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Leaders ponder salary puzzle

Boost in earnings tied to better regional economic strategy
by: CHRISTOPHER ONSTOTT, Studies repeatedly show that Oregon incomes fell below the national average after the collapse of the timber industry in the 1980s.

During her unsuccessful campaign for Portland mayor, Eileen Brady occasionally sounded as though she favored large businesses over small ones.

At a number of debates with Charlie Hales and Jefferson Smith, Brady said the city needed to recruit big employers and stop being a 'fly-over town between San Francisco and Seattle' for corporate executives.

Hales and Smith always responded by saying that they were committed to helping existing small businesses.

Although Brady finished in third place during the May 15 primary election and is no longer in the race, John Topagna, president of the ECONorthwest economic development firm, says Brady had a point. Speaking before the Westside Economic Alliance last week, Topagna pointed to the concentration of Fortune 500 companies in the Seattle region to help explain the difference in per capita incomes - more than $50,000 in the Seattle region compared to slightly more than $40,000 in the Portland region in 2010.

'The presence of companies like Starbucks, Microsoft, Amazon and Boeing are one big reason why average incomes are higher in Seattle than Portland,' Topagna says. 'It's not just the corporate salaries, it's also the contracting with outside professionals like lawyers, accountants and even economic consultants, like my company.'

At the same time, Topagna says the best economic development strategy is to encourage a mix of diverse large, medium and small firms that provide a wide range of employment opportunities.

'Having a healthy mix is important,' Topagna says.

Hole in the doughnut

Much work has recently been done to create a regional economic development strategy. The biggest change in the last year has the been the creation of Greater Portland Inc., a public-private partnership involving elected and business leaders from throughout the Portland-Vancouver area to coordinate regional economic development efforts.

Greater Portland Chief Executive Officer Sean Robbins credits the group with helping to bring Catalyst Health Solutions Inc. to the region, a move that could create up to 300 jobs. Robbins says the top priority is retaining existing employers and helping them grow, however.

Not everyone is convinced the region is speaking with one voice on economic development issues yet, however. During the Westside Economic Alliance breakfast, Hillsboro Mayor Jerry Willey said Portland was still the 'hole in the doughnut' that prevents the entire region from working together to create the most jobs possible.

'Portland still wants to keep it weird, and that doesn't work for the rest of us,' Willey told the alliance audience.

Willey, who is on Greater Portland's board of directors, says Robbins has put a good team together and is optimistic about its future. However, he still believes Portland thinks only about itself.

'Does Portland think we all win if a new business moves to Hillsboro? I don't think so,' Willey says.

Topagna's presentation was based on preliminary data being compiled for a new report by the Value of Jobs Coalition, which includes the Portland Business Alliance, Associated Oregon Industries, the Oregon Business Association, the Oregon Business Council and the Port of Portland. The coalition has issued a number of reports during the past few years in an effort to understand why the regional economy is so hard hit by recessionary cycles and slow to recover.

Much of the presentation summarized the previous reports. Topagna said average incomes in Portland were slightly above the national average until the recessions of the 1980s, when the collapse of the timber industry helped push them below the rest of the country and a number of other cities, including Seattle.

From that point on, average Portland-area wages have consistently lagged behind Seattle, with the gap closing slightly in the 1990s because of Intel's expansion of its Washington County campuses.

Portland wages slipped further behind during the recession that began in 2007 and have not yet begin to close the gap again, however.

According to Topagna, it's not a coincidence that the decline in average wages in Portland coincided with the departure from the region of a number of corporate headquarters, including such timber companies as Louisiana Pacific and including U.S. Bank. At this time, the only Fortune 500 companies in the region are Nike, which is headquartered in Washington County near Beaverton, and Precision Castparts in Clackamas County.

'Having a large corporation headquartered in your region not only generates local work for local companies, but helps them compete for work outside the region because of the reputations and connections they make,' Topagna says.

One key finding of the upcoming study is the difference between Portland and Seattle on 'traded services,' a term used to describe services exported and sold outside a company's hometown. Average per capita traded service income in Seattle was around $60,000 in 2010 compared to only about $45,000 in Portland, according to information presented at the WEA gathering.

Recession recovery

The alliance's breakfast meeting also included new information compiled by WEA Executive Director Jonathan Schlueter showing that the tri-county region is recovering from the most recent recession, with more jobs being created in Multnomah County but unemployment dropping further in Washington County.

According to WorkSource Oregon, the state's employment division, 3,800 jobs were created in Multnomah County since April 2011, compared to 2,700 in Washington County and 600 in Clackamas County.

According to the figures, unemployment in the three counties in April was at the lowest level in 40 months. Unemployment in Washington County dropped to 7 percent last month compared to a high of 9.7 percent in June 2009. It has dropped to 7.6 percent in Multnomah County from a high of 10.8 percent in June and July of 2009. And it has dropped to 7.8 percent in Clackamas County compared to a high of 10.7 percent on July 2009.

Median household income is highest in Washington County at $62,574, compared to $49,618 in Multnomah County and $62,007 in Clackamas County.

Multnomah County is barely ahead of the state's $49,260 median income but below the national $51,914 figure.