How Does Oregon Rank for Business

Monday, May 11, 2015

GoLocalPDX News Team

Portland’s economy is on a bit of a hot streak with cranes littering the Pearl District and the Park Avenue West tower is just months from completion, but are Portland and Oregon inextricably linked economically? Is Portland growing the right ways? The answer depends on who you ask or who is measuring the economy.

There are a slew of think tanks and news organizations that analyze data and rank the states. Today in many of the business rankings, states like Texas are consistently in the top ten and perceived as pro-business and a great environment to create or grow a business.

Cities like Austin, Texas have exploded fueled by tech and innovation firms. Austin is attracting young smart people, innovative companies and a lot of venture capital money.

Austin, a city with a population of 885,000, attracted $620 million in venture capital funding across 114 deals in 2014. In comparison, Portland with a population of 610,000 sparked $167 million in venture funding across 27 deals last year. While Austin has a roughly 25% greater population than Portland, it generated nearly 400% more in venture funding and more than four-times the number of venture deals, according to the National Venture Capital Association.

Recently, CEO Magazine unveiled their annual ranking of states. The magazine ranks each state on a range of measures including, taxation and regulations, workforce quality, and living environment. Oregon ranked poorly at #42 out of 50 states. “California and Oregon are essentially anti-business, whereas Texas and Tennessee do everything possible to make business comfortable and successful,” one top CEO was quoted.

In contrast, Forbes magazine ranks Oregon as the #18 best state for business on a number of indicators: Oregon is #12 in the country for both business costs and labor supply and #8 for growth prospects. But, Oregon scored poorly in Forbes' ranking for regulatory environment (#39), economic climate (#32) and, surprisingly, quality of life at #35.

“Oregon’s economy has surged over the past five years, up 3.1% annually, which is the third best growth in the U.S.. behind North Dakota and Texas. The state’s outlook is equally strong, with employment gains expected to be eighth biggest over the next five years," writes Forbes. "By revenue, Beaverton, Ore.-based Nike is three times larger than the next biggest Oregon company. “

Portland Centric

What is clear is that much of the economic development focus is Portland-centric. Real estate prices are up in Portland. More people moved to Oregon than any other state in 2014, according to a study by United Van Lines, which tracked 128,000 moves. More than 66 percent of moves to and from Oregon were inbound. Portland is the focus of many of the new residents.

“All told, Oregon’s labor market today is about 60 percent recovered from the depths of the Great Recession to where we were at the start of it. With a 5.4 percent unemployment rate, Oregon very likely has no cyclical unemployment left,” reports the Oregon Office of Economic Analysis.

As GoLocal reported in November, job growth in Portland grew 2.9 percent in 2014, making it the third fastest growing city in America according to a study by Forbes.

The study also ranked the top states with the highest percentages of job growth. Oregon ranks number six, with job growth percentage up by 2.8 percent since 2013.

Does Population Growth Drive Economic Growth?

It is clear from the population trends both in the Portland metro area and across the state that Oregon will continue to see a healthy population growth. The growth alone will not fuel the economy in the long run. The state will need to address critical issues like education, work force development and the perception of the regulatory environment to improve the state's business rankings.

Related Slideshow: Oregon Business Rankings in US

See how Oregon stacked up against the other states in the U.S.

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ThumbTack

Oregon gets a C+ for small business friendliness from Thumbtack, in conjunction with the Kauffman Foundation.

According to the ranking:

Overall friendliness C+

Ease of starting a business B
Ease of hiring D+
Regulations D
Health & safety D
Employment, labor & hiring D
Tax code D+
Licensing C-
Environmental D
Zoning D+
Training & networking programs B+