Our Opportunity to Build a Strong Tech Economy in Southern Oregon, Part I – by Mark VonHolle

In spite of the oft repeated news that the Great Recession ended in 2009, I am going to provide you with a number of very clear and disturbing statistics within this article that make it abundantly clear our community is still struggling to break free from its lingering grip. In this first of a two part series we are going to work through some of the symptoms that indicate the serious need for change in our regional economy. In next month’s article, we’ll get into greater detail about what we can do to make things considerably better.

First, a bit of good news. According to various reports by the Milken Institute, Medford’s Metropolitan Statistical Area (MSA, which includes all of Jackson County) has been ranked among the top 179 Best Performing Small Cities for a number of years. Now, the not so good news is that we have been free falling on this list during the past 10 years. In 2004 we were ranked #12. By 2014 we plummeted to #114. We are ranked #160 for job growth and #166 for wage growth. As a matter of fact, out of the 335 largest counties in the U.S., Jackson County ranks #311 for wages (about a $36k annual average) which puts us in the bottom 7% for the lowest wages in the U.S.

Seven out of eight MSA’s in the U.S. that are similar in size to ours have lower unemployment rates than Medford. We are the only metropolitan market out of six in Oregon that experienced zero job growth over the past 12 months. We have the second highest student homeless rate in Oregon. Our unemployment rates, childhood poverty rates, etc. are considerably higher than U.S. averages. 56% of the students in the Medford School District now qualify for food assistance.

As sobering as all of these statistics should be, the numbers for Grants Pass and Josephine County paint an even more ominous picture. There are multi-generational impacts of our young people moving to and building the economies of other communities. There are also multi-generational impacts of the mindset of scarcity and entitlement perpetuating from one generation to the next. We are fortunate there is a great culture of caring that stands in the gap to help make our community a great place to live, raise a family and do business, but far too much of this culture is borne of economic necessity.

If you take a look at the individuals and businesses that advertise in the yellow pages and those that belong to our Chamber and Rotary organizations, you will find the vast majority of these businesses are dependent upon what happens in our local economy. Most every community in the world that has a robust economy has at its foundation a strong traded-sector group of businesses that create a product that is shipped out of the region to bring dollars back into the region. Few and far between are the traded-sector businesses that engage with the aforementioned organizations, yet they are critically important to the strength of our regional economy. With the decline in the timber industry, the Rogue Valley and many of the rural communities in the Pacific Northwest lost their foundation of traded-sector family wage jobs. Subsequently our primary job growth has been in substandard wage jobs.

Our local economy struggles because the average citizen working for the median wage doesn’t have enough expendable cash in their pocket to support our local retailers, restaurants, wineries, service sectors, etc. One of the most practical ways to create a stronger, more resilient and sustainable economic multiplier will be by creating a stronger, more resilient and sustainable foundation of family wage jobs. Although we have a very limited amount of industrial land in our region, most of it sits vacant decade after decade because of our lack of a comprehensive strategic plan to populate it. Also the payer mix in our region (medical jargon that identifies the private sector insurance contribution for health care costs) is among the most anemic in the U.S. Better wages usually come with better benefits. So, creating a more robust economy will also benefit regional healthcare providers.

We have been on a continual downward spiral of economic and social degradation for so long that far too many of our fellow citizens have acclimated to a mindset of scarcity, entitlement, or both, none of which is sustainable. Far too many of our most motivated and educated young people leave the valley because of the lack of opportunity. In 1980 Jackson County had two births for every death. Only 30 years later our birth rate has declined to the point where it is almost equivalent to our death rate. These statistics tell us we are not replacing our younger generation, which is our future workforce and the fertile ground where we should be growing our next generation of community leaders.

Our continual uptick in population provides a false sense of security for those who are aware of this phenomenon. Our population growth is fueled in large part by what I call “The Equity Refugee Pipeline” flowing into southern Oregon, primarily from California. The majority of our inward migration is made up of retirees. In 2002, the year that our family moved to southern Oregon, Medford’s MSA was ranked the #1 least affordable housing market in the U.S. (in terms of the disparity between our low wages and our high real estate values).

In California and across many areas of the U.S., housing starts are down and home equities are up. We are only a few years into the “Silver Tsunami” of retiring baby-boomers and our region is continually ranked among the top for desirable retirement destinations. Ashland had to close two of their elementary schools, in part because young families cannot afford to live there. If we do not reverse course, this is simply a preview of coming attractions for what will happen in the greater Rogue Valley. If we do not develop and execute an effective strategy to raise our stagnate median wages, we are going to see this lack of affordable housing gap continue to grow, possibly to the largest gap in the U.S. once again.

So, what can we do to slow down the brain-drain and keep our talented, motivated, educated and technology oriented young people here (and bring back some of those who would like to return)? I’m glad you asked! Let me give you a preview. In the same report referenced earlier (Top 179 Best Performing Small Cities) where we are bringing up the rear in far too many critical categories, we are ranked #12 for our 5-year high tech GDP growth! As a matter of fact, we are recognized for having 20 of 22 sectors of technology, 9 of which are at density levels equivalent to and 7 actually exceeding national density averages.

You might ask, how many high tech companies are represented in our two county region and how many actual jobs exist? And, what sort of wages do they pay in comparison to our low median wage rates? And, what exactly can we do to take advantage of the incredible reality of our high tech sector? Well, as I’m already way over my word limit for this article, those answers and the strategic plan to transform our economy will be provided in the second part of this article in next month’s Jacksonville Review. By the way, if this article has driven you to drink, be sure to do so though supporting our local wineries! Next month we’ll raise a glass to celebrate our current success and unveil a relatively simple plan to help our community realize its greater potential sooner rather than later. Stay Tuned…