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Table of Contents

0. Introduction

Are the businesses in the Portland metropolitan region prospering?

When we think of business prosperity, we picture a company with growing revenues hiring new employees and opening new plants and offices. Given our persistently negative recent economic news, we might immediately jump to the conclusion that our businesses are on the decline.

But what evidence should we use to determine whether our businesses are thriving?

The Brookings Institution’s Blueprint for Regional Prosperity identifies three types of growth necessary for regional prosperity: productive growth, inclusive growth, and sustainable growth.^[1] Although all three play important roles in metropolitan prosperity, this article focuses on productive growth, because businesses are the primary drivers of productive growth.

Productive growth requires innovation and entrepreneurship and leads to income and job growth. We examine data that point to productivity, entrepreneurship, and the ingredients of innovation: venture capital investment, patent activity, and educational attainment.

Finally, we assess the region’s job growth to determine which economic sectors have the most robust growth.

Like other articles on the Metropolitan Knowledge Network, we examine our region’s prosperity in comparison to other regions comparable to the Portland MSA and present the data in order of their 2008 population estimates. Figure 1 shows Portland and the 10 comparator metropolitan areas in descending order by 2008 population.

1. Productivity

Productivity growth is a key ingredient to a growing and vibrant economy. Productivity growth, usually measured as output per unit of labor, is important because it leads to a rising standards of living. Productivity growth usually coincides with rising wages, and companies, industries, and nations with rising productivity are generally considered more competitive and profitable than other companies, industries, and nations. And although the wage/productivity link is currently being debated, rising productivity is generally a sign that workers and company shareholders will eventually benefit.

Productivity is usually measured as output or value added per unit of labor. For the United States and for individual business sectors, the Bureau of Labor Statistics calculates both labor productivity and multifactor productivity, which takes into account not only labor, but also capital and intermediate inputs. It does not publish productivity statistics for states or metropolitan areas.

In an attempt to fill the gap in metropolitan level productivity statistics, we calculate productivity measures for the Portland region and its competitor MSAs by taking the ratio of Gross Metropolitan Product (GMP), published by the Bureau of Economic Analysis (BEA), to total non-farm workers, also published by BEA. Please note that the GMP estimates are experimental. See Figure 2. Therefore, the same caveats that apply to these estimates apply to these productivity measures as well.^[2]

Regional Comparisons

Portland ranks low relative to the comparator metropolitan areas in GMP per worker. For the Portland MSA, GMP per worker rose from $62,298 in 2001 to $76,803 in 2006 (see Figure 3). This 23.3 percent increase places the Portland region 5th in terms of productivity growth among its peer regions (see Figure 2). GMP per worker for Portland in 2006 was lower than seven of the peer regions.

The San Jose and Charlotte MSAs had the highest GMP per worker at $118,022 and $109,096, respectively, and the Austin and Salt Lake City regions had the lowest.

Table 1: GDP per Worker for Portland and Comparator MSAs, 2001-2006.

Source: Bureau of Economic Analysis, “Gross Domestic Product by Metropolitan Area” and “Local Area Income and Employment” data sets from 2006.

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