Hey, New York Times: Portland happens to outshine many U.S. cities in entrepreneurship, job growth, productivity—and the elusive "second paycheck."
Portland: <Insert hipster paradise joke here>. The city has been the subject of years of fawning national press coverage that treated it as a terminally cute cultural nirvana. Even send-ups like IFC's "Portlandia" have shown love for its flaky charms. Finally, though, has come the Serious Journalism Takedown: In Tuesday's New York Times article "Will Portland Always Be a Retirement Community for the Young?,” ex-Portlander Claire Cain Miller yanks back the curtain.
With Matthew Hale—a bearded, skateboard-riding kombucha drinker—as her main character, Miller claims that “Portland has become a city of the overeducated and underemployed—a place where young people are, in many cases, forced into their semi-retirement."
She says Portland now “has more educated people than it knows what to do with.” That’s pretty damning stuff. But is it really true?
There’s an easy way to find out: data from the Census Bureau. Are college-educated young adults in Portland more likely to be unemployed than their peers in other cities? The data gives a short, unambiguous answer: No.
The unemployment rate for 25- to 34-year-olds with a four-year degree in the Portland metro area in 2012 (the latest year for which this data is available) was 4.8 percent, slightly higher than the average of 4.0 percent for all large metro areas, but only ranking 16th highest of the 52 largest metro areas. Portland’s unemployment rate for this group was exactly the same as Houston's and lower than in Atlanta's and Chicago's (5.2 percent), Los Angeles' (8.3 percent), Las Vegas' (7.2 percent), and even New York's (5.7 percent).
Far from being condemned to perpetual joblessness, the typical well-educated young adult moving from New York to Portland would have a statistically better chance of being employed than if they stayed in the Big Apple.
And to be sure, Portland’s unemployment rate for this group is higher than the national average. But the difference is not large: If Portland’s unemployment rate for college-educated young adults were at the average (4.0 percent), the region would have about 800 fewer unemployed people.
There’s a good and unsurprising reason why the unemployment rate ought to be higher in Portland, too: It's something economists call “frictional unemployment.” People are counted as unemployed when they are between jobs. Lots of people move to Portland first, and then, once here, start looking for employment. Unlike those who move—say to North Dakota—only after they’ve searched for a job, these move-first job seekers get counted as unemployed in Portland and not somewhere else. And if people want to be here, and consequently are willing to invest weeks or months to find a job, that job search is counted as “unemployment.” But rather than being a marker of economic distress, this unemployed period is really a marker of commitment to long-term value of place.
The "Portland as retirement community for the young" stereotype was around before Carrie Brownstein and Fred Armisen lampooned it on cable. But this well-worn claim has been repeatedly debunked. As Portland State University researchers Greg Schrock and Jason Jurjevich have shown, far from retiring, young and talented people coming to Portland are decidedly entrepreneurial. On average, they’re 50 percent more likely to start their own businesses. And Portland ranks third nationally among large metro areas in the fraction of its college-educated young adults running their own businesses.
This entrepreneurship has been a genuine boon to local economic growth, as has the ease of attracting bright young workers from elsewhere. It's a chief reason for the city's booming high-tech sector, the growth of the athletic apparel industry, and an expanding software scene. Companies like Salesforce and Airbnb are moving here to tap into the local labor pool, helping Portland outperform the nation in the current recovery. Metro Portland ranks ninth in the top 100 metro areas in economic performance according to the Brookings Institution, based on job growth, productivity, and the housing market.
The New York Times article asserts that Portland is experiencing a paradox, where all of these amenities are somehow making people worse off. But the connection between wages and amenities isn’t so much a paradox as it is a fundamental axiom of urban economics.
Miller dismisses as “perks” the mild climate, great urban neighborhoods, green living, transportation alternatives, and vibrant cultural life that characterize Portland. Yet these so-called perks have a tangible economic value. This insight is captured in something called the Roback-Rosen model developed by economists Jennifer Roback and Sherwin Rosen more than 30 years ago. This model measures the value of amenities by looking at differences in earnings among places. It shows that, if workers accept lower wages to work in one location than another, it is because they attach a real economic value to quality of life. By extension, the same is true of prices: People pay higher prices for housing in nice neighborhoods or great cities because they place a real value on the amenities outside their doors. Economists have long used this model to evaluate the economic benefits associated with cleaner air, better schools, lower crime, and other urban and natural amenities.
Venerable Oregon economist Ed Whitelaw called this the “second paycheck” that Oregonians get from their quality of life—the access to the environment and livability of communities that you can’t buy at any price in most other cities.
Great environmental policies do more than make a nice place to live—they also reduce the cost of living. While per capita incomes in Portland are slightly lower than in some other larger, better-educated cities, Portlanders get a “green dividend” from the city’s compact development and robust bike and transit systems. Because it has less sprawl, Portlanders drive about 20 percent less than the national average, saving them a combined cool billion dollars a year—real money they can spend on good food, bikes, beer, or even rent. (Did I mention that Portland has the third highest number of restaurants per capita of any large U.S. metro area, after only Seattle and San Francisco?)
Everyone in Portland understands that maintaining and enhancing the region’s great quality of life is the cornerstone of our economic well being. Coping with the challenge of growth purposefully and with a sense of what we value is something that is a hallmark of the community. We’ve drawn an urban-growth boundary, preserved our farms and forests, built walkable, bikeable neighborhoods, and fostered a creative, entrepreneurial local economy.
The next chapter is still to be written, but the newcomers who want to be a part of this place and share in that central task play an important role in writing it. And the good news is that there are lots of talented young people looking to come to Portland to help us do just that.