An economic study hints at Portland’s altered future

Portland's housing costs relative to household income are going up again, now that the recession is over.

Portland’s housing costs relative to household income are going up again, now that the recession is over.

Today’s headline was an attention grabber: “Portland economy losing ground at ‘alarming’ rate, study shows. The facts, as is usual in any story about economics, were a lot grayer, less clearcut than anything a headline writer could craft. But they contained storm clouds.

Most of the categories in the Portland Community Chamber study—total employment, population, property taxes—showed small changes, one or three tenths of a percent.

But there were important indicators hidden in the murk of gray numbers, not particularly those signaled by the Chamber, however.

One is that the average homeowner spent more of his annual income on housing (26.7 per cent) than did the average Mainer (24.1%) or the average American (24.5%). That is one housing affordability index.

So that confirms what we knew: that the price of housing is relatively high in Portland. And, despite any and all efforts to the contrary, we can be assured that, barring a period of national deflation, absolute housing prices in Portland will continue to rise.

So the only way to attain or maintain affordable housing is to provide for more high-paying jobs in the city. Only higher paying jobs can lower the relative cost of rising housing prices.

The city with its Economic Development Department and the Greater Portland Chamber of Commerce and a half dozen other city-based entities are working to do just that: Attract more high-paying jobs to the city.

How are those efforts working out?

The report spells out the overall answer: Not well.

While joblessness is down, so is overall employment in the city. Worse yet, the average wage in the city is declining. In the face of rising housing prices, this spells unaffordability in capital letters.

It also means what we all could have guessed from all the hotel construction, cruise ship landings and new high-end restaurants. Portland has gone from being a pitstop on the way to Acadia and Maine’s lakes and mountains to being a full-scale tourist destination of its own.

In the good news/bad news seesaw, the downside is that the jobs being created are low-paying and derivative. Service jobs lack the trickle-down effect of high-paying, innovative or entrepreneurial jobs. Tourist-based jobs spin off almost no other jobs.

Although Portland has returned to pre-recession employment numbers, the average wage is down--a bad sign for the city's future.

Although Portland has returned to pre-recession employment numbers, the average wage is down–a bad sign for the city’s future.

What to do about this?

Chris Hall, CEO of the Portland Regional Chamber, said, “I hope people don’t read this scorecard as some sort of indictment of city officials,” he said. “We all own these numbers.”

That’s true and it’s false.

True because the problem with having more than a half dozen economic development entities in a city as small as Portland is that every group has only one or two people working on job development. Six or eight people working in a single office would have a much greater positive impact.

The city knows that, and the city’s economic development director Greg Mitchell is working to increase coordination among all the groups for greater effectiveness.

Still, no amount of coordination among a half dozen offices serving different masters can equal the impacts of a single unified office.

The city is also working to raise the local minimum wage, a much needed infusion of cash for those in the bottom tier of service jobs but an insufficient solution to the bigger issue of creating more family-supporting jobs.

In the larger picture, high-paying jobs result from a local or regional comprehensive strategy developed by area educational and research institutions, local (and preferably state) government, nonprofits, business leaders, and individuals and sustained for years.

That is, a truly community wide forum needs to be established and pointed toward good-job creation with everyone understanding the stakes involved. Without new good jobs, housing will become even less affordable, and the middle class will desert the city, especially middle class families.

If we as a whole community do not embark on this conversation, Portland will arrive where it is headed right now, toward becoming a home only for rich retirees and the very poor, riding a boom and bust touristic economy.

That is a future that few favor. It will be so different from a Portland of not so very long ago, filled with middle class families working at good-paying jobs on the waterfront, in the railroad shops, forges and other industries on the peninsula and elsewhere.

The new good jobs will be different, of course—clean tech, food tech, and other post-industrial innovations compatible with inner city living. But they can and should be located downtown, where the techies want to live and where the research and educational institutions already exist.

Whether the Chamber’s strategy of holding a series of meetings in the coming year will jump start this process is unclear. For instance, we didn’t hear mention of including the educational and research institutions so vital to the success of this undertaking.

At his 2010 inauguration Mayor Michael Brennan’s announced intention of creating something akin to North Carolina’s Research Triangle was on the mark.

In that region between UNC, NC State, and Duke, for the past half century, the leading technology firms, educational and medical institutions, and governments have worked to build the economy with great results. Significant increases in employment, earnings, personal income, and retail sales have occurred and are projected in that southern region.

Unfortunately, we have seen little action since then to implement that idea here. So the city government does shoulder some responsibility for our poor economic showing.

In any case, as Hall says, the time to act is now. The Portland of the 21st century is being constructed around us now.

If we do not start acting swiftly, as a community, strategically and effectively to create good paying jobs, this report has, in its own modest way, announced starkly how changed our city will be.

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