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Economics behind Portland as youth magnet

February 23, 2011

By Patrick Emerson
Oregon Economics Blog

Portland got another national star turn on NPR with a story about the migration of twenty somethings to the city despite relatively high unemployment and low pay. The usual suspects are trotted out as reasons – lifestyle, hipsters beget more hipsters, etc.

It seems to me, however, there are two points that keep getting missed in the discussion that provide the essential linkages to provide at least a plausible explanation of the phenomenon.

The first is that as societies grow more affluent one of the biggest jumps on consumption we see is a jump the the consumption of leisure time. Affluence buys us rest and relaxation – and the related vacations, travel, etc. This has been true for some time, over the 19th and 20th centuries we saw the amount of leisure time increase dramatically in high-income countries. But I wonder if now what were are seeing is a generation that puts more worth on lifestyle as opposed to more material goals. So it is now no longer just more leisure time, but the quality of your leisure and your work time. Being in a community that affords quality leisure time activities, like minded individuals and a pleasant atmosphere is worth a lot to the youth of the 21st century in America. For this reason they are cashing in on the compensating wage differential – accepting lower pay for the chance to live in Portland. And they are not just willing to accept lower salaries, but are actively looking for places that match their preferences and thus are willing to move without job prospects – suggesting that the value they place on lifestyle is extremely high. This is not lack of ambition, but just the opposite – the ambition to make a life that is the most fulfilling holistically, not just materially.

The second point is that this should be a source of comparative advantage for the city not disadvantage. The recent report from ECONorthwest lamenting low salaries, in my mind, got it all wrong. The fact that skilled wages are depressed (if, in fact, they are – they did not account for education) are a sign of an incredibly successful job done by city government in creating a place where educated young people want to come and live. They are willing to pay for the chance to live here and they do so by accepting lower wages. Is is also a source of economic strength: that there are talented people here willing to work for less means that Portland should be a good place for companies to come and set up shop.

Anyway, when thinking about the path that led us to the Portland that is now the media darling. I always think about the downtrodden, blue-collar city of my youth that specialized in cheap, home-grown diversions. It was a great place to be a college student or aimless twenty-something even then, as rents were incredibly cheap, you could go to the Mission Theatre for free and then spend your few dollars on local beer. What more could you want? I think that these trends start slowly and then gain feedback momentum and this is where my consciousness begins – Portland in the early 80s. Looking back we look for big answers, but often the roots are humble.

  
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Discuss this article

Garish February 23, 2011

Portland could use more jobs.

Doolittle H. February 23, 2011

Not sure how high marks for leisure and entrepreneurship go together. I thisk teh youth magent issue is more complex than teh academics are making it out to be. It may or may not have to do with Portland politics.

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[...] This post was mentioned on Twitter by Oregon Report, Landon and PDX4Biz, MarketLink. MarketLink said: Interesting post from @OregonEconomics on the "Portlandia" effect: http://goo.gl/Khz8Z [...]

Bob Clark February 23, 2011

Sorry but this article is delusional. Twenty somethings lack real world experience and property. They tend to vote for more taxes on people with property, and for many of cityhall’s conspicuous public consumption expenditures. For the rest of us longterm Portlanders, we have to pay for these public excesses. Eventually decades of over public expenditure and debt escalation will most probably end in a Greek financial moment for stump town.

Maybe the author isn’t up on the show “Portlandia.” The show doesn’t half joke when it effectively says, there still exists a place you can retire as a twenty something (read free food stamps, free healthcare, and general unproductiveness), and this would be Portland. Eventually many of the Twenty somethings grow up, and realize they are bored with just hanging out. They actually want a full time job for material things and a life of substance. Maybe then after they’ve help elect a juvenille spending and minded city hall, they trend away from Portland. The rest of us Portlanders face cleaning up the public government excesses left behind.

Delusional.

Nathan N February 23, 2011

I think Bob is correct. The media glamorizes our bike-riding, eco-friendly, easy-living culture and forgets that services must to be paid for. Yes, I do think livability and quality of life are intangibles the Portland area has it. It is great we live such a great place so close to the beach and mountains.

However, we must understand that we can’t continue to spend hundreds of millions of dollars on bike lanes, when it affects only a small portion of people. Or we give tax breaks or incentives to solar companies only to have those expenditures not pencil out.

I like our smart growth policies, but I hate 4000sf housing lots. I like having the MAX, but I can’t stand the idea of paying $300+ million for a high speed train from Wilsonville to Beaverton that only a 100+ people ride every day. We have great ideas here and it’s a great place to live. But we push things too far.

We need to wake up and smell the freshly brewed coffee….

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