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Economist Mark McMullen produced a snapshot of Oregon last week that could make readers fear the state is in the kind of decline Rust Belt states such as Ohio and Michigan have endured. Seen from another angle, the same report could leave you feeling pleasantly surprised.
McMullen’s report drew on new U.S. census data and found big shifts. “Since 2020, the state has witnessed profound changes in its demographic dynamics,” the report says. “Although migrants continue to be drawn to the state, some residents are leaving and the birth rate has been very low, leading to small population losses.”
McMullen, 56, spent 14 years as the Oregon state economist before leaving earlier this year to join the think tank Common Sense Oregon, which promotes free market values. In Salem, McMullen at different times saw the Great Recession torpedo state revenues and an influx of young well-educated newcomers buoy economic growth in a trend that drew the envy of most states.
McMullen’s new research focuses on a different phenomenon: the dwindling of Oregon’s in-migration, which over the past couple of years resulted in a small but significant population loss.
A kayaker and fisherman who grew up here, McMullen is cautiously optimistic about his home state, even if, as his new report found, some Oregonians have forgotten how to procreate and others have fled for a cheaper cost of living elsewhere.
His remarks have been edited for brevity and clarity.
WW: You’ve been looking at Oregon’s changing demographics. What surprised you?
Mark McMullen: Oregon hasn’t seen a stall in population growth since the early 1980s. At that point, the mills were closing and people were leaving. Since then, basically, every time Oregon has had jobs available, we’ve seen net migration increases. It has been a real strength of ours. So it’s very unusual to see these population gains stall out. Now, it’s not like we’re hemorrhaging households, but negative population growth is something we are not used to.
In your report, you wrote that “net population losses have clearly been driven by movers to lower-cost regions.” Can you unpack that?
Oregon households are moving to places like Idaho or rural Washington or Texas. These are lower cost areas. Back then in the early ‘80s, people left Oregon because there were no jobs. Over the last three years, almost everyone who wanted a job in Oregon could get one. So it’s fundamentally different now. We’ve seen it within Oregon as well—there’s population growth in Klamath County for the first time in ages. There are other things that suggest that cost is a factor in terms of people moving out of the Portland metropolitan area. Half of them were children, which suggests people are looking for bigger places to live.
What should policymakers be doing?
Well, Gov. Kotek and the Legislature are attacking our housing shortage. That’s all hands on deck right now. That’s a big step in terms of the cost of living. Maybe we could do more about the cost of child care or subsidizing education.
Your research shows that net in-migration peaked in 2016. So if one wanted to be more pessimistic, one might say the down trend started eight years ago. So how are you thinking about that?
The most mobile households are in early 20s to early 30s. There was massive millennial population cohort, and Oregon attracted a lot of them. Even without any kind of underlying issues, we would’ve been looking for a slowdown in migration just as that population cohort aged.
Your report showed that the number of households making over $200,000 a year in Multnomah County is actually up pretty strongly. Did that surprise you?
Yeah, it certainly raised my eyebrows. Anecdotally, there are a lot of people who have decided to pack up and either go out of the county or out of the state because of troubles downtown or new taxes or both. We hear these anecdotes daily. But from 2021, when we had 40,000 of these households, to 2023, we have 55,000 of these households. That does raise your eyebrows. My assumption is it’s because there was a tremendous amount of income growth: We had a lot of households that were making $175,000 that are now over the $200,000 threshold.
Do people move because of tax increases?
These flows have been happening since the dawn of time. A decade or two ago, Oregon would gain net migrants from everywhere across the country except for Washington. We would lose ‘em to Washington, probably because of the lack of income tax there.
It might be a little different now. With Preschool for All, you can move to Lake Oswego and get out from under it. We don’t have the data yet, but that might actually be creating some amount of shift.
Your report noted Oregon has one of the lowest birth rates in the nation, significantly lower than Washington’s. What’s your takeaway there: Oregonians should have more sex?
I think the millennials do need to start getting busy. Given the huge size of our millennial population cohort, we would’ve expected more births at this point. That’s a concern and a puzzle. People say millennials are putting off having children because of cost pressures. But given that things have turned around in Washington, I would expect them to turn around here soon as well.
Oregon’s reputation took a beating during the pandemic and after. Do we risk a long-term decline like some Rust Belt states have experienced?
It’s clearly a concern. I think some of Oregon’s positive migration trends were about people showing up here, usually in the summer when it’s not raining, and they’d come to downtown Portland and out to the coast or the mountains and they’d fall in love with the place. The issues downtown obviously are a concern, even though we’re talking about 10 square blocks, maybe 20 square blocks. But they’re very important 10 or 20 square blocks and could certainly affect migration going forward. It’s hard to disentangle that from the impact of the pandemic on office and retail and business travel and all the things that happened all the exact same time. But in general, Oregon has really large advantages relative to places that have declined.
Such as?
It really is a quality-of-life thing. In the early ‘80s in Oregon, we saw massive job losses. Coos Bay lost a third of their jobs, which was the same as Flint, Mich. Lincoln City lost half their jobs, which is the same as Youngstown, Ohio. Where Flint and Youngstown lost that population permanently, Coos Bay and Lincoln City treaded water. They lost the population, but it came back. We have natural beauty and other advantages like inexpensive hydropower. We’re also in a great place in terms of trade, where we’re between these huge markets: Vancouver and California and the Midwest and China—we’re in a nice spot.
What’s your long-term outlook?
It’s unclear right now whether or not this population stall is going be a long-term thing, but even if it is, that doesn’t mean we would be a Rust Belt or farm belt sort of economy. There are a lot of economies that outperform over and over again, even with slow population growth or losses—states like California and Massachusetts. Their economic growth is built on investment and capital. We make every worker more productive, and every worker gets more income growth because of these investments. It may well be that Oregon is maturing into one of those type of economies.
And we certainly saw that over this last business cycle, where Oregon outperformed in terms of business formation and investment and income gains and GDP or output gains. These are things where Oregon hasn’t traditionally excelled.
So, not so bleak after all?
People are still moving to Oregon. We have seen some outflows, but young folks still like it here and I’m still bullish about Oregon in terms of our attractiveness to migrants. Although people are moving out, the one place we’re still netting population gains is in the youngest working-age cohort, which is really the gold standard for economic development. Oregon’s traditional comparative advantage has been all about getting these young, skilled, working-age households to move in. We have seen these outflows, of course, but in 2023, those outflows came back a lot closer to normal. If that continues, we’ll be back to our traditional pattern.