An Evolving Coastal Economy: The Latest Study (March 2006)
OCZMA, working with the Research Group (Shannon Davis & Hans Radtke), completed a comprehensive study on the Oregon Coast’s economy in 2006. A Steering Committee guided the effort. In addition, a number of people in state government and at Oregon State University (OSU) provided peer review. This was a team effort and we are grateful to everyone who participated.
Why is the information so important?
This is like taking a chest X-ray of the Oregon Coast. It tells us what’s really going on inside our economy. The study will help guide economic development and community development strategic planning efforts on the Oregon Coast.
This latest study is an update of an OCZMA study published in 1994—A Demographic and Economic Description of the Oregon Coast (prepared by the Research Group). OCZMA’s 1994 study was groundbreaking. The study is, by far, the most requested document ever produced by OCZMA. It became the “Bible” on Oregon Coast economics. It was so useful because it organized a lot of important information about our region in one place in an accessible format. Data is broken down to the county-level, a scale which renders the information relevant to many people at the local level.
Then and Now: A Sense of Revelation—When the economic report came out in 1994, many people were shocked to learn that the tourism industry only generated 7% of the total earned personal income on the Oregon Coast (1991 data). Things have not changed much. In 2003, tourism only contributed 6% of the Oregon Coast’s earned personal income. So, tourism has gone from 7% in 1991 to 6% in 2003.
We are not suggesting this data means tourism is unimportant to the Oregon Coast. Clearly, it is. However, the data puts tourism on the Oregon Coast into its proper context.
Here’s another important fact. In 1994 and in 2003 data, transfer income (social security and other government assistance), constitutes 23% of the total personal income on the Oregon Coast (in 2003). Investment income (things like retirement accounts such as individual 401k accounts and pensions) constitutes 23% of the total personal income on the Oregon Coast. These two major sources of income come largely from retirees living on the coast. Taken together, investment income and transfer income constitutes 46% of the total earned income on the Oregon Coast. This shows how important retirees have become to the Oregon coastal economy.
Looking at the pie chart found on Page IV-3 of the Report, you can see how other industries fit into the overall Oregon coastal economy. In 2003, timber is at 9% (down from 12% in 1991). Commercial fishing is at 5% (in 1991 it was 5%). Agriculture has dropped to 2% in 2003 from 4% in 1991. However, in Tillamook County agriculture continues to be a significant part of the economy.
And, there’s a category on the pie chart labeled “Other.” In 2003, the “Other” category represented 32% of the Oregon coast economy. In 1991 “Other” was 27% of the total personal income on the Oregon Coast.
What is “Other?” “Other” is a miscellaneous category. Personal income in this category doesn’t fall into other categories on the chart. It really represents a mix of small businesses. In addition, approximately 20% to 25% of the “Other” category is employment stemming from the public sector. Real estate professionals probably account for 7% or 8% of the “Other” category.
What is the Data Telling Us?—As described above, the Oregon Coast’s economy is highly dependent on retirees. Demographic data over the last two decades shows the Oregon Coast’s population is rapidly aging. As such, the reliance on retiree spending is a trend that’s likely to grow over time.
The Steering Committee members had trouble formulating recommendations about what to do about this phenomenon. There was consensus that additional original research needs to be carried out on the Oregon Coast’s retirement sector. Indeed, we need to learn more about our retirees. Here’s what we do know. Not all retirees are alike. T he Research Group cites national level studies showing low income elderly people spend approximately $13,000 annually. Higher income elderly spend approximately $40,000 annually.
And, obviously, leaders in coastal communities should develop strategies that can capture as much of retirement spending on the coast as possible. Larger coastal communities are in a much better position to capture the spending of local retirees because they offer more services to retirees (for instance, a fuller range of medical services).
So, developing a better understanding of retirees on the Oregon Coast, their spending patterns, their needs, should be a priority. In addition, having this information would help coastal leaders develop workforce training programs and other strategies related to retirement. In the meantime, community colleges on the Oregon Coast are enhancing nursing programs. Baby boomers are just entering retirement age. This demographic wave is upon us.
But, we need to step back. We need to better assess the demands retirees place on local services versus the positive impacts they make on the economy. After we learn more, we should ask ourselves, do we market the Oregon Coast to retirees? Or, what kind of retirees should we try to attract? Sorting out these retirement sector issues by generating information will take time and resources. At the OCZMA meeting in January 2006, there was a unanimous enthusiastic vote to instruct OCZMA staff to seek funds to get more information on retirees on the Oregon Coast.
The “Other” Category: Toward a Diverse Economy—At the outset, though, it makes sense, from an economic development perspective, to grow the “Other” sector if we can. Why focus here? Well, again, the “Other” category represents a range of businesses. It indicates how diverse an economy is. Most leaders on the Oregon Coast want a coastal economy that’s less seasonal in nature and less susceptible to cyclical boom and bust cycles (like forest products used to be because it was so linked to housing starts and interest rates). The data in the Update shows that the coast’s economy is becoming less seasonal in nature.
We urge you to read at least parts of the Oregon Coast Telecommunications Economic Development Strategy document (see Telecommunications Chapter to download document). The telecommunications strategy, developed in partnership with many talented people, is a road map for coastal leaders to follow that can help them take full advantage of broadband technologies. Because of broadband, communities on the Oregon Coast have an unprecedented opportunity to retain and attract knowledge-based businesses. We believe the telecommunications strategy, if implemented, can accelerate the trend toward a more diversified regional economy on the Oregon Coast.
Future Work: Breaking Data Down to the Community Level—The data OCZMA provides coastal communities takes information down to the county level. Information at the county level is valuable. But, it would be even more useful to break information down to the community level. We want to provide socio-economic statistics for each coastal town and for each unincorporated community on the Oregon Coast. Information at the community level is the most relevant information.
As many people on the Oregon Coast already know, there are large disparities of wealth within different parts of each coastal county. Communities and neighborhoods bordering the Pacific Ocean attract some fairly wealthy people. So, each year, income gaps on the Oregon Coast are growing.
A consultant living just South of Waldport, Carol Gundlach, developed data sets about Southern Lincoln County. Carol did this because, at the time, the Lincoln County School Board considered closing Waldport High School. Carol Gundlach’s study on “South Lincoln County”, coupled with an IMPLAN analysis, documented how bad the economy is in Southern Lincoln County. She also demonstrated that the closure of Waldport High School would deal a body blow to the economy of South Lincoln County. Lincoln County Commissioners were enthusiastic to get this information. Many were astonished to see how great the disparities are in income within Lincoln County.
In addition, getting data broken down to the community level, would be invaluable for local visioning and for grant writing. Community-level data would be a complement to the economic analysis OCZMA already performs for coastal communities.
At OCZMA, we will seek resources to fund Carol Gundlach to break down data to the community level for the entire Oregon Coast. The project would serve as a pilot project for the entire state of Oregon. Thus far, finding funding for this project has not been easy. Yes, people love data. But, very few people want to pay for it.
Facts on Coastal Poverty—The Oregon Coast has some high poverty rates. And the trends are disconcerting. The 2002 Census determined approximately 208,000 people lived on the Oregon Coast in 2000. I n the year 2000, 28,076 of those coastal residents had incomes below the federal poverty threshold ($8,501). Of the 48,469 children living on the Oregon Coast in 2000, 16% or 8,000 live in poverty.
A telling statistic is the fact that 64% of the children living on the Oregon Coast live in families eligible to receive food stamp assistance. An average of 44.5% of the children in our schools qualify for free and/or reduced school lunches. Some coastal schools have 70% of the children qualifying for school lunch assistance. On the Oregon Coast the “Rates of Poverty Per Census Tract” range widely from a low of 4.0% to a high of 28.7%. The Median Household Income (MHHI) on the Oregon Coast is 15.6% below the average for the State of Oregon. Per Capita Personal Incomes (PCPI) on the Oregon Coast are 17.7% below the average in the United States.
What does this mean? A third of the families on the Oregon Coast are one paycheck away from financial disaster. And, many of the young people on the Oregon Coast are really behind and are struggling.
In recent years, the Oregon coast lost many family wage jobs in the timber and fishing industries. The tourism industry and the retirement industries on the Oregon Coast have not replaced family wage jobs. This painful transition has been underway since the 1980s and 1990s. The situation was exacerbated when Oregon’s fishing industry had to downsize in the late 1990s and in 2001 and 2002. The Oregon Coast has not recovered from these structural changes. Like Appalachia, today, a significant segment of the Oregon Coast’s population is trapped in a cycle of poverty.
And, within the last three years, Oregon experienced a recession more deeply than other states. Why? One major reason is the profound impacts on our rural economy from these structural changes that have never been adequately addressed.
At the surface, the Oregon Coast is looking prosperous. A growing number of trophy homes are being built, especially near the beach. The impressive homes are mostly being built by people who don’t live on the Oregon Coast. And, many of these homes are vacation homes. Moreover, because of real estate speculation, there has been a spike in real estate prices. This phenomenon raises the issue of adequate (affordable) “workforce housing” on the Oregon Coast. This is a growing national problem.
OCZMA's Study Update can be downloaded as a full report or in sections (see Printable Reports below).
Click on any of the photos below to enlarge.
Front Cover 2006 Study Update
Front Cover 1994 Study
Total Personal Income at Coastal County Level for 2003
2006 Study Update Steering Committee