Street Smart Economics | The narrative that downtown Portland isn't recovering as quickly as other city centers is based on a flawed study, writes economist Mary King
Local news outlets are reporting downtown Portland is recovering particularly slowly from the pandemic and that people are moving away to avoid homeless people and taxes. They’re echoing the talking points of wealthy real estate heir Jordan Schnitzer and his cronies. These assertions feed a narrative that supports pushing people off the streets into costly mass camps, dismantling Portland Street Response and cutting back on voter-approved funding for Metro’s houseless supports as well as Multnomah County’s new universal preschool program.
But the evidence that Portland is faring worse than other cities doesn’t hold up to a closer look. Portland’s office vacancy rate in June 2023 was better than the national average, and better than places that get called “business-friendly,” like Dallas, Atlanta and Nashville, Tennessee. While Willamette Week claimed in February that Lake Oswego’s Kruse Way is “becoming the metro area’s new Main Street,” in May, the Oregonian reported Kruse Way had the same office vacancy rate as downtown Portland.
It's likely that people moving out of Multnomah County want more affordable housing rather than to avoid taxes on the top 5%. Nationwide, the pandemic sped up an already ongoing migration out of cities with expensive housing, including the Portland area.
Downtown Portland’s so-called “weak recovery” due to flaws in research methods A widely reported, recent study from the University of Toronto claims from Spring 2019 to Spring 2023, Portland has had the third-slowest recovery of 63 major cities in the United States and Canada. This misleading study compares areas of very different sizes in different cities and a particularly small slice of downtown Portland. It measures “recovery” with counts of unique visitors, rather than total visitors, to the area. That effectively defines recovery as tourism rather than tourism added to local trips downtown over the three-month study period.
This poorly done study defined Portland’s downtown as just one-quarter of a square mile containing very few of the city’s attractions. It centers the area near the river between West Burnside Street and the Hawthorne Bridge but only goes as far west as Southwest 6th Street or Southwest Broadway, depending on the block. It doesn’t include the Pearl, Old Town, Portland State, the museums, the performing arts centers, the stadiums, Powell’s or even Nordstrom. Only 1,036 people lived there in 2020, with a median household income of $13,350. The biggest tourist destination is probably Voodoo Doughnuts!
By comparison, the study area in San Diego, which the research brief lists as the large city best recovered from the pandemic, is nearly five square miles, including both the San Diego Zoo and the airport. People are flying again, and the total number of scheduled airline seats in the United States is now slightly higher than it was in 2019. And the San Diego Zoo is an outdoor venue attracting millions of visitors a year. Thirty-seven thousand people lived in the area in 2020, with a median household income of $52,550, four times that of the Portland study area.
What’s more, the study counts the number of different people visiting an area within three months, but not the total number of visits by anyone or even the total amount of sales for downtown businesses. If a local walks into the area to buy lunch 25 times during those three months, that would count as one visitor, but if 25 tourists each walked into the area once during that time only to look at the Portland Building, it would count as 25 visits.
Counting all visits and using a much bigger definition of downtown, the Portland Metro Chamber (formerly the Portland Business Alliance, or PBA) reports Portland had nearly two-thirds as many visits in June 2023 as in June 2019. In stark contrast, the Toronto study asserts that there were just 37% as many visitors to “downtown Portland” from March through May 2023 as in 2019.
People most likely leaving Portland because of high housing prices One piece of evidence for people leaving for more affordable housing shows up in Multnomah County’s age distribution. County residents include relatively few children and seniors, and the highest proportion of any Oregon county between the ages of 18 and 64. While the biggest cohort is young adults aged 30 to 34, it looks like some people then begin to move out, perhaps as they have children and may want more space.
Nationally, people have been moving out of the 56 biggest U.S. metro areas since 2010, according to the Brookings Institution. The pandemic accelerated that decline. Portland is one of the metro areas with falling net in-migration over time, but it’s not just the city they’re talking about. Brookings used a definition of the Portland metro area that includes five Oregon counties and two in Washington.
Since the pandemic, the only areas sending more people to the Portland metro area than we send back are other large metros with high housing costs. The Cleveland Fed ranked the Portland metro area as 11th of the 12 big metro areas with the highest housing costs in the country. That finding, though, describes a large region as the Portland metro area, including nine Oregon and three Washington counties — essentially most of the Willamette Valley as well as southwest Washington. People are leaving those 12 counties as a group, moving to smaller or more affordable metro areas.
No evidence for people moving to avoid taxes Despite the relentless griping of Portland’s aristocrats and big business associations, there’s little evidence that people are moving out of the county to avoid taxes levied on the top 5%. Oddly, in an article stating that people were being “driven away as taxes rise,” Willamette Week printed a chart showing that Multnomah County lost population and tax income for the two years BEFORE the Metro Housing Supports and the County’s Preschool tax took effect. That same article quoted a local developer, Mark Edlen, who’s retired to Sun Valley, Idaho.
“The taxes are pretty close to the same,” Edlen told Willamette Week. “I haven’t done the math.”
Despite dire predictions, people didn’t move when Multnomah County voters passed a high-end income tax for the schools 20 years ago, and people haven’t left higher taxing states in any significant numbers. Being affluent means that you can live wherever you want to, and most don’t want to change their commutes, schools, extended families and neighborhoods. People are far more attracted to places with good public services than they are to low taxes, and that’s where business executives also want to live.
Smaller local business organizations point out that it’s hard for them to recruit workers. Their employees need more affordable housing and more affordable child care.
False narratives underpinning cruel treatment of unhoused people and attempted money grabs Meanwhile, our mayor and some city commissioners have been pushing false fixes for homelessness and trying to grab the tax revenue approved by a big majority of voters for the Portland Clean Energy Fund, Metro’s houseless supports and Multnomah County’s new preschool program — off the ground and anticipated to build to full universality by Fall 2030. As we’ve seen, they also hoped to subvert the popular vote of a new City Charter. We’ll have to fight hard for democratic control of the city in 2024.
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