According to a new report from the Portland Metro Chamber, foot traffic in the central city is still down 21% compared to 2019. On top of that, the region lost nearly 10,000 jobs and has continued to lose population. Andrew Hoan, president and CEO of the Portland Metro Chamber, joins us to talk through the report, and what he thinks is needed to help downtown Portland thrive.
Note: The following transcript was transcribed digitally and validated for accuracy, readability and formatting by an OPB volunteer.
Dave Miller: From the Gert Boyle Studio at OPB, this is Think Out Loud. I’m Dave Miller. The Portland Metro Chamber has just released a bleak economic report about the region. It showed that people are moving away from the Portland area, that jobs were cut last year even as the national labor market grew substantially, and that out of 81 metropolitan areas, Portland was ranked second to last in terms of attractiveness for real estate investment. As one of the economists behind the report summed it up at a presentation last week, Portland might be in an urban doom loop.
Andrew Hoan is the president and CEO of the Portland Metro Chamber. He joins us now. Welcome back to the show.
Andrew Hoan: Thank you. It’s good to be here.
Miller: I want to start with that catchy and terrifying phrase. What’s an “urban doom loop”?
Hoan: Well, no one wants to share difficult news, obviously. We’ve been doing this report for almost 15 years, and we’ve been able to share the bright points when it was great and rosy, and we’ve been able to share the challenging times as well. This is certainly a challenging time. But for listeners, if you want to know what the “urban doom loop” is, it’s real straightforward – as economic activity starts to decline, you see reduced demand within a city or region, and then you see tax revenues start to fall. Governments then face the difficult choice of either cutting services or raising taxes, and those two directly link back to demand falling, and once again, seeing tax revenue decline.
So it just gets into a vicious cycle. And I think everybody who’s tracking can certainly see that we are exhibiting those signs, where we have reduced demand in our central office corps, and some of our big employers are seeing job cuts across the region. You see governments start to see less revenue. You’ve seen the city and county announce big deficits. You see those difficult conversations of cutting services and it produces a challenge for our community, no doubt.
Miller: In his remarks last week, the economist Mike Wilkerson, who’s one of the main authors of the report, said, “When you look at the data, you can make the case that we are in a doom loop or that we are on the precipice of being in one.” When you look at the data, what’s your conclusion?
Hoan: I think it’s clear that we’re in the beginning cycle. And it’s about trends. The biggest trend that we’re watching started last year. We signal with bright lights that this is where we’re getting worried, and you mentioned this in your introduction. There is an axiom that everybody knows here in Portland and Oregon, and it’s always been accepted in policy circles: as the U.S. economy grows, we grow faster, and as it shrinks, we shrink harder. The problem is the U.S. economy continues to expand. It did all the way through 2024. It grew jobs, it grew GDP faster than anticipated. And what is so shocking in the news here, what we observed is that we’ve now disconnected from that U.S. economic growth. We are now arguably in a localized recession. So, those are the bright lines that we’ve evaluated and said, “It’s beginning to look like some bad news in two consecutive years in a row.”
Miller: How do you explain that disconnect from what had been a long-standing trend?
Hoan: I think the biggest issue for a lot of people is the emotions they feel around this. We’ve seen a lot of reaction to it, even though it’s a clinical diagnosis. This isn’t something that we’re making up or painting a doomy picture on. It’s just the facts of the matter. I think we’re looking at a number of headwinds. First, we were the first into the pandemic, one of the last out, so that had significant impacts to our localized economy. And we were more dependent on office workers in our central city than almost any other place in the country. And then on top of that, you look at the …
Miller: Wait, that’s not something I remember hearing before. More dependent on office workers downtown than most other cities?
Hoan: In other words, the office workers that were … I should frame this differently … most susceptible to hybrid work. In other words, that would maybe be able to relocate more easily than other places. We were one of those that had the highest exposure to what hybrid work would naturally result in, which is people not always coming into the office.
So, we’ve seen that implication real time in the economic data. And then you look at our two pillars of the economy: semiconductors, and apparel and outdoor. How are our two flagship companies doing right now? It is not great. When you combine all these issues, and then you roll up us having a lot of political destruction in our central city that impacted our national reputation. Let’s just call it the perfect storm of economic headwinds. And that’s on the back of what was three decades of torrid economic expansion.
Miller: Why do you think that people within the U.S. are more likely to move away from Multnomah and Washington counties than to them?
Hoan: This has been disputed and argued, but we’ll just call it what it is – it’s the taxes. Straight up. There’s no arguing anymore, and here’s the evidence. Number one in the nation, highest marginal income tax rate. It’s not disputable. It just is what it is. When we saw a trend emerge here around who’s coming and who’s going, it was as clear as day that 2020 marked a clear departure of who was coming and who was staying. The folks that were coming had certain income profiles that were lower than the people that were leaving.
Miller: I have the numbers, because this is one of the … In the executive summary, your group decided this was an important enough bit. You could have put a million numbers in there and you chose five or six to highlight. And it was that, in 2022, the average income of people who moved to Multnomah County was about $74,000. The average income of people who moved to Clark County across the river was about $106,000. Why is this a key comparison for you?
Hoan: Well, because we are one economy. Clark County is not separate from us. It’s part of our region, by statistical analysis. This is one economy. So when you see people making choices and voting with their feet, that’s how you would connotate it, they are choosing the higher-value tax proposition. They are mobile, economically speaking, so they are choosing a lower taxed location. And in fact, the data shows we lost a billion dollars in outflow income. That’s a big number, and hence, back to that scary word, urban doom loop. When you lose high-income earners and you are dependent on them for your revenue, there are consequences when you are the number one highest tax location in the nation.
Miller: I can imagine people listening, saying, “I make nothing close to $100,000 and I don’t care that the rich people are leaving. Go away. You’re part of the reason that this isn’t the city that I knew and loved, the city I grew up in. You’re the reason I can’t afford my rent right now, or that I can’t afford to buy a home.”
You did mention the billion dollars in lost tax revenue. That is, I suppose, a billion-dollar response to the argument that I’m imagining people are having right now. But in addition to that tax revenue, what else would you say why people should care that high-income earners are either leaving or less likely to want to move to Multnomah or Portland counties in the first place?
Hoan: I think, first off, no one should ever think it’s us-vs-them in any scenario, because we are mutually dependent on one another. In other words, if you don’t like big business or the private sector, you still want them to thrive because they are paying the taxes. If you develop recipes or policy prescriptions that support an inclusive, growing and equitable society, it depends on the private sector. And now, more than ever in our community, it depends on people defined as high-income earners.
So you want them to stay, to pay the taxes that fund the services like, let’s be specific – the Supportive Housing Services Measure, and Preschool for All, which are specifically tailored to high-income earners. If we’re saying those are important, we feel important about that, yes, you want to retain your residence, and no one should say, “I want you to leave.” That is not a healthy cultural conversation that we should ever have.
Miller: We were talking there about domestic migration – people within the U.S. moving to Milwaukee, St. Paul or Vancouver, as opposed to Portland. But when you look at the graphs, there is a small demographic bright spot in terms of people moving here. It’s international migration, people coming to Washington and Multnomah counties, in a positive number.
I’m wondering, there’s so much uncertainty right now about the U.S. immigration system and the possibility that the Trump administration is going to make it harder for people to legally come here. Maybe limiting the number of special visas for people with the kind of expertise that we’ve traditionally wanted, maybe in the semiconductor industry, or in others. Would that have a disproportionate impact on the Portland area?
Hoan: Absolutely. And I think everyone should walk away with an understanding that natural population growth is gone.
Miller: People having more babies than people dying?
Hoan: Nailed it. So, if your community … and generally speaking, this has been a trend that most communities are facing. We are all dependent on net migration, getting more people to move here, and people are still coming here and that’s to be celebrated. And if you want a more diverse community, yes, you want more people moving here.
Two things that could impact this community dramatically: Immigration changes, absolutely, and tariffs. Those are two things we are looking at as massive headwinds that could potentially impact our community even further. Currently, we’re having a challenged economy, and two federal policies could potentially negatively impact our local economy in a significant way.
Miller: You don’t put these reports out just in an academic exercise, these are to sway public opinion to say, “This is where we are, and this is where we should be.” So, what policies do you want city, county, regional leaders to pursue, with all of this data in mind?
Hoan: I think it goes back to your initial question: First off, it probably feels uncomfortable, because we’ve had so many feel-good stories come out of late. We’re getting the WNBA; we’re going after baseball. There’s been some positive stories about foot traffic coming back downtown. So, everyone can watch, and I think, feels the way that we feel, that livability has been improving over time. And I want to point out why. It’s because we all started working together.
When the governor convened the Central City Task Force, we made massive and dramatic improvements in safety, cleanliness, the unsheltered homeless on our streets, behavioral health, substance abuse, all those things. The call to action here is that the same urgent collaboration on the economy needs to happen. And second, if not the most critical piece, we have to accept that to solve our problems – whether they be climate, inequity, whatever you feel is the most important thing – growth, inclusive equitable growth has to happen. It cannot occur in a vacuum, so seeing the private sector and our economy grow is necessary to solve our big problems. We have to agree on that.
And if there are things that we can do today to make changes, it’s about spurring our central city development. Construction has completely fallen off a cliff, specific to housing construction, especially, which causes so much of our housing affordability issues leading to the conditions we see on our street. We have four mega projects right in the central city, ready to go, shovel ready: Broadway Corridor, Major League Baseball, OMSI and the Albina Rose Alliance. We need to supercharge projects that are ready to go, shovels in the ground to kick start that economy again, start building.
Miller: What’s the policy that …
Hoan: There’s tons. And it comes with investment from the city, from the county, from the state, all stacking on top of investments from the private sector attracting capital here and making policies to make it easier to build. We can’t sit around and just expect builders to build in a vacuum. We need to make it possible they can build quicker and more affordably.
Miller: You touched on some of this, but in recent years, a lot of elected officials in the Portland Metro region have said that they’re not interested in increasing the tax burden, saying things that I think the Portland Metro Chamber was very happy to hear. The new mayor has made reducing unsheltered homelessness the centerpiece of his agenda. The legislature recriminalized the possession of drugs.
It seems like you’ve gotten a lot of the policy changes that you have desired in recent years. Is it possible that the data and the metrics just haven’t caught up with some of these policies? That green shoots are around the corner.
Hoan: I feel very optimistic. I just want to make sure people understand that.
Miller: But I mean, if you’re the data guy, who says, “hey, I don’t want to be the bearer of bad news, but look at these numbers,” why are you optimistic?
Hoan: I’ve had the pleasure of coming from … I was born in Milwaukee, Wisconsin, moved here from Brooklyn, New York. Guess what? Other cities have gone through hard times and we’re going to be in a hard time. And this is about growing as a community together through a really difficult moment. That’s where I see all the optimism.
I also see the political and intellectual wherewithal to solve our actual problems. Now, I wouldn’t say we’ve gotten all that we want. I mean, being the number one highest taxed location in the nation isn’t exactly winning, so I would argue about that. But what I have seen is a dramatic turn to embracing a culture of working with the private sector to solve the problems.
That’s where I derive my positivity. And I can point to any number of wins where we’ve done that and we’ve proven it, the proof is in the pudding. It’s what I told all of my members this weekend. I think when we work together, we can solve these problems. I saw policy things last year, under the city council, especially – adopting expanded Enterprise Zones, these would be a little bit wonky but TIF districts and the business license tax office leasing credit that we saw. These were really innovative, responsive to the issues that we were facing. They’ve had success and we will see more success derived from them.
So I think of this as stacking on what we’re already doing together and just creating a sense of urgency around the economy.
Miller: How do you propose to get out of this current downturn in a way that is sustainable, that doesn’t lead to another boom that itself leads to a bust? In particular, I’m thinking about housing affordability – a boom that doesn’t price people out who are just barely getting by right now.
Hoan: This is going to be the hardest part for Oregonians to overcome. We led our presentation last week with examples of Tom McCall saying, “Welcome to Oregon. Now, get out,” or politicians in Washington County in 1999 fighting Intel and its expansion efforts. And you look at some of our housing policies that have been put in place over the decades, because they are so inherently in the DNA of Oregonians, about conservation and about low impact on the environment.
We have to solve the question: “Can we produce housing that does not conflict with our environmental and sustainability goals?” The answer is, of course, “yes,” but we’re going to have to come to grips with that reality that we must build housing to be able to create a more affordable region. You do not want to see housing affordability a result of lost population. Serves no one well. And I don’t … Actually, this is one thing I will generally slightly disagree with our economists on. We have an $8.3 billion city budget. Milwaukee, Wisconsin, one of our peer regions you mentioned, has a $1 billion city budget. We are not suffering from scarcity here. It’s how we are spending our money, and I think we have to be honest about how we are doing that and be thoughtful to produce returns on our investment when we are spending our money.
That’s where I think I see the possibility that we have in this region to make smart housing investments that spur construction, create affordability and help reduce the cost of doing both business for employers and employees together here.
Miller: Andrew, thanks very much.
Hoan: Thank you.
Miller: Andrew Hoan is the president and CEO of the Portland Metro Chamber.
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