Oregon population decline is cause for concern, say economists

The latest federal census numbers show Oregon’s population is shrinking for the first time in decades. And it’s losing residents at the sixth fastest rate. Calculating these estimates is not an exact science, says Josh Lehner, with the Oregon Office of Economic Analysis. He says numbers from the Portland State University Population Research Center indicate a slowing of growth in the state, but also show a drop in the Portland metro area. Lehner says however you look at it, the implications for state revenues are serious. He joins to explain these numbers and what it could mean if Oregon’s population doesn’t rebound.

This transcript was created by a computer and edited by a volunteer.

Dave Miller: This is Think Out Loud on OPB. I’m Dave Miller. ‘Come visit but don’t stay’ goes the famous phrase from former Oregon governor Tom McCall. For many decades it seems people have not been heeding that request. Oregon’s population has grown for 30 years straight, driven largely by in-migration. But, according to the U.S. Census Bureau, that streak is now over. Recent census data found that Oregon’s population decreased by about 16,000 people in 2022. Josh Lehner is a state economist who says this is worrisome news. He joins us now with more details. Josh, happy new year and welcome back.

Josh Lehner: Thanks Dave. It’s a pleasure to be here.

Miller: I just mentioned the U.S. census numbers, but I understand that of course economists have more than one way to slice anything. There’s another population count done by folks at PSU that you also pay attention to. Can you give us a sense for what these two sets of numbers tell you right now?

Lehner: They’re broadly in agreement in the sense that Oregon’s population is not growing quickly. We’ve got a set of demographers at Portland State – they’re doing their set of estimates and their methodology – and then we have the demographers and statisticians at the Census Bureau doing theirs. They both have validity. We use the PSU numbers officially in public policies in the state of Oregon between the decennial census every 10 years. PSU estimates right now that population growth has slowed quite a bit during the pandemic in Oregon; it’s still positive but it’s really, really slow. The Census Bureau is more pessimistic and says that slow growth has been sharper, and in 2022 more people packed up and left the state than moved into the state.

Miller: So, practically speaking, it seems that both of these are pointing in a similar direction, even if the census numbers are worse. But, in terms of our conversation, I suppose it doesn’t exactly matter whether it’s 4,000 people or 2,000 people. What matters most is the trajectory?

Lehner: Yes, I think so. I would characterize it as, during the pandemic Oregon has had a stagnant population. Whether that’s up a little bit or down a little bit, it’s relatively unchanged overall. Especially when you think about the role of our office where we do 10-year forecasts for the state – the legislature and the governor, they build their budgets based upon these 10-year outlooks – the trajectory matters considerably.

Miller: How does what is happening in Oregon compare to a larger but similar state like Washington?

Lehner: Last year, in the 2022 estimates that just came out from the Census Bureau, Washington also saw negative net migration as well, just like Oregon did, a little less than we did. But the big difference between Oregon and Washington is not just that they’re north of us, it’s that their birth rate is higher. Even though they also experienced an increase in pandemic related deaths and a decline in migration, their higher birth rate was more than large enough to offset those other changes. So Washington’s population increased overall, whereas ours did not because we have a very low birth rate.

Miller: Why is it that Oregon has a low birth rate?

Lehner: It’s a really interesting question, and I would defer to some of the demographers. I don’t have a great answer for you. I know, we’ve talked about this before, if you look at surveys of why people are choosing to have fewer births, a lot of it has to do with finances, cost of housing and healthcare and feeling confident in your household situation that you’re willing to bring a child into this world. To the extent that those are the factors holding us down, we know we have really bad housing affordability in Oregon – worse than nearly everywhere else in the country. I think that’s probably going to be a key factor here. It’s not the only one for sure.

Miller: Is it clear what ages, or what demographics, were most likely to leave Oregon over the last year?

Lehner: Unfortunately, the complete data from the Census Bureau is not available. We only have total, top line numbers for the states at the moment. We’ll get the county numbers here in a couple of months. Then the demographics – socioeconomic characteristics, educational attainment, age, race, ethnicity, things like that – we won’t get until the fall. So it’s gonna be a ways before we know. What I will say is if we look at the 2021 numbers from the Census Bureau, which showed a small positive increase still for the state of Oregon, what looked pretty normal was the inflows of younger workers, 20 and 30 somethings of all educational attainment levels – whether you have a college degree or not. Those look pretty normal for 2021, so the weakness would [have] been coming from children and then middle-aged adults and retirement age populations.

Miller: So, if we don’t have the kind of granular local level population data that can give you more of a sense for who’s coming and who’s not coming, how do you start to answer the biggest questions, which is why? Why is it that the population, perhaps, has declined?

Lehner: It’d be great if we had the luxury of a couple more years of data and the luxury of some more time, but we don’t. Right now all we have is this one indicator. We knew population growth had slowed down. We were expecting it to pick back up a little bit – not a lot but a little bit – and instead it looks like it slowed further. So how do we factor that into our forecast moving forward is still an open question. We’re gonna have to incorporate the latest numbers. We’re gonna have to incorporate advice from some of our advisers. But we do a forecast every three months, so it’ll be a continuous process until we’re able to learn a little bit more I think.

Miller: Heath Haywood sent us this in an email: ‘Maybe instead of looking at what will happen, should the state not rebound in population, the economists should look at the cause of the decline. Bad policies and high taxes, with extreme high living costs with low wages will drive out even the most dedicated Oregonians. I myself, along with my three grown children, have decided to leave as well. We are a small business that employs 20. We’re closing shop and leaving. The state will lose my trucking company’s tax revenue as well as the population loss of future generations of my family.’

Obviously this is just one person’s story, and I’ve seen other similarly anecdotal takes as well. Do you have a sense right now for the kinds of personal reasons that people are leaving?

Lehner: Moving is, to your point, a very personal thing. There’s a lot that goes into it. When you look at surveys, they tend to ask, ‘What is the number one reason why you moved?’ And the answers almost always are these big picture things like jobs and housing: ‘I need to move for work’ or ‘I’m moving in search of work.’ That’s always number one when you look at the traditional data that we have. Housing is number two, and then family would be number three. That’s an easy thing to discuss.

What doesn’t show up would be some of those softer measures or things that kind of impact our psyche or the way we feel about things, whether that’s the increase in the visibleness of our homeless neighbors or whether it is the taxes or whether it is the crime. Fill in whatever you want to put in that place. That doesn’t show up on these surveys, at least the traditional ones, so it’s really hard to kind of gauge those things. But even if we focus just on jobs, housing and family, we can still tell a coherent story for slower growth. Just maybe not necessarily outright decline.

Miller: When this U.S. census data came out, you wrote on Twitter that this is a two or three alarm fire. Why is population decline in a state such a big deal?

Lehner: I think there’s a couple of reasons for it. First, just quickly on maybe like a public policy point of view, growing pains are real. When we have more people moving here than are moving away, you have to build more housing, you have to build more roads or manage your transportation networks in a different way. Growing pains are real, but managing decay, managing decline, seems to be a lot harder because you have to decide what are you going to stop doing. When are you gonna stop replacing the sewer system, which roads are you gonna choose not to repair in the years ahead, that sort of thing. That’s a lot harder to do than to say, ‘Hey, we just need to add an extra road.’ or we need to toll the roads and put more buses in or whatever it is. Those aren’t not challenges, it’s just that those are easier things to manage than decline.

From a forecast perspective, it’s all about the demographics right now. We have mediocre demographics at best from an economic perspective because we have the large baby boomer generation that is continuing to retire and will retire for the decade ahead. They’ve earned that; they’ve earned the right to retire. Hopefully they have a good financial nest egg, and they can enjoy their retirement years. But, because of that low birth rate nationwide, and especially in Oregon, the younger inflows of new workers into the economy is much smaller, or at least slower growing than it used to be. If we’re seeing people pack up and leave, especially if they’re working age population or the kids that will become working age population, that’s going to put a lot of pressure on local businesses looking to hire. It means their sales will be slower. It’s gonna be harder to find workers. Overall that would translate into less economic activity than expected, and therefore less public revenues than expected as well.

Miller: That directly ties into available money for the public sector, for schools and roads and services. Is it possible to see the silver lining on a kind of individual basis, say for people who are looking for jobs or looking for housing?

Lehner: Yes. I would say overall from a societal perspective, or an economic perspective, there’s no silver lining. At the individual level, that’s right. If you’re looking for a job today and suddenly there’s fewer people, fewer neighbors competing for that job, you probably have a better chance of landing it because there’s fewer candidates in the pool. Same thing with an apartment, right? We have very, very low vacancy rates. It’s hard to find housing. Even if you can pay high prices, it’s hard to find housing in this state. There’s a little less competition for that, potentially, so there’s a little bit at the micro level in the short term. But if we have an overall slower growing economy than anticipated in the years ahead, that’s gonna come back and feed through into wages and income and stuff like that.

Miller: In that tweet that I mentioned earlier, where you said this is a ‘two or three alarm fire.’ You also wrote something else. You said that ‘if the decline continues next year, then it’s a five alarm fire.’ What exactly do you mean?

Lehner: Specifically, I said five alarm fire for the outlook, because built into our forecast for the next five to ten years, and even if we did a longer one, would be a positive migration, a positive growth in Oregon’s population. That increases demand for pizza and breweries and housing in the state. That also provides an ample supply of labor force from workers for businesses to hire and expand. That’s probably the number one reason Oregon grows faster than the typical state in recent decades is because our local businesses can hire and expand at a faster rate because there’s a lot of people that want to live here and they’re coming for a job or in search of a job. If we’re not seeing that, if the population growth is relatively stagnant or even if it’s just slower than we anticipate, that means overall economic activity will be slower than anticipated.

Miller: Finally, I’m just curious about the larger population trends if some of the really big economic conditions continue. In particular, I’m thinking about cost of living and housing costs. If those stay really high, then who’s going to be coming to Oregon and who is not going to be coming?

Lehner: I think it’d be an acceleration or an ongoing pattern of what we’ve kind of seen already, and certainly our neighbors to the south have experienced in California and even up in the Puget Sound area, the Seattle metro area. Pre-pandemic, what we saw was a combination of solid to very good economic growth. If you look at income, jobs and things like that, the growth was really good. But they were seeing net out-migration of lower income households, young families and retirees, the people that can’t afford the really high cost of living. As of pre-pandemic, we hadn’t seen that yet in the Oregon data. I don’t know to what extent we are now seeing that in the Oregon data.

Then layer on the fact that working from home is a larger share of the workforce than it used to be. Some folks, even if you could afford the high housing costs in Oregon, you could be more untethered now and live farther afield because the coming into the office is less of a deal. I don’t know to what extent that’s the case, but I do know relative patterns pre-pandemic to the north and the south of us certainly exhibited those patterns. What that means is the people moving in are those that can afford the cost of living and the high housing costs. What does that mean? That means some form of economic displacement. Whether that means they’re being displaced to the suburbs or the exurbs or something like that versus packing up and leaving the state entirely, that’s something again we hadn’t seen in the data before.

Miller: Josh, thanks very much.

Lehner: Thanks, Dave.

Miller: Josh Lehner is an economist with the state of Oregon. He joined us to talk about the latest data from the US Census Bureau showing a decline in Oregon’s population for the first time in 30 years.

Contact “Think Out Loud®”

If you’d like to comment on any of the topics in this show, or suggest a topic of your own, please get in touch with us on Facebook or Twitter, send an email to thinkoutloud@opb.org, or you can leave a voicemail for us at 503-293-1983. The call-in phone number during the noon hour is 888-665-5865.