What creates jobs? What goes into building a healthy and vibrant economy that creates real opportunity for as many people as possible? Right now, Portland has an opportunity to answer those questions in a way that sets the city apart as a model for people-based prosperity, rather than continuing to compete in a corporate welfare race to the bottom.
Portland’s growing reputation as a great place to live and work means it’s well-positioned to turn away from an archaic “economic development” model where politicians and bureaucrats pick and choose companies for special favors. Instead, the region can embrace a forward-looking model where a focus on quality of life makes Portland the obvious home for good businesses that create good jobs.
Changing strategies makes sense, because it’s increasingly clear that the old economic development strategy of luring companies with bigger subsidies and incentives simply don’t work with any reliability. A growing body of work by independent researchers from across the sociopolitical spectrum shows that these programs are just big enough to knock holes in city and state budgets when they go wrong, but nowhere large enough to truly change many companies’ decisions about where to go, what to build and whom to hire.
Most importantly, these giveaways rarely accomplish their mission to improve economies or create many – if any – new jobs in the communities that hand them out. That’s because companies make big decisions based on fundamental business factors: Where their customers are, where the best workers are, who the competitors are, how good the local infrastructure is and the like.
Subsidy offers from local economic development agencies can factor into these decisions, but for a real-world example of their importance, consider Amazon’s high-profile “HQ2” process that led the company originally to select New York City, Northern Virginia and Nashville. The company passed up billions of dollars in bigger subsidy offers from other regions because, as its announcement said, “Economic incentives were one factor in our decision—but attracting top talent was the leading driver.”
Portland already attracts people looking for more from life, and the region’s leaders should embrace this as the core of their economic development strategy. For instance, Portland’s metro area was recently named the “top city for working women” by Business.org, an attribute that means far more to any employer looking to attract and keep a happy workforce than any subsidy or incentive a city or state could offer.
Women make up more than half of all managers and members of professional occupations and most of the workforce in growing industries like finance, education and healthcare. Additionally, they’re increasingly the future of the educated and high-value workforce, as today’s women are earning more bachelor’s, master’s and doctoral degrees than their male classmates. This means that a place like Portland where women want to live and work is a place where great companies who depend on great people should want to be.
The opportunity for Portland is to embrace making the region not only the “top city for working women,” but the top place for everyone. In a marketplace in which one of the world’s largest corporations passed up billions of dollars to go to where the best workers are, Portland should simply stop trying to chase companies with subsidies and incentives and instead devote itself to becoming the place where workers want to live.
What does this look like in practical terms? Last year, Portland’s city budget took a $3.74 million hit from a combination of taxes the city didn’t collect thanks to corporate tax abatements and direct subsidy payments to a few developers. That’s slightly more than the amount of money the city budgeted for its libraries, which do far more to make a community a place where people want to live and raise families. Or, that money could pay the salaries of 70 teachers for Portland Public Schools or 75 cops to patrol the city’s neighborhoods.
Today’s great businesses are looking for the best people, not the biggest subsidies. That’s why Portland should put people, not ineffective corporate welfare, at the heart of its economic development strategy.