Economics behind Portland as youth magnet

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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.