Toward One Oregon: Rural-Urban Interdependence and the Evolution of a State

Chapter 8. Critical Linkages: Strengthening Clusters in Urban and Rural Oregon

143 Chapter 8 Critical Linkages Strengthening Clusters in Urban and Rural Oregon Sheila Martin Introduction People living in the urban and rural parts of our state are linked in a number of ways. First, they are linked through relationships developed through migration . Migration has occurred in both directions: from the rural areas to urban areas for the purposes of education, work, and social interaction, and from urban to rural areas to retire or simply to find an alternative way of life (Hammer 2008). Urban and rural Oregonians are also linked through trade in goods and services. As demonstrated in Chapter 5, almost $7.4 billion in goods and services purchased by the periphery comes from the core area of Oregon, while the core purchases $1.8 billion in goods and services from the periphery. As was documented in Chapter 6, urban and rural Oregonians are also linked by the state’s revenue-sharing system that is used to equalize the services available for the citizens of its state, especially for education and health care. This linkage is critical, because it means that economic vitality in one part of the state provides benefits to citizens in other parts. In effect, we all benefit from economic success in one part of the state because state tax revenues are shared statewide. Finally, urban and rural Oregonians are united by a state boundary and a government that ensures that decisions made in Salem affect all parts of our state. Oregonians are also connected through their business relationships, which link the urban and rural economies in fundamental ways. Earlier in our state’s history this economic connection was obvious, because the natural-resources industries were fundamental drivers of the economy in both urban and rural 144 TOWARD ONE OREGON areas. But as other industries became more prominent, particularly in urban areas, there was a growing disconnect between the metropolitan regions of our state and the rural areas, which have in many ways been left behind in the economic boom fueled by technology industries. While metropolitan Oregon has always had a more diversified economy than rural Oregon, many jobs in urban areas were historically tied to the natural-resources industries. The legal, financial, trade, and transportation sectors served natural resources, and a number of urban-based food and wood-processing manufacturers also depended on raw materials from the rural areas. The percentage of personal income derived directly from farming, forestry, and fishing was about 8 percent in nonmetropolitan areas in 1969; that percentage grew to over 10 percent in 1974, but then fell to about 4 percent in 1990. Statewide, the percentage of personal income derived directly from natural-resources industries also fell, from about 3 percent in 1969 to about 2 percent in 1990. But the decline in this industry was clearly felt most acutely in rural areas (figure 1). After 1990, the state’s dependence on natural resources further declined as the percentage of personal income from computer-related industries began Figure 1. Percentage of personal income from farming, agricultural services, fishing, and forestry in metropolitan and nonmetropolitan areas and statewide, 1969 to 1990. Source: U.S. Bureau of Economic Analysis 2008. CRITICAL LINKAGES 145 to rise (figure 2). In the 1990s these two economic sectors contributed about the same amount of personal income to our state, but since then they have pulled apart. This trend has largely left the rural parts of our state behind. While the computer and electronic products industry employed approximately forty thousand workers statewide in 2007, with an average annual wage of $88,226—significantly higher than the state’s average annual wage of $39,564—over 80 percent of those jobs were in the three-county Portland metropolitan area (Oregon Employment Department 2008). The sense among many rural people of economic disconnection exacerbates the division between urban and rural policymakers, as rural leaders see a generation of wealth in the cities that they and their fellow citizens largely do not share. However, several industry clusters key to the Oregon economy span urban and rural areas and their future well-being hinges on strong relationships between urban and rural businesses, consumers, and supporting institutions. Strengthening these connections can improve the profitability of both urban and rural businesses in these industries. I will focus on two key industry clusters that have important components in both urban and rural areas: farms and food, and forest and wood products. Figure...