan area a disproportionate number of affluent families choose to
             live outside the City, while a greater share of less well-off families live inside
             the city.

                Table 5 shows nearly 83 percent of all Portland households earn money
             through work. This is a higher percentage than in the rest of Oregon or the
             United States, but below that of the rest of the PMSA. About 22 percent of
             Portlanders get social security retirement checks—less than for Oregon and
             the U.S, which is consistent given the relatively low proportion of residents
             over 65 in the city. Where Portland lags is in other retirement income—



2-2 page 6                    July 2002                       Appendix 2-2: Overview of the Portland Economy
                      mostly pension income. In comparison with the rest of the PMSA Portland
                      households are also more likely to rely on public assistance and supplemental
                      social security, which is designed largely to help people who are both poor
                      and disabled.

                      Table 5: Sources of Household Income, Various Areas, 2000
                                                                             Rest of Part
                                                                Portland    of the PMSA*       Oregon       US
                       Percent of households receiving:
                        Wage, salary & self employment income     82.93%              84.18%     80.42%     81.06%
                        Social security retirement benefits       21.64%              21.68%     26.83%     26.25%
                        Other retirement income                   13.19%              15.53%     16.88%     16.94%
                        Supplemental social security               3.49%               2.34%      3.38%      3.83%
                        Cash public assistance                     2.72%               1.88%      2.95%      2.60%
                        Food stamp benefits                        8.18%               5.16%      8.13%      6.12%
                      Source: U.S. Census 2000. Rest of PMSA calculated by ECONorthwest and excludes Yamhill and Columbia
                      Counties.


                         Table 6 shows the amounts of income received. Households in Portland
                      who reported wage, salary, or self-employment income in 2000 earned over
                      $10,000 less than households in the rest of the PMSA. Portland households
                      with other sources of income, including retirement and public assistance, also
                      received less money than those in the rest of the PMSA and in the state as a
                      whole. As a result, the average household income in Portland was less than it
                      was for the other parts of the PMSA ($51,822 versus $56,510).

                      Table 6: Average Amounts Received by Household from Sources of
                      Income, Various Areas, 2000
                                                                                          Rest of Part
                                                                           Portland      of the PMSA*     Oregon         US
                       Average amount received by households getting:
                        Wage, salary & self employment income                 $51,151          $61,649      $49,486      $55,684
                        Social security retirement benefits                    11,436           12,394       11,847       11,377
                        Other retirement income                                15,411           16,309       16,206       15,563
                        Supplemental social security                            6,234            6,351        6,618        6,233
                        Cash public assistance                                  2,963            3,649        2,906        2,990
                      Source: U.S. Census 2000. Rest of PMSA calculated by ECONorthwest and excludes Yamhill and Columbia
                      Counties.


                         Table 7 shows how the spending patterns of people in the Portland PMSA
                      and elsewhere. The data come from surveys conducted regularly by the U.S.
                      Bureau of Labor Statistics. They measure the income and spending by
                      consumer units. A consumer unit is basically a household except that some
                      households, like those made up of unrelated roommates who don’t share
                      expenses, are counted as two separate units. Consequently, there are a few
                      more consumer units than there are households in the country (about five
                      percent more in Portland).




Appendix 2-2: Overview of the Portland Economy                              July 2002                                 2-2 page 7
             Table 7: Average Household Living Costs, Various Areas, 1999 - 2000
                                                                    Portland                    Seattle
                                                                     PMSA            U.S.       PMSA         Western U.S.
             Average consumer unit characteristics:
              Income before taxes                                      $49,035       $44,301      $51,292        $47,078
              Persons                                                      2.5            2.5          2.4           2.6
              Vehicles                                                     2.2            1.9          2.3           2.0
              Percent Homeowners                                          64%           66%          64%            60%

             Average annual spending by category:
              Food                                                      $5,655        $5,095       $6,542         $5,508
              Housing, furnishings and up-keep                          12,311         9,755       12,419         11,882
              Utilities, fuels, and public services                      2,344         2,433        2,225          2,202
              Transportation                                             7,800         7,215        7,402          7,874
              Clothing                                                   1,517         1,800        1,917          2,007
              Entertainment                                              2,718         1,877        2,301          2,144
              Health care                                                1,984         2,013        2,514          1,982
              Alcoholic beverages and tobacco products                     758           655          793            646
              Reading and Personal care products & services                700           639          788            700
              Miscellaneous                                              1,656         1,455        1,539          1,658
              Cash contributions                                         2,265         1,187        1,061          1,297
              Personal insurance and pensions                            4,623         3,400        4,100          3,927
             Average annual expenditures                               $44,331       $37,522      $43,601        $41,826
             Source: U.S. Bureau of Labor Statistics consumer expenditure surveys.


                 In summary, the information about the residential sector has the
             following implications for current and likely future economic activity in the
             Portland region:

                 •    Young professionals like Portland; families with children
                      prefer the suburbs. Portland has proven to be more attractive to
                      young, college educated people. However, they tend to move out of the
                      city after marrying or advancing in their careers. The result is that
                      households outside the city are larger, earn more money, and have
                      more young children than those in the City. Economic development
                      actions that can help reduce this shift would help raise the earnings
                      power of residents and, in turn, stimulate growth in business
                      activities.

                 •    Portland’s educated workers attract the service industries.
                      Nationally, there has been a trend way from goods-producing
                      industries and towards service industries. Portland has been well
                      positioned in capturing a larger share of the service sector than
                      outlying areas. The City has the educated workforce characteristics to
                      continue growing in the services sector.

                 •    Majority of region’s workforce work in the City. According to the
                      Census data, over 60 percent more people work in the City than
                      workers live in the City, which means there is a large net
                      commutation into Portland from the rest of the PMSA. Maintaining a
                      cost-effective, reliable transportation system will be crucial in
                      sustaining the City’s access to this labor supply. Those in the Portland
                      PMSA spend more each year on transportation than those living in
                      Seattle and the U.S. as a whole.



2-2 page 8                    July 2002                      Appendix 2-2: Overview of the Portland Economy
                               •   Portlanders receive more welfare and less retirement income
                                   than others in the region. Portland has a disproportionately large
                                   share of the PMSA’s households who get public assistance but a
                                   smaller share of those earning retirement income. Job training, more
                                   access to education, and other services to help elevate the earnings of
                                   Portland households would be beneficial. The low share of retirees,
                                   which appears to be, in part, caused by the out-migration of late-
                                   career households, may be something that is beginning to change as a
                                   result of the plethora of attractive urban empty-nest housing in the
                                   City. This trend should support a natural evolution of high-end retail
                                   and service businesses.


              BUSINESSES
                               This section provides a brief overview of the business component of the
                           economy. It covers the activities of private enterprises engaged in selling
                           products or services for profit or personal income. Included is everything from
                           large corporations with thousands of workers all the way down to self-
                           employed persons with no employees. Since the data for employer and
                           nonemployer businesses come from different sources, they are reported in
                           separate sections.

                  CURRENT CONDITIONS
                       Employer Businesses
                               The most current numbers on the business component come from the U.S.
                           Economic Census of 19972. In this section we report revenue (sales) data for
                           the main Census business categories including businesses with no paid
                           employees. In order to compare Portland to other areas, we divided each
                           industry’s total revenues by the population. This provides us with measure of
                           relative importance to the local economies.

                               The results are shown in Table 8. We find that service industries are
                           more dominant than goods producing industries in Portland when compared
                           to the rest of the PMSA. Particularly strong in the city are those industries
                           that need to be centrally located to the regional population either because of a
                           need to move goods quickly and efficiently to customers, such as the
                           wholesaling and transportation industries, and those that benefit from being
                           centrally located to large white collar labor pools, such as the finance and
                           insurance industry.




2   For farms we used the 1997 Census of Agriculture.



Appendix 2-2: Overview of the Portland Economy                     July 2002                     2-2 page 9
              Table 8: Per Capita Industry Revenues (in dollars), Various Areas, 1997

                                                                                Rest of the
                                                                    Portland      PMSA        Oregon       US
              Industry:
               Farming and ranching                                        $2         $570       $915       $735
               Forestry, fishing, hunting & agricultural services          16            43         82         32
               Mining and oil & gas extraction                             23            92         71        668
               Manufacturing                                           14,736        19,861     14,762     14,366
               Wholesale trade                                         47,304        18,340     16,652     15,275
               Retail stores                                           12,056         9,978     10,112      8,936
               Non-store retailing                                        550           433        459        513
               Utilities                                                4,980           961      1,411      1,539
               Construction & contracting                               4,488         5,549      4,486      3,532
               Transportation & warehousing                             3,281           838      1,265      1,298
               Information services                                     3,710         2,279      1,818      2,349
               Finance & insurance                                     23,317         5,604      7,601      8,345
               Renting, leasing & real estate                           2,495         1,202      1,219      1,279
               Holding companies, managing & auxiliary offices          3,623           196        730        387
               Professional & technical services (for-profit)           5,013         1,466      1,744      2,467
               Administrative, support & waste services                 2,126           948        991      1,169
               Educational services (for-profit)                          101            70         67         66
               Health care & social services (for-profit)               2,403         1,343      1,508      1,680
               Arts, entertainment & recreation (for-profit)              431           198        302        371
               Food & lodging places                                    2,291         1,099      1,396      1,342
               Personal & maintenance services (for-profit)             1,432           668        754        771
              Total                                                  $134,378       $71,741    $68,345    $67,122
              Source: The 1997 Economic Census, 1997 Census of Agriculture, 1997 Economic Census Non-employer
              Statistics, and ECONorthwest estimates.


                  Key findings from the analysis are:

                  •    Portland manufacturing is on par with state and nation but
                       lags the suburbs. Per capita manufacturing revenues were
                       substantially higher ($19,861) in the PMSA surrounding Portland
                       because of the high concentration of semiconductor plants.

                  •    Portland dominates wholesale and retail trades. While Portland
                       holds its own in manufacturing, it dominates the wholesale and retail
                       store trade. Per capita sales of both industries well exceed similar
                       figures for the nation, state, and rest of the PMSA. Wholesalers, by
                       their very nature, need to be centrally located in metropolitan areas
                       and, therefore, are concentrated in Portland. The sales at retail stores
                       benefit from regional tourism and interstate traffic, both of which are
                       focused in the PMSA in Portland.

                  •    Transportation and warehousing is centered in Portland. For
                       these sectors, Portland shows $3,281 in sales per capita versus $838 in
                       the rest of the PMSA. Portland is the center of the aviation and
                       marine transport industries, which of course tie-in closely with
                       trucking. Further facilitating this industry is the proximity of
                       Portland to interstate highways and the city’s central location with
                       respect to other major cities in the west.




2-2 page 10                   July 2002                       Appendix 2-2: Overview of the Portland Economy
                          •   Utilities are headquartered in the City. Revenues per capita for
                              utilities are problematic because it is difficult to attribute their sales
                              geographically. Utility sales in Portland are higher than the region
                              because the three largest utilities are headquartered in the city. Thus,
                              the revenues per capita reflect as much the location of their offices
                              than where their actual service or products are sold.

                          •   The information industry is strong in the City. The information
                              industry is centered in Portland because it is the largest media
                              market and the largest city in the state. According to the Census
                              broadcasters, publishers, and telecommunications companies’ make-
                              up the bulk of the “information industry” in Oregon. Another sub-
                              sector of it, the film and video production business, is also
                              concentrated in the city—in large part because it is where much of the
                              business’s creative talent resides.

                          •   Portland serves as state’s key financial center. Being the state’s
                              traditional financial center and having a large white-collar workforce
                              probably helps explain why per capita revenues of the finance and
                              insurance industry is $23,317 in Portland, but only $7,601 for the
                              state as a whole. Similarly there is much higher revenues per capita
                              for “holding companies, managing & auxiliary offices” within Portland
                              than elsewhere in Oregon. This industry is a Census catchall for
                              establishments ranging from corporate headquarters and bank
                              holding companies to regional business offices that provide
                              administrative services to operating corporations.

                  Non-Employer Businesses
                          Non-employer businesses are family-run firms (with no paid employees),
                      self-employed people, or small businesses where only the owners work. Non-
                      employers are found in virtually every for-profit business category. In some
                      cases they hold large shares of industry’s revenues. As can be seen in Table 9,
                      local non-employer firms hold sizable market shares in many key service
                      sector industries. For example, non-employers in Portland accounted for over
                      $170 million of the construction industry’s revenues in 1997, which was
                      almost eight percent of the total earned by that sector.

                          Non-employers are major factors in three industries whose main functions
                      are to assist other local businesses and consumers all exhibit higher revenue
                      per capita figures in Portland than in the rest of the PMSA, state, or nation.
                      That are: (1) renting, leasing & real estate, (2) professional, technical, &
                      scientific services, and (3) administrative, support & waste services. All
                      employ large numbers of white-collar workers and tend to locate centrally in
                      urban areas so that they are convenient to customers.




Appendix 2-2: Overview of the Portland Economy                 July 2002                     2-2 page 11
              Table 9: Percent of Industry Revenues by Non-Employer
              Firms, Various Areas, 1997
                                    Industry                             Portland    Rest of PMSA
              Mining                                                            0.0%          2.2%
              Manufacturing                                                     0.4%          0.3%
              Wholesale trade                                                   0.3%          0.7%
              Retail stores (in store)                                          1.9%          1.9%
              Non store retailers                                              14.1%         14.2%
              Utilities                                                         0.0%          0.2%
              Construction                                                      7.6%          8.6%
              Transportation & warehousing                                      2.2%          9.7%
              Information industries                                            0.9%          0.7%
              Finance & insurance                                               0.5%          1.9%
              Renting, leasing, & real estate                                  26.2%         32.8%
              Holding companies & managing offices                              0.0%          0.0%
              Professional services (for-profit)                               11.0%         19.6%
              Administrative, support, & waste services                         3.8%          6.3%
              Educational services (for-profit)                                18.0%         17.6%
              Health care & social assistance (for-profit)                      9.2%          9.5%
              Arts, entertainment & recreation (for-profit)                    17.4%         19.1%
              Food & lodging places                                             1.5%          3.8%
              Personal services (for-profit)                                   13.7%         23.1%
              Source: The 1997 Economic Census, 1997 Census of Agriculture, 1997 Economic Census
              Non-employer Statistics, and ECONorthwest estimates.


                  Businesses with no employers account for 17 percent of the revenues of
              the three industries in the PMSA. Not apparent in Table 10 is the geographic
              difference between firms with employees and those without. While City of
              Portland businesses in the three industries with paid employees generated 53
              percent of the PMSA’s revenues, only 40 percent of the non-employer
              businesses in the same three industries did so. In other words, those without
              payrolls are far more likely to be located outside of the City limits.

              Table 10: Revenues of Three Industries by Location and
              Type of Establishment, City of Portland and PMSA, 1997
                                     Establishments with Paid Non Employer Firms and
                                            Employees             Self-Employed
                                       Revenues     % of Total Revenues     % of Total
               Portland              $4,201,713,000       53%  $646,227,000      40%
               Rest of PMSA           3,698,863,000       47%   955,875,000      60%
              Total PMSA              7,900,576,000     100% 1,602,102,000      100%
              Source: Combined revenues of the renting, leasing & real estate, professional, technical &
              scientific services, and the administrative, support & waste services industries by type of
              establishment. Data are from the 1997 Economic Census, 1997 Economic Census Non-
              employer Statistics, and ECONorthwest estimates.


                  Among the possible reasons for this is that self-employed people in these
              industries tend to be mid or late career and work at home, thus, are more apt
              to live outside the city. They may also see a personal tax advantage to being
              out of the city.




2-2 page 12                    July 2002                        Appendix 2-2: Overview of the Portland Economy
                  INDUSTRY TRENDS
                              In 1980 the largest employment sector in the PMSA was manufacturing.
                          In 2000 it was the service industry.3 In 1980 18.7 percent of workers in the
                          PMSA were employed by service-producing industries. In 2000, 23.8 percent
                          were. Construction and agriculture4 showed small increases in their shares of
                          total employment as well. Nearly every other sector declined. The percentage
                          of workers employed by government, wholesale trade, utilities and
                          transportation, and FIRE (finance, insurance, and real estate) all fell
                          between 1980 and 2000.

                             In the figures that follow, we show the long-term employment trends of
                          some major business sectors for the Portland-Vancouver PMSA and the
                          United States. We used the average annual covered employment by industry,
                          which is reported by the U.S. Bureau of Labor Statistics (BLS)5. The BLS
                          data include non-profits, but exclude the work of non-employer businesses.

                          Total employment numbers are reliable, but we warn readers that
                          employment down to the local industry level can change suddenly because
                          each company’s industry code is based on an opinion. That means that a
                          sudden change in the employment of a given industry in Portland could be
                          due to a single company’s business being reclassified from one industry to
                          another. It may have nothing really to do with the success or failure of the
                          industry. Therefore, we recommend that readers consider the general trends
                          over long periods of time for Portland employment by industry, instead of
                          focusing on big changes in any single year. Since the number of employees
                          nationally is so much larger than the PMSA, we indexed the data in these
                          figures to 1990 = 100. By indexing we can easily compare trends in the local
                          market with those of the nation.

                      The Portland region is drawing an increasing share of a flat
                        high-tech sector
                              Oregon Employment Department defines the high-tech sector as the sum
                          of the computer, electronics, and instrument manufacturing industries.6
                          Contrary to popular belief, national employment in high tech peaked in 1984


3   2002 Regional Economic Profile, Oregon Employment Department, December 2001. Page 31.
4 While the PMSA is largely urban, there is still over 295,000 acres of harvested farmland in it and in 2000 farm sales

from this land totaled $809 million.
5The advantage of using the BLS data is that it offers an accurate historical record of paid employees in industries. But
there are some disadvantages. As noted earlier, covered employment counts those who work for pay and are covered by
unemployment insurance. That is roughly nine out of every ten workers in the country. Not counted are the self-
employed, the military, most farm employees, and unpaid family workers. The BLS trend data also do not distinguish
between non-profit and business employment. Thus, in this analysis, when we report on employment in the health care
industry, we cannot separate out the non-profit employment as we were able earlier when reviewing the 1997 Economic
Census data and the Oregon Employment Department ES 202 data for 1994 and 2000.
6 According to the 2002 Regional Economic Profile for the Portland PMSA the high tech industry is the sum of SIC 357,

36, and 38. December 2001. Page 26.



Appendix 2-2: Overview of the Portland Economy                            July 2002                          2-2 page 13
              when more than 3.4 million people were employed by the sector. Except for a
              period from 1993 to 1998, national employment in high tech has been falling.
              In 2001 it was down to about 2.8 million. Several factors contribute to the
              decline. The industry’s sales have grown dramatically because it consistently
              has been able to provide more value for less cost to consumers. This has come
              about in large part because of extraordinarily high labor productivity. Output
              has grown without increasing employment. Another factor is the shift of high
              labor processes to overseas plants. A trend that is accelerating today as
              nearly every significant Japanese manufacturer operated multiple plants in
              China in an effort to reduce product costs and stay competitive. Finally, the
              perception of high tech growth is in part colored by relocations. Expansions in
              one region of the country have come partly at the expense of lost growth
              opportunities elsewhere. The Portland metropolitan area has been a
              beneficiary of this.

                  In Figure 3, we show the          Figure 3: Employment in the Computer & Office
              historical employment trends of       Equipment Manufacturing Industry, indexed to 1990
                                                    = 100 for the PMSA and U.S., 1980 – 2001
              office and computer equipment
              manufacturers. Locally, makers          210.0

              of computer printers are among          190.0

              the biggest employers in this           170.0

              sector. Nationally, employment          150.0

              in this sector peaked in 1984           130.0

              when over 514,000 people                110.0

              worked for the industry.                 90.0


              Employment has declined every            70.0
                                                            1980               1987                    1994          2001
              year but two since. In the PMSA                                         PMSA        U.S.

              there was a surge of employment       Sources: ECONorthwest analysis of data from the Oregon Employment
              in this sector in the 1990s when      Department, U.S. Bureau of Labor Statistics, and the Washington
                                                    Employment Security Department.
              new plants opened (the PMSA
              has just 1.6 percent of the national employment of this sector). Despite
              dropping markedly since 1997, local employment is still about 30 percent
              ahead of where it was a decade ago. The industry is being hurt by a sharp
              curtailment in computer equipment spending by business and consumers
              alike. That weakness is transitory and over the longer term industry orders
              should resume their historical upward trend. The ability of the local industry
              to garner a share of that growth
              will depend in part on how well       Figure 4: Employment in the Electronics
              they can innovate their product       Manufacturing Industry, indexed to 1990 = 100 for
                                                    the PMSA and U.S., 1980 – 2001
              lines at cost and quality levels
              superior to foreign
                                                      250.0
                                                      230.0
              manufacturers.                          210.0
                                                                   190.0
                                                                   170.0
                  Companies like LSI Logic,                        150.0

              Tri-Quint, Lattice                                   130.0
                                                                   110.0
              Semiconductor, and others are                         90.0

              large manufacturers in the local                      70.0

              electronics industry. A surge in                      50.0
                                                                        1980              1987                   1994           2001

              new manufacturing capacity                                                         PMSA     U.S.

              from firms moving to the PMSA,                     Sources: ECONorthwest analysis of data from the Oregon Employment
                                                                 Department, U.S. Bureau of Labor Statistics, and the Washington
                                                                 Employment Security Department.




2-2 page 14                    July 2002                      Appendix 2-2: Overview of the Portland Economy
                      such as Intel back in 1974, and established local companies, such as
                      Tektronix and its spin-offs, led to a remarkable, nearly five-fold increase in
                      employment since 1980. This contrasts sharply with a generally weak
                      declining trend nationally. The PMSA has clearly developed a critical mass of
                      manufacturers and skilled workers in this sector and, although the current
                      downturn in shipments is severe, those companies who make it through will
                      most likely thrive.

                          Figure 5 shows the               Figure 5: Employment in the Instrument & Related
                      employment trends for                Equipment Manufacturing Industry, indexed to 1990
                                                           = 100 for the PMSA and U.S., 1980 – 2001
                      manufacturers of instruments. A
                      recession followed by workforce        170.0

                      reductions starting in 1986 and        150.0
                      continuing through 1990 by a
                      large manufacturer caused much
                                                             130.0



                      of the decline seen in the PMSA.       110.0


                      By 1992 this sector’s employment        90.0


                      in the PMSA was about 10                70.0

                      percent below the national level.
                                                                     1980         1987                      1994             2001

                                                                                           PMSA     U.S.
                      Since then local manufacturers       Sources: ECONorthwest analysis of data from the Oregon Employment
                      have generally kept pace and         Department, U.S. Bureau of Labor Statistics, and the Washington
                                                           Employment Security Department.
                      show no signs of competitive
                      disadvantage or advantage for
                      the long term.
                                                           Figure 6: Employment in the Lumber & Wood
                                                           Products Industry, indexed to 1990 = 100 for the
                  Wood products and paper                  PMSA and U.S., 1980 – 2001
                    show job losses in                       120.0

                    Portland and nationally                  115.0
                                                             110.0
                                                             105.0
                          In Figure 6, we show total         100.0
                                                              9 5.0
                      employment for the lumber and           9 0.0

                      wood products industry. Local           8 5.0
                                                              8 0.0
                      employment in this industry             7 5.0

                      suffered a large downturn in the        7 0.0
                                                                  1980            1987                  1994                 2001

                      early 1980s. Employment                                              P MS
                                                                                           A
                                                                                                    U .S.

                      recovered somewhat in the late       Sources: ECONorthwest analysis of data from the Oregon Employment
                                                           Department, U.S. Bureau of Labor Statistics, and the Washington
                      1980s, but has since fallen even     Employment Security Department.

                      though national employment
                      levels climbed about nine percent
                      in the last 11 years. Production     Figure 7: Employment in the Paper Manufacturing
                                                           Industry, indexed to 1990 = 100 for the PMSA and
                      has been moving out of the           U.S., 1980 – 2001
                      region to other parts of the
                                                             110.0
                      country where raw materials and
                      labor are less costly. This is a
                                                             105.0


                      trend that is apt to continue.         100.0


                                                              95.0

                         Employment trends in the             90.0

                      paper industry mirror that of the       85.0
                      lumber and wood products
                                                              80.0
                      industry (Figure 7). The                    1980              1987                           1994             2001

                                                                                             PMSA          U.S.

                                                           Sources: ECONorthwest analysis of data from the Oregon Employment
                                                           Department, U.S. Bureau of Labor Statistics, and the Washington
Appendix 2-2: Overview of the Portland Economy                July 2002
                                                           Employment Security Department.                                2-2 page 15
                weakness in local employment can be tied to competition from other regions
                of the country where raw material and labor costs are less. Given the capital-
                intensive nature of the industry and the difficulty in citing new plants locally,
                it is doubtful there would be much employment growth in this sector over the
                long term.

              Metals, machinery, and transportation equipment job gains
                ended with the recession
                    Locally the largest employers     Figure 8: Employment in the Primary Metals
                in the primary metals industry        Industry, indexed to 1990 = 100 for the PMSA and
                                                      U.S., 1980 – 2001
                (Figure 8) are foundries and steel
                mills. In the 1980s employment          150.0
                in this industry grew in the
                PMSA while falling rapidly              130.0


                elsewhere in the country. Since         110.0


                then employment both in the              90.0

                PMSA and the U.S. are down               70.0
                about 10 percent from where
                they were in 1990. The Portland
                                                         50.0
                                                              1980              1987                    1994          2001

                metropolitan area historically                                         PMSA        U.S.

                has had certain competitive           Sources: ECONorthwest analysis of data from the Oregon Employment
                                                      Department, U.S. Bureau of Labor Statistics, and the Washington
                advantages in this sector             Employment Security Department.

                including a skilled labor force,
                ample scrap metal supplies, relatively cheap electric power, and a centralized
                location (one day truck delivery distance from Seattle, Spokane, and
                Oakland). These advantages, for the most part, remain. However, Portland
                manufacturers are subject to cyclical surges in foreign competition,
                particularly when international markets are weak and the U.S. dollar
                exchange rate is high. Such are the market conditions today. If the productive
                capacity in the PMSA remains intact, employment by this sector will grow
                again when market conditions improve.

                    Figure 9 shows employment
                trends in the fabricated metal       Figure 9: Employment in the Fabricated Metals
                                                     Industry, indexed to 1990 = 100 for the PMSA and
                products industries, which           U.S., 1980 – 2001
                includes many diverse                  140.0
                manufacturers of metal products
                such as architectural steel
                                                       130.0


                shapes, cutlery, and brass             120.0


                fixtures. As with primary              110.0

                metals, this is an industry that       100.0

                benefits from the skilled               90.0
                workforce in the PMSA and
                                                        80.0
                Portland’s centralized location.            1980                1987                    1994           2001

                In recent years strong levels of                                       PMSA        U.S.

                consumer spending and                Sources: ECONorthwest analysis of data from the Oregon Employment
                                                     Department, U.S. Bureau of Labor Statistics, and the Washington
                negligible pricing pressure on       Employment Security Department.

                raw materials have helped this
                sector. As such, the industries’ employment level has grown faster locally


2-2 page 16                      July 2002                       Appendix 2-2: Overview of the Portland Economy
                      than nationally. We would expect, over the long-term, that the fabricated
                      metals industries would remain strong in the PMSA.

                          There are many
                                                          Figure 10: Employment in the Industrial Machinery
                      manufacturers of industrial         Industry (excluding computers), indexed to 1990 =
                      machinery in the PMSA. It was a     100 for the PMSA and U.S., 1980 – 2001
                      strong sector throughout much of      130.0

                      the 1990s when corporations           125.0


                      around the world were investing       120.0


                      heavily in capital equipment.         115.0

                                                            110.0
                      More recently, a sudden drop in       105.0
                      capital spending coinciding with      100.0

                      a high exchange rate has hurt          95.0

                      area manufacturers. These              90.0
                                                                 1980               1987                    1994          2001
                      conditions are cyclical in nature                                    PMSA        U.S.
                      and, as with other metal            Sources: ECONorthwest analysis of data from the Oregon Employment
                      intensive manufacturing sectors,    Department, U.S. Bureau of Labor Statistics, and the Washington
                                                          Employment Security Department.
                      local makers of industrial
                      machinery that survive the current weak markets are apt to grow in the
                      future.

                          Among the manufactures of          Figure 11: Employment in the Transportation
                      transportation equipment in the        Equipment Manufacturing Industry, indexed to 1990
                                                             = 100 for the PMSA and U.S., 1980 – 2001
                      PMSA are Warn Industries,
                      Consolidated Freightways, and            130.0


                      Gunderson. It is an important
                                                               120.0

                                                               110.0
                      industry because transportation          100.0
                      manufacturers rely on large               90.0

                      networks of local suppliers that          80.0

                      are also manufacturers. Between           70.0

                      1983 and 1999 employment by               60.0


                      this industry more than doubled           50.0
                                                                    1980               1987                    1994          2001

                      in the PMSA while nationally it                                         PMSA        U.S.

                      barely grew at all. Much of this       Sources: ECONorthwest analysis of data from the Oregon Employment
                                                             Department, U.S. Bureau of Labor Statistics, and the Washington
                      industry consists of makers of         Employment Security Department.

                      business capital equipment,
                      which is a very weak part of the national economy. Fundamentally, the
                      competitive strengths of the PMSA remain intact, but they are not unique
                      and the ability of this sector to grow employment locally in the future is
                      dependent on retaining efficient manufacturing capacity.

                  Local food manufacturing declined in a flat national market
                         Even though Oregon has a large agricultural base, only one out of every
                      200 employees in the national food manufacturing industry work in the
                      PMSA. Generally, large food manufacturing plants are best located in areas
                      central to the nation’s households. This gives Portland a distinct
                      disadvantage.




Appendix 2-2: Overview of the Portland Economy                               July 2002                               2-2 page 17
              Local job growth in printing, publishing, and communications
                outperformed the national market
                    The printing and publishing                     Figure 12: Employment in the Printing & Publishing
                                                                    Industry, indexed to 1990 = 100 for the PMSA and
                industry has grown steadily in                      U.S., 1980 – 2001
                the PMSA since 1980. Even when                        130.0
                the national trend flattened out                      120.0
                in the 1990s, local area                              110.0
                employment grew. This was                             100.0
                partially fueled by population                         90.0

                growth. Between 1980 and 2000                          80.0

                the population of the PMSA grew                        70.0

                by 44 percent compared with 24                         60.0

                percent nationally.                                        1980              1987                      1994          2001

                                                                                                       PMSA     U.S.


                    With a few exceptions, the         Sources: ECONorthwest analysis of data from the Oregon Employment
                                                       Department, U.S. Bureau of Labor Statistics, and the Washington
                trend of employment in the             Employment Security Department.

                communications industry of the
                PMSA has stayed ahead of that          Figure 13: Employment in the Communications
                                                       Industry, indexed to 1990 = 100 for the PMSA and
                of the nation. As with publishing,     U.S., 1980 – 2001
                this is in large part due to the         140.0
                PMSA higher population growth            135.0

                and its place as the population          130.0


                center of a large state. In the
                                                         125.0
                                                         120.0
                1990s this sector grew strongly,         115.0

                powered by large investments in          110.0
                                                         105.0
                capacity by the cellular telephone       100.0

                and cable television industries.          95.0

                That surge appears to have
                                                          90.0
                                                               1980               1987                    1994           2001

                ended abruptly and employment                                            PMSA        U.S.

                is now declining both nationally       Sources: ECONorthwest analysis of data from the Oregon Employment
                                                       Department, U.S. Bureau of Labor Statistics, and the Washington
                and locally. The PMSA has no           Employment Security Department.

                inherent strength or weakness in
                this sector, and future growth will likely track national trends.

              Trucking and warehousing
                was flat after mid-1990’s
                                                                      Figure 14: Employment in the Trucking &
                losses                                                Warehousing Industry, indexed to 1990 = 100 for the
                                                                      PMSA and U.S., 1980 – 2001
                    Trucking and warehousing                             140.0
                employs about 17,400 people in the                       130.0
                Portland-Vancouver PMSA. Up                              120.0

                until the mid-1990s, employment in                       110.0

                this sector grew steadily. It has                        100.0

                since fallen back, possibly as a                          90.0


                consequence of the weakness we                            80.0


                have seen in certain truck
                                                                          70.0

                                                                          60.0
                transportation dependent                                      1980              1987                          1994          2001

                manufacturing sectors and the                                                            PMSA          U.S.

                                                                      Sources: ECONorthwest analysis of data from the Oregon Employment
                                                                      Department, U.S. Bureau of Labor Statistics, and the Washington
                                                                      Employment Security Department.



2-2 page 18                      July 2002                       Appendix 2-2: Overview of the Portland Economy
                      movement of business to facilities outside the metropolitan area.

                  Portland PMSA trade sectors slightly outperformed national
                    trends
                          Figure 15 shows the              Figure 15: Employment in Wholesale Trades,
                                                           indexed to 1990 = 100 for the PMSA and U.S., 1980 –
                      employment trends in wholesale       2001
                      trades. This is a large sector.        130.0
                      Over 65,000 people in the PMSA
                                                             120.0
                      worked in this industry during
                      2001. It generally tracks              110.0


                      population and commercial              100.0


                      business growth, which explains         90.0

                      why employment by wholesalers           80.0

                      in the PMSA has risen at a faster       70.0
                      rate than the country as a whole.           1980              1987                   1994            2001


                      Future growth will track local                                       PMSA     U.S.


                      population and business growth.      Sources: ECONorthwest analysis of data from the Oregon Employment
                                                           Department, U.S. Bureau of Labor Statistics, and the Washington
                                                           Employment Security Department.

                          The PMSA has a clear
                                                           Figure 16: Employment in Retail Trade, indexed to
                      advantage in retail trade due to     1990 = 100 for the PMSA and U.S., 1980 – 2001
                      the lack of a sales tax, its           140.0

                      proximity to Washington State,         130.0

                      and a steady stream of affluent        120.0

                      tourists coming through its            110.0

                      airport. This advantage in             100.0

                      combination with the relatively         90.0

                      stronger income growth of the           80.0

                      PMSA is reflected in the region’s       70.0

                      faster increase in retail                   1980              1987                   1994            2001


                      employment. The PMSA should                                          PMSA     U.S.


                      continue slightly exceeding the      Sources: ECONorthwest analysis of data from the Oregon Employment
                                                           Department, U.S. Bureau of Labor Statistics, and the Washington
                      national trends in this              Employment Security Department.


                      employment sector.

                  Service sectors are growing
                    at the national rate
                                                           Figure 17: Employment in Social Services, indexed
                          Social services employment in    to 1990 = 100 for the PMSA and U.S., 1980 – 2001

                      the PMSA has generally tracked         180.0

                      the U.S. trend over recent years.      160.0


                      This sector serves local               140.0


                      populations and depends heavily        120.0


                      on contributions to non-profits,       100.0


                      the principal employers in the          80.0


                      sector, and both direct and             60.0


                      indirect government support.            40.0
                                                                  1980              1987                   1994           2001
                      The long-term trend will track                                       PMSA     U.S.

                      the needs of the PMSA’s              Sources: ECONorthwest analysis of data from the Oregon Employment
                      residents for individual and         Department, U.S. Bureau of Labor Statistics, and the Washington
                                                           Employment Security Department.




Appendix 2-2: Overview of the Portland Economy                July 2002                                           2-2 page 19
                              family services, childcare, job training, and other social services. Health care
                              is another major service sector that tracks the needs of the population, but


        Figure 18: Employment in Health Care, indexed to                         Figure 19: Employment in Engineering, Accounting,
        1990 = 100 for the PMSA and U.S., 1980 – 2001                            & Management Services, indexed to 1990 = 100 for
                                                                                 the PMSA and U.S., 1980 – 2001
          130.0
                                                                                   160.0
          120.0
                                                                                   150.0
          110.0
                                                                                   140.0
          100.0
                                                                                   130.0
           90.0                                                                    120.0

           80.0                                                                    110.0

           70.0                                                                    100.0

                                                                                    90.0
           60.0
               1980              1987                   1994            2001        80.0
                                                                                        1980              1987                    1994              2001
                                        PMSA     U.S.
                                                                                                                  PMSA     U.S.
        Sources: ECONorthwest analysis of data from the Oregon Employment
        Department, U.S. Bureau of Labor Statistics, and the Washington          Sources: ECONorthwest analysis of data from the Oregon Employment
        Employment Security Department.                                          Department, U.S. Bureau of Labor Statistics, and the Washington
                                                                                 Employment Security Department.




                              due to high costs, is under constant pressure to increase labor productivity.

                                  Employment in engineering, accounting, and management services had
                              been growing faster in the PMSA than in the rest of the country. This was a
                              reflection of the stronger business
                              climate in the region as well as    Figure 20: Employment in Legal Services, indexed to
                              the tight labor market that         1990 = 100 for the PMSA and U.S., 1980 – 2001
                              compelled businesses to                                  120.0


                              outsource more work than they                            110.0


                              otherwise would. Now that the                            100.0


                              economy of the PMSA has                                      90.0



                              weakened considerably,
                                                                                           80.0

                                                                                           70.0
                              employment in this service sector                            60.0

                              is beginning to fall back in line                            50.0

                              with the national trend, which it                                1980        1987

                                                                                                                  PMSA   U.S.
                                                                                                                                1994         2001



                              is apt to track closely with in the Sources: ECONorthwest analysis of data from the Oregon Employment
                              long term.                          Department, U.S. Bureau of Labor Statistics, and the Washington
                                                                  Employment Security Department.


                                  Figure 20 shows the
                              remarkable similarity in legal services employment between the PMSA and
                              the nation. We have no reason to expect any significant difference in this
                              relationship. Evidently the Portland metropolitan area consistently receives
                              its share of the country’s legal services work and has neither an
                              extraordinary competitive advantage nor disadvantage.




2-2 page 20                                        July 2002                   Appendix 2-2: Overview of the Portland Economy
                                                                        Figure 21: Employment in Construction, Indexed to
                                                                        1990 = 100 for the PMSA and U.S., 1980 – 2001
                                                                          160.0


                                                                          140.0

                          Construction employment is         120.0
                      cyclical on a national level and
                      when viewed for a smaller
                                                             100.0


                      geographic area, like the               80.0


                      Portland-Vancouver PMSA, the            60.0

                      swings in employment are often          40.0

                      wilder. The construction industry            1980               1987                    1994          2001


                      in the PMSA suffered through a                                         PMSA        U.S.


                      severe decline 20 years ago,         Sources: ECONorthwest analysis of data from the Oregon Employment
                                                           Department, U.S. Bureau of Labor Statistics, and the Washington
                      which culminated in 1983 when        Employment Security Department.

                      fewer than 17,000 had jobs. As the local economy recovered, construction
                      slowly rebounded—more than doubling by 1990. Construction employment
                      climbed to over 50,000 and remained above that level since 1996. Now it is
                      declining again. We are on the downward leg of a construction cycle.
                      Ultimately, however, construction employment follows general population
                      and economic growth, both of which will be stronger in the PMSA than in the
                      rest of the country.

                          With the main exceptions of                   Figure 22: Employment in Finance, Insurance & Real
                      regional and multi-state banks                    Estate, indexed to 1990 = 100 for the PMSA and U.S.,
                                                                        1980 – 2001
                      and insurance companies, most
                      businesses in the finance,                          130.0


                      insurance, and real estate sector                   120.0

                      of the PMSA serve local residents                   110.0

                      and companies. Thus, the trend                      100.0
                      comparison in Figure 22
                                                                           90.0
                      basically mirrors the historical
                      differences between the                              80.0


                      economies of the PMSA and the                        70.0
                                                                                  1980           1987                    1994          2001
                      United States, with some periods                                                   PMSA     U.S.
                      of weakness in recent years                       Sources: ECONorthwest analysis of data from the Oregon Employment
                      resulting from job losses at major                Department, U.S. Bureau of Labor Statistics, and the Washington
                                                                        Employment Security Department.
                      banking institutions that were
                      acquired by out-of-state interests.

                  Job changes in the hotel industry track the business cycle
                          Employment in the hotel                       Figure 23: Employment in Hotels and Other Lodging
                      industry is affected by the                       Places, indexed to 1990 = 100 for the PMSA and U.S.,
                                                                        1980 – 2001
                      cyclical nature of business travel
                      and, to a lesser degree, tourism.                   130.0


                      Highly dependent on rising                          120.0


                      household and business incomes,
                                                                          110.0

                                                                          100.0
                      the trend for hotel rooms is                         90.0
                      positive. The upward trend                           80.0
                      evident in Figure 23 will resume                     70.0

                      both nationally and locally once                     60.0

                      the current slump ends. The                              1980             1987                   1994         2001


                      PMSA is competitive with the
                                                                                                        PMSA    U.S.

                                                                        Sources: ECONorthwest analysis of data from the Oregon Employment
                      nation in its ability to attract                  Department, U.S. Bureau of Labor Statistics, and the Washington
                                                                        Employment Security Department.




Appendix 2-2: Overview of the Portland Economy                             July 2002                                            2-2 page 21
                    travelers to its lodging places and should, thus, keep pace with national
                    trends well into the future.

                        Summarizing our findings about the business sector and their implication
                    for future economic activity in the Portland region:

                       •   Sectors that rely on talented labor have prospered in
                           Portland. Relative to its population, most industries the City of
                           Portland greatly outperform those in the rest of the PMSA, the State,
                           and the country. Every industry, except manufacturing, construction,
                           and natural resources, reported higher sales per capita in the City
                           than outside. In general, industries that rely on a highly productive
                           labor force and are not land-intensive are thriving in the City. Efforts
                           to improve, and further educate that work force would help Portland
                           maintain its apparent competitive advantage. In addition, industries
                           that depend on having good accessibility to outlying areas and other
                           regions of the West, seem to prefer the City over the other parts of the
                           PMSA. Thus, facilitating that location advantage would help ensure
                           that these industries continue to thrive in the City.

                       •   Nationally, high-tech sector has been a zero-sum game that the
                           Portland region has won. The high technology industries in the
                           PMSA have grown by taking market share away from the rest of the
                           country. Industry trends show declining employment growth. Thus, in
                           order to growing locally in the future, the PMSA must continue taking
                           market share away from other regions.

                       •   Self-employed workers prefer the suburbs. Some service sectors
                           have high percentages of self-employed workers, which are not
                           counted in the covered employment data that is widely quoted. These
                           self-employed workers are often well compensated. They show a
                           strong tendency towards working outside the City. This may be due to
                           taxes, which discourage self-employment in the City and Multnomah
                           County, or the living choice to reside outside the City by mid-career
                           individuals. Encouraging self-employed workers to stay and move into
                           the City would have potential economic development benefits.


              NON-PROFITS
                CURRENT CONDITIONS
                        Non-profits have a sizable impact on the state’s economy and spend
                    billions of dollars annually providing everything from health care and social
                    services to fire protection and education to Oregonians. They are defined are
                    organizations with no owners, that are governed by boards or members, and
                    are operated for charitable, public benefit, religious, or mutual benefit
                    purposes.

                       In Table 11 the 1997 revenues of five segments for which the U.S. Census
                    reports the activities of tax-exempt organizations separately from businesses


2-2 page 22                     July 2002              Appendix 2-2: Overview of the Portland Economy
                      are shown. These five account for slightly more than two-thirds of the total
                      employment by non-profits in Oregon.

                      Table 11: 1997 Revenues and Revenues per Capita for Major
                      Non-Profit Industry Segments, Various Areas, 1997
                                                                                   PMSA
                                                                            Revenues  $ per Capita      Oregon       US
                       Non-Profit industry segment:
                        Personal, repair, laundry & maintenance services    $652,120,000        $364        $264        $384
                        Arts, entertainment & recreation                      136,555,000          76         67          73
                        Health care & social services                       2,964,911,000       1,656      1,501       1,742
                        Educational services                                   39,750,000          22         20          21
                        Professional, technical & scientific services          90,779,000          51         38          59
                      Source: The 1997 Economic Census.


                          Data from the Oregon Employment Department show the average
                      number of paid workers in 2000 employed by non-profits in Multnomah
                      County and the four other Oregon counties in the PMSA. Each economic
                      sector has some non-profit employment, but services sectors have the most.

                      Table 12: Average Annual Employment by
                      Non-Profit Sector, Various Areas, 2000                              ,
                                                                                Clackamas,
                                                             Multnomah      Washington & Yamhill
                                Economic Sector               County             Counties
                        Farming, construction & resources              11                      86
                        Manufacturing                                 181                       6
                        Transportation and utilities                  433                      68
                        Wholesale & retail trade                      145                      10
                        Health and legal service                   18,136                10,867
                        Educational services                        5,814                   4,432
                        Social services                            10,088                   3,985
                        Other services and arts                     3,666                   1,026
                        Membership organizations                    5,343                   5,148
                       Total Paid Employment                       43,817                25,628
                      Source: ES-202 tapes, Oregon Employment Department.


                         In Table 13 we show the breakdown in total employment by sector in
                      Multnomah County by non-profits, government, and businesses. We do not
                      show self-employed because year 2000 data by sector is unavailable for them.

                      Table 13: Share of Average Annual
                      Employment by Sector and Type of
                      Organization, Multnomah County, 2000
                          Economic Sector      Non-Profits Government Businesses
                        Social services              67%          7%         26%
                        Education                    16%         80%          4%
                        Health care                  53%          6%         41%
                        Arts and entertainment       15%          1%         84%
                        Business services              3%         0%         97%
                      Source: ES-202 tapes, Oregon Employment Department.


                         Non-profits accounted for 67 percent of social service professionals and
                      other workers in Multnomah County during 2000. That is more than twice as
                      many as businesses and nearly ten times as many as government did. Within
                      that sector we note that non-profits employed 41 percent of the child daycare,


Appendix 2-2: Overview of the Portland Economy                              July 2002                            2-2 page 23
                  68 percent of the residential care, 72 percent of the job training, and 73
                  percent of the family and individual social services workers in the County.
                  Non-profits were also the dominant employers in the health care industry.

              INDUSTRY TRENDS
                      Generally, employment by non-profits has been growing at rates similar
                  to the overall population. Payrolls have been rising substantially faster. From
                  1994 (the earliest year that data are available) to 2000 the number of people
                  working for non-profits for pay rose 17 percent in Multnomah County. The
                  payroll from non-profits climbed 47 percent to $1,243,000,000, which is over
                  seven percent of the County’s total. As can be seen in Table 14, in places
                  outside Multnomah County non-profits have been growing considerably
                  faster. Presumably rising populations in areas outside of Portland are behind
                  the increases.

                  Table 14: Percent change in the
                  employee counts and payrolls of
                  non-profits, various counties, 1994 - 2000
                                        1994     2000      Change
                  Employees:
                   Clackamas             7,825    9,760       25%
                   Columbia                498      559       12%
                   Multnomah            37,543   43,817       17%
                   Washington            9,909   12,776       29%
                   Yamhill               1,972    2,533       28%
                  Payroll (millions):
                   Clackamas              $177     $275       55%
                   Columbia                  5         8      60%
                   Multnomah               846     1,243      47%
                   Washington              224       361      61%
                   Yamhill                  33        58      76%
                  Source: 1994 and 2000 ES-202 data from the Oregon
                  Department of Employment.


                      Our findings about non-profits are:

                      •    Non-profits have traditionally preferred the City but are
                           growing in the suburbs. Non-profits are a large employer in
                           Portland, Multnomah County, and the rest of the PMSA. In the social
                           service and health care sectors, non-profits are the principal
                           employers. Non-profits are concentrated inside Portland, but trends
                           indicated a steady movement of non-profit employment out to suburbs.
                           This is a consequence of consumer demand for non-profit services
                           expanding more in area where population growth is faster.

                      •    Non-profits do not pay property taxes but contribute in other
                           ways. While most non-profits do not pay property taxes, their
                           employees do and non-profits account for about two billion dollars
                           annual payroll in the PMSA. In addition, non-profits provide services
                           that help alleviate public services spending by local and state
                           governments.




2-2 page 24                        July 2002                   Appendix 2-2: Overview of the Portland Economy
           GOVERNMENT
               CURRENT CONDITIONS
                          Government is the fourth component of the economy. Unlike the other
                      three, we cannot assign income or revenues by geography to the government
                      sector. Thus, we are resigned to comparing the relative importance of the
                      government sector by another measure. In this section, we chose
                      employment.

                          As noted before in Table 2, government (including the military) employed
                      14.6 percent of the country’s workforce in 2000. In Oregon, only 13.5 percent
                      held government jobs and in Portland just 11.7 percent of the City’s residents
                      did. This understates the size of the government sector in the City, however,
                      because a large percentage of those working for government in Portland live
                      outside the City. So when we look at the number of those working for
                      governments in offices and other places of employment in Portland and
                      compare that to the City’s population, we find that the result is
                      comparatively large.

                         There were 110.1 government employees working in Portland per
                      thousand residents in 2000. From Table 15, we see that this is well above
                      that of the statewide and national averages. It is not an unexpected result
                      considering that Portland is the State’s largest city. It has a high
                      concentration of courts, Federal offices, State and Federal regional offices,
                      and Portland State University. Just under half of all government employees
                      in Multnomah County work in education.

                      Table 15: Government Employees, Various Areas, 2000
                                                        Portland              Rest of PMSA    Oregon         US
                                                               per 1,000
                                                 Employees    Residents                per 1,000 Residents
                       Government Employees:
                        Federal (civilian)             11,304          21.4            5.2          9.2           10.2
                        State                           6,815          12.9            3.9         14.4           15.5
                        Local                          39,574          74.8           36.2         47.9           44.8
                        Armed Forces                      541           1.0            1.0          0.5            2.7
                       Total                           58,234         110.1           46.2         72.0           73.3
                      Source: Bureau of Labor Statistics, 2000 Census, and ECONorthwest estimates of Portland’s share of
                      employment in Multnomah County based upon ES-202 data.


                          Table 15 shows 21.4 Federal government employees working in the city in
                      2000 per thousand residents—more than twice the national and statewide
                      rates, and almost four times higher than the rest of the PMSA. Federal
                      administrative offices that address issues in Oregon tend to locate in the City
                      of Portland. Some major Federal government offices in Portland include the
                      U.S. Forest Service, the Bonneville Power Administration, Internal Revenue
                      Service, and the National Marine Fisheries Service.

                          The rest of the PMSA has 46.2 government employees per thousand
                      residents, which is much less than the Oregon and national averages. This
                      partly due to regional government offices serving the PMSA tending to be



Appendix 2-2: Overview of the Portland Economy                             July 2002                                2-2 page 25
                  located inside Portland. “Economies of scale” is another factor. That means
                  that in areas with large populations, you need fewer government employees
                  to serve every thousand residents. It is the reason why places with low
                  populations often require more government workers per thousand residents.
                  In Clatsop, Hood River, and Tillamook counties, which adjoin the PMSA,
                  there are an average of 72 government employees per thousand residents.

                     The ratio of state government employment to population in Portland is
                  low in comparison to national averages because Salem is the center of state
                  government in Oregon. If Portland were able to achieve the national ratio of
                  15.5 state workers per 1,000 residents, it would have nearly 1,400 more state
                  government workers within its borders.

                      Armed forces employment in Portland and throughout the region is well
                  below the national average because of the paucity of major military
                  installations in Oregon.

                     In summary, while Portland residents were less likely to work for
                  government, the numbers employed by the Federal, State, and local
                  governments in Portland offices and other establishments were higher than
                  other areas relative to the size of the City’s population.

              TRENDS IN GOVERNMENT
                      In Table 16, we show the total employment in the PMSA by government.
                  Total government employment in the PMSA has been rising at rates similar
                  to that of the population. Government employed about 12 percent of the
                  covered non-farm workers in the PMSA during the year 2000. Statewide the
                  figure was higher—about 15 percent. In total around 127,300 people worked
                  for government in the PMSA in 2000.

                  Table 16: Employment by government type, Portland PMSA, 1980-
                  2000 (in thousands)
                                                                                  Growth Rate Growth Rate
                                       1980             1990             2000     1980 - 1990 1990 - 2000
                    Federal              16.6             18.5             18.5          1.1%         0.0%
                    State                16.3             16.6             12.2          0.2%        -3.0%
                    Local                52.8             61.1             89.7          1.5%         3.9%
                   Total                 85.7             96.2            127.3          1.2%         2.8%
                   Population         1,333.6          1,515.5          1,918.0          1.3%            2.4%

                  Sources: U.S. Bureau of Labor Statistics and the U.S. Census.


                      Nationally, Federal government employment peaked in 1990 and it has
                  since declined about 15 percent. Federal government employment locally has
                  resisted this trend and has remained relatively stationary for the last decade.
                  In 2000, there were 18,500 people working for the Federal government in the
                  PMSA—about 30 percent of which were employed by the U.S. Post Office.



2-2 page 26                        July 2002                      Appendix 2-2: Overview of the Portland Economy
         Figure 24: Federal Government Civilian Employment,                    Figure 25: State Government Employment, indexed to
         indexed to 1990 = 100 for the PMSA and U.S., 1980 –                   1990 = 100 for the PMSA and U.S., 1980 – 2001
         2001
                                                                                 120.0
           110.0
                                                                                 110.0
           105.0
                                                                                 100.0
           100.0
                                                                                  90.0
            95.0
                                                                                  80.0
            90.0
                                                                                  70.0
            85.0
                                                                                  60.0
            80.0                                                                         1980             1987                   1994             2001
                   1980           1987                   1994           2001
                                                                                                                 PMSA     U.S.
                                         PMSA     U.S.
                                                                               Sources: ECONorthwest analysis of data from the Oregon Employment
         Sources: ECONorthwest analysis of data from the Oregon Employment     Department, U.S. Bureau of Labor Statistics, and the Washington
         Department, U.S. Bureau of Labor Statistics, and the Washington       Employment Security Department.
         Employment Security Department.                                       Note: In 1996 about 7,100 State employees at OHSU were reclassified as
                                                                               local government workers.

                                   Nationwide employment by state governments has been rising virtually
                               uninterrupted for over 20 years. In the PMSA, however, State employment
                               rose less than one percent in the 1980’s and has declined since 1990.
                               However, the dramatic drop in 1996 that can be seen in Figure 25 is a result
                               of a reclassification of workers at  Figure 26: Local Government Employment, indexed
                               Oregon Health Sciences               to 1990 = 100 for the PMSA and U.S., 1980 – 2001
                               University. The organization was       160.0

                               quasi-privatized in 1996 and it        150.0

                               approximately 7,100 employees          140.0

                               were reclassified from being           130.0


                               State workers to being local           120.0


                               government workers.
                                                                      110.0

                                                                                 100.0

                                   Local government                               90.0


                               employment in the PMSA has                         80.0
                                                                                         1980            1987                    1994            2001
                               been growing faster than the                                                      PMSA     U.S.

                               national trend even after                       Sources: ECONorthwest analysis of data from the Oregon Employment
                               accounting for a one-time gain in               Department, U.S. Bureau of Labor Statistics, and the Washington
                                                                               Employment Security Department.
                               1996 because of the                             Note: In 1996 about 7,100 State employees at OHSU were reclassified as
                                                                               local government workers.
                               reclassification of OHSU workers
                               from State to local government.

                                   In summary, the data we examined on the government component of the
                               local economy reveals the following:

                                     •     Federal jobs in region held steady in the 1990s despite declines
                                           nationally. The PMSA has managed to retain many Federal
                                           employees since 1990 even though national employment has declined
                                           sharply. Future retention of Federal workers would be beneficial to
                                           the local economy.

                                     •     Portland has less than expected share of state workers. State
                                           worker employment in Portland is below the levels one would expect
                                           in comparison to national averages. Again, the retention of State jobs
                                           inside the City would be beneficial.



Appendix 2-2: Overview of the Portland Economy                                    July 2002                                             2-2 page 27
              OUTLOOK FOR ECONOMIC GROWTH
               POPULATION FORECASTS
                       Long-term population forecasts show the region continuing to grow, but at
                   a slower rate than in has since 1980. This is due to a combination of an aging
                   population and less migration. Table 17 shows the forecasts for 2020 for the
                   six counties in the PMSA and the United States. The county forecasts are
                   from the State governments of Oregon and Washington. The U.S. Census
                   provided the national forecast.

                   Table 17: Population growth rates and forecasts, 1980 - 2000
                                                                             Growth Rate Growth Rate
                                      1980          2000          2020       1980 - 2000 2000 - 2020
                   Counties:
                    Clackamas          241,911       338,391       480,392          1.7%         1.8%
                    Clark              192,227       345,238       497,199          3.0%         1.8%
                    Columbia            35,646        43,560        50,250          1.0%         0.7%
                    Multnomah          562,647       660,486       732,500          0.8%         0.5%
                    Washington         245,860       445,342       598,800          3.0%         1.5%
                    Yamhill             55,332        84,992       119,589          2.2%         1.7%
                   PMSA              1,333,623     1,918,009     2,478,730          1.8%         1.3%
                   United States   226,542,199   281,421,906   324,927,000          1.1%         0.7%
                   Sources: The U.S. Census, Washington State Office of Financial Management, and the Oregon
                   Office of Economic Analysis.


                       The population of the PMSA grew 1.8 percent between 1980 and 2000
                   compared to 1.1 percent nationally. The growth rates of both areas will be
                   less in the next twenty years, although the PMSA will still grow much faster
                   (1.3 percent versus 0.7 percent). Within the PMSA the slowest growing
                   county has been Multnomah. Its population is forecast to continue growing
                   more slowly than the other five counties of the PMSA.

               EMPLOYMENT FORECASTS
                       Both the national and state economies are now in recession. Because of its
                   industry mix and trading patterns, Oregon’s economic contraction is expected
                   to be deeper than the nation’s, with an economic rebound that is forecast to
                   lag the nation’s slightly. This pattern or relationship is typical of the state
                   and national economies: Oregon’s business cycle tends to lag the nation’s and
                   exhibits more volatility, with larger job losses during contractions and
                   stronger employment growth during expansions.

                      The Oregon Office of Economic Analysis (OEA) forecasts that the state’s
                   economic contraction will reverse itself in the second quarter of 2002. Job
                   growth in the second half of this year, however, will be modest and
                   insufficient to record an overall annual increase in employment.

                      In the longer term, OEA forecasts that annual job growth in Oregon will
                   outpace the nation. Table 18 reports forecast Oregon job growth, by major
                   industry sector. Total employment is expected to increase 2.3 percent
                   annually in 2003 and 2004, with above average job growth in the service,
                   construction, and manufacturing sectors. Employment in the government


2-2 page 28                         July 2002                     Appendix 2-2: Overview of the Portland Economy
                      sector is forecast to increase approximately 1.0 percent annually; however,
                      this overall job growth is attributed solely to increases in local government
                      employment as both state and federal government employment is forecast to
                      decline.

                      Table 18: Oregon Forecast Job Growth, by Sector, 2002-2007
                       Industry Sector                                            2002      2003        2004       2005        2006    2007
                       Total Nonagricultural                                      -0.6%      2.3%       2.3%       2.2%        2.0%    1.8%
                          Mining                                                   1.7       1.7        1.8        1.8         1.8     1.8
                          Construction                                            -6.1       2.7        2.8        2.4         2.3     2.1
                          Manufacturing                                           -3.8       2.6        2.3        2.0         2.2     1.3
                             Lumber and Wood Products                             -1.7       0.6        0.5        0.5         0.5     0.8
                          Transportation, Communication, Utilities                -1.4       1.8        2.9        2.5         2.1     2.2
                          Trade                                                   -0.3       2.1        2.3        1.9         1.7     1.6
                             Wholesale Trade                                      -2.2       1.5        2.1        2.1         1.8     1.9
                             Retail Trade                                          0.3       2.3        2.3        1.9         1.6     1.6
                          Finance, Insurance, Real Estate                          1.2       1.4        1.9        2.1         1.5     1.7
                          Services                                                 0.8       3.1        2.9        3.0         2.9     2.5
                          Government                                               0.6       1.1        1.1        1.1         1.0     0.9
                             Federal Government                                   -0.8      -0.2       -0.4       -0.5        -0.4    -0.4
                             State Government                                      0.1       0.2       -0.4       -0.1        -0.3    -0.1
                             Local Government                                      1.0       1.6        1.8        1.8         1.7     1.5
                       Source: State of Oregon, Office of Economic Analysis, "December 2001 Economic and Revenue Forecast."



                          Table 19 shows average annual job growth estimates, by sector, based on
                      historical and forecast employment levels reported in OEA’s December
                      economic forecast. Over the ten year, 1997 through 2007 period, total
                      nonagricultural employment in Oregon is expected to increase, on average,
                      approximately 1.4 percent annually. This compares to a 1.6 percent average
                      annual growth in the 2001 through 2007 time period. The higher job growth
                      estimate for the upcoming six-year period.

                      Table 19: Oregon Job Growth Trends (average
                      annual percent change), by Sector, 1997-2007
                                                                                            1997             2001
                                                                                          through          through
                       Industry Sector                                                      2007             2007
                       Total Nonagricultural                                                  1.4%             1.6%
                          Mining                                                              0.0              0.0
                          Construction                                                        0.8              1.0
                          Manufacturing                                                       0.3              1.1
                             Lumber and Wood Products                                        -1.0              0.2
                          Transportation, Communication, Utilities                            1.6              1.7
                          Trade                                                               1.3              1.6
                             Wholesale Trade                                                  0.5              1.2
                             Retail Trade                                                     1.5              1.7
                          Finance, Insurance, Real Estate                                     1.0              1.6
                          Services                                                            2.4              2.5
                          Government                                                          1.3              1.0
                             Federal Government                                              -0.5             -0.5
                             State Government                                                 0.5             -0.1
                             Local Government                                                 1.8              1.6
                       Source: State of Oregon, Office of Economic Analysis, "December 2001 Economic and Revenue Forecast."



                         As the state’s largest economic region, the Portland metropolitan area is
                      currently showing similar weakness. Indeed, the same trend in employment
                      growth for the state is also evident for Portland. That is, Portland’s economic
                      contraction is expected to be deeper than the nation’s, however, the economic


Appendix 2-2: Overview of the Portland Economy                                               July 2002                                        2-2 page 29
              recovery is forecast to be stronger for the city than for the nation. Figure 27
              below compares average annual job growth rates for the U.S. and Portland.
              Beyond the second quarter of 2002, the average annual percent change in
              employment for Portland exceeds that of the nation.

              Figure 27: Comparison of U.S. and Portland job growth rates,
              1980-2006
                8%




                6%



                4%




                2%



                0%
                  1980      1982     1984   1986   1988   1990     1992     1994        1996   1998   2000   2002   2004


               -2%

                                                                  Portland Employment
                                                                  US Employment
               -4%




               -6%



               -8%
                     Source: ECONorthwest



                 Table 20 presents ECONorthwest’s intermediate job growth forecast
              through 2005 prepared as part of the October 2001, “Tri-Met Revenue
              Forecast.” These estimates are strongly influenced by the current economic
              recession, with several sectors—especially manufacturing and construction—
              experiencing a slow recovery and negative growth rates over this five-year
              horizon. (ECONorthwest’s forecast contractions in these sectors match
              Metro’s forecast declines.)




2-2 page 30                        July 2002                     Appendix 2-2: Overview of the Portland Economy
                      Table 20: Portland Intermediate Job Growth
                      Forecasts, by Sector, 2001-2005
                                                                                           2001
                                                                                         through
                       Industry Sector                                                     2005
                       Total Nonagricultural                                                1.0%
                          Mining                                                          -10.8%
                          Construction                                                     -4.3%
                          Manufacturing                                                    -0.7%
                             Lumber and Wood Products                                       0.9%
                          Transportation, Communication, Utilities                          0.2%
                          Trade                                                             1.3%
                             Wholesale Trade                                               -1.4%
                             Retail Trade                                                   2.3%
                          Finance, Insurance, Real Estate                                  -0.5%
                          Services                                                          2.1%
                          Government                                                        2.6%
                             Federal Government                                             0.6%
                             State Government                                              -5.0%
                             Local Government                                               3.8%
                       Source: ECONorthwest, "Tri-Met Revenue Forecast," October 2001.



                         Metro tracks employment in Portland and the principal communities in
                      the Portland metropolitan area including Clark County. In Table 21, we show
                      the long run forecast from Metro for the City of Portland and the rest of
                      Metro’s employment zones, which encompass the majority of businesses in
                      the PMSA.

                          Metro’s 2000-2025 job forecast shows employment in the region growing
                      faster than in the City. With the exception of high tech, manufacturing
                      employment will be little changed over the 25 year forecast period.
                      Employment in the construction sector is also forecast to grow slowly in
                      Portland (0.2 percent annually) and the rest of the PMSA (0.9 percent
                      annually) through 2025.

                          The service sector, in particular business services, are forecast to be the
                      strongest overall in terms of job growth for both the City of Portland and the
                      rest of the PMSA. Indeed, the strong, forecast growth in service sector
                      employment drives the PMSA average, as employment in all other industry
                      sectors are forecast to grow slower than the regional average.

                            Metro’s forecasts suggest:
                            •      The recession will be relatively short. The fundamental economic
                                   advantages of the PMSA remain intact and ensure long-term growth.
                            •      Aging population slows population growth. The only major factor
                                   that works against the strong growth rates the PMSA has seen since
                                   the early 1980’s is the natural slowdown in population expansion due
                                   to the aging of the population.
                            •      The shift from manufacturing to services will continue. Overall,
                                   the forecasts show a continuation of the trends we found in our review
                                   of the historical data. That is, an ongoing transition from a primarily
                                   manufacturing based economy to one that is services based. However,
                                   within manufacturing, the high technology sectors, which in the



Appendix 2-2: Overview of the Portland Economy                                           July 2002   2-2 page 31
                          Portland metropolitan area have grown dramatically, are forecast to
                          continue adding employees while other types of manufacturing show
                          small gains and losses.

              Table 21: Metro's Job Growth Forecasts, by Sector, 2000-2025
                                                                                             Average Annual Growth Rates (%)
                                                                           2000          2005         2010      2015      2020    2000
                                                                            to            to           to        to        to      to
              Area/Sector                                                  2005          2010         2015      2020      2025    2025
              Portland (Employment Zones 101-118, 126)
              All Industries                                               1.7%           1.1%         1.4%     1.4%       1.6%    1.4%
                Ag, Forestry, Fisheries & Mining                          -0.4            0.8         -2.6     -6.0      -12.0    -4.2
                Construction                                              -2.2           -0.6          0.8      1.2        1.7     0.2
                Manufacturing                                             -0.9            0.3         -0.3     -0.1        0.7    -0.1
                   Manufacturing (Nondurables)                             0.3            0.4          0.2     -0.4       -0.1     0.1
                   Manufacturing (Durables)                               -2.2           -1.6         -1.2     -1.3       -0.2    -1.3
                   Manufacturing (High tech)                               1.2            4.7          1.1      2.4        2.8     2.4
                Transportation, Communication, and Utilities               1.9            0.7          1.0      0.9        1.1     1.1
                   Transportation and warehousing                          1.7            0.1          0.5      0.3        0.9     0.7
                   Communication and Utilities                             2.1            1.5          1.8      1.6        1.3     1.6
                Trade                                                      1.6            0.6          1.0      0.9        1.3     1.1
                   Wholesale Trade                                         1.4            1.3          1.4      1.3        1.9     1.5
                   Retail Trade                                            1.7            0.3          0.8      0.7        1.0     0.9
                Finance, Insurance, Real Estate                            0.4            0.8          1.0      0.9        0.6     0.8
                Services                                                   3.2            1.8          2.2      2.3        2.5     2.4
                   Services (Consumer)                                     3.8            1.8          2.5      2.3        2.4     2.6
                   Services (Health)                                       1.9            2.0          1.8      1.8        2.7     2.0
                   Services (Business and Professional)                    4.1            1.7          2.4      2.8        2.6     2.7
                Government                                                 1.4            0.7          0.9      0.8        0.5     0.8
                   Government (Non-education)                              1.7            0.5          0.4      0.6       -0.1     0.6
                   Public Schools                                         -0.3            2.1          3.1      1.5        2.4     1.8
              Rest of Metro's Employment Zones
              All Industries                                               2.7%           1.9%         2.2%     2.4%       2.3%    2.3%
                Ag, Forestry, Fisheries & Mining                           0.3           -3.5         -3.2     -5.4      -11.5    -4.8
                Construction                                              -0.7            0.1          1.3      2.1        1.9     0.9
                Manufacturing                                              1.8            0.7          0.9      0.8        0.4     0.9
                   Manufacturing (Nondurables)                             2.0            2.0          1.5      1.2        0.7     1.5
                   Manufacturing (Durables)                               -0.3           -0.1          0.2      0.4       -0.2     0.0
                   Manufacturing (High tech)                               3.1            0.7          1.1      0.8        0.6     1.3
                Transportation, Communication, and Utilities               2.7            2.0          2.1      1.9        1.7     2.1
                   Transportation and warehousing                          2.7            2.4          2.5      2.2        1.7     2.3
                   Communication and Utilities                             2.6            1.0          1.1      1.1        1.5     1.5
                Trade                                                      2.6            2.0          1.9      2.1        1.9     2.1
                   Wholesale Trade                                         2.7            1.4          1.4      1.7        1.5     1.7
                   Retail Trade                                            2.5            2.2          2.1      2.2        2.0     2.2
                Finance, Insurance, Real Estate                            1.5            1.5          1.7      1.6        1.8     1.6
                Services                                                   4.5            3.2          3.4      3.6        3.6     3.6
                   Services (Consumer)                                     4.9            2.8          3.2      3.5        3.7     3.6
                   Services (Health)                                       3.6            3.8          3.7      3.7        3.3     3.6
                   Services (Business and Professional)                    5.0            3.1          3.5      3.5        3.7     3.8
                Government                                                 2.1            1.2          1.5      1.6        1.9     1.6
                   Government (Non-education)                              3.5            1.6          0.7      1.8        0.5     1.6
                   Public Schools                                          0.9            0.8          2.2      1.4        3.1     1.7
              Source: Portland Metro, Metro Planning Department's "Metroscope Model," January 2002.




2-2 page 32                         July 2002                                 Appendix 2-2: Overview of the Portland Economy

						
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