The report by UO researchers and commissioned by Business Oregon urges lawmakers to prioritize economic development to avoid losing thousands of jobs and billions in revenue.
Oregon is gearing up for a major investment in data centers as tech companies from around the country have identified the Northwest as ripe for energy development.
Except the recent headline from The Toledo Blade refers to the city of Oregon in northwest Ohio (pop: 20,000).
To many in the state of Oregon, business seems to be flocking elsewhere. Now, a new study by the state’s economic development agency and the University of Oregon confirms what a lot of people hear anecdotally: that other states are actively recruiting Oregon businesses. The report suggests more must be done to improve the state’s business climate and prioritize business retention and expansion.
“Survey data indicate the state has lost thousands of potential jobs and billions of potential private investments in the past five years and is poised to lose even more in the next five years,” reads the study.
Examples aren’t hard to find. The popular Dutch Bros chain of drive-through drink shops has continued its wild success since going public in 2021, with revenue topping $1.28 billion last year. But the Grants Pass-based company opted to target recent expansions in Arizona and Texas and today keeps only a small presence at its Oregon headquarters. Portland-based Columbia Sportswear chose to invest $4 million and add 175 jobs at its Robards, Kentucky, facility. Continuing the drumbeat of bad business news, last week, two publicly-listed Oregon companies were acquired by out-of-state interests, raising doubt about how long and in what form Vacasa and Radius Recycling will remain in Oregon.
To examine external recruitment efforts by other states, researchers with UO’s Institute of Policy Research and Engagement surveyed nearly 400 traded sector businesses and conducted more than 30 interviews.
Among the results:
- 24% of respondents reported being approached by recruiting agencies outside Oregon.
- Of that group, 68% reported moving or expanding outside Oregon.
- 60% of respondents say recruitment efforts have increased in the past three years.
- Solicitations have come from 36 states with many from California, Washington and Texas.
“There is ample evidence that many U.S. states are actively competing to attract businesses and investments away from Oregon,” reads the study. “This inter-state competition for economic development poses a potential threat to Oregon’s economy, as the loss of businesses and private investment could lead to job losses, reduced tax revenues and slower overall economic growth in the state.”
The study breaks down factors that drive recruitment into “anchor” factors that keep businesses in place, and “push” and “pull” factors that repel businesses from Oregon and attract them to other states. Businesses choose to remain anchored in the Beaver State due to factors like family ties, capital assets located here, access to raw materials and markets. “Pushing” businesses out are forces like restrictive regulations, heavy taxes and a high cost of housing. Other states pull in Oregon businesses with lower taxes and effective economic development programs.
A number of rankings and studies have Oregon near the top in terms of taxes and regulations and the bottom in terms of business friendliness.
“A concerning number of businesses indicated they were choosing to expand outside of Oregon due to tax and regulatory burdens, challenges attracting and retaining talent, and an unfavorable business climate,” the report states.
The study was released at an inopportune time to impact the current legislative session in Salem. It calls on Gov. Tina Kotek’s office to make economic development a more prominent priority.
Kotek has made some moves to improve the business climate including support for an Oregon version of the CHIPS and Science Act. In January, she called on the Department of Environmental Quality to relax requirements of the Advanced Clean Truck policy when it became clear the policy had hurt large manufacturers like Daimler. But more frequently, the governor has frustrated business interests, like by requiring union-friendly project labor agreements on nearly all large state projects.
Economist Damon Runberg, who worked on the study for Business Oregon, notes that along with the state government, local jurisdictions play an important role in economic development. And it’s not always bad news when a successful Oregon company is acquired, or when one opts to expand out of state.
“I think it’s important for us to celebrate some of this expansion,” he says. “Because if an Oregon business is doing so well that they’re expanding into new markets, that’s pretty cool.”
In a statement, Angela Wilhelms, president and CEO of the pro-business group Oregon Business & Industry, called the report sobering though not surprising.
“The issue is not new, but it can no longer be ignored,” she writes. “We recognize the need for any governor to set priorities and we ask that she immediately add economic development as an additional priority for her administration. Economic development is critical to the state’s future, including the ability to pay for and sustain other areas of investment.”
A spokesperson for Kotek said the governor is committed to using “every tool at her disposal to make Oregon a place where businesses want to locate and grow,” though she stopped short of acknowledging a competitiveness problem.
“The Governor firmly believes we should be doing more to recruit businesses and has a track record of speaking directly with businesses as they consider making Oregon their home or expanding their footprint in our state.”
Kotek touts her use of the Governor’s Strategic Reserve Fund, which directs state funds to innovative businesses with a focus on job creation, retention and capacity building. The fund recently awarded $720,000 to Swinerton subsidiary Timberlab, a mass-timber focused company with a planned expansion in Millersburg intended to create 100 well-paying jobs.
“With regard to the report, (Kotek) believes Oregon’s ‘anchor factors’ are a strong foundation for business recruitment. She is focusing on improving the “push factors” (such as housing, health care, and schools), and is committed to growing the “pull factors” through partnership with the private sector,” reads the governor’s statement to Oregon Business.
Related to business development, Kotek’s 2025-2027 Recommended Budget features $30 million to increase access to childcare through the Child Care Investment Fund to help employers find workers, $10 million to help industrial lands get shovel-ready for business development, and $4.8 million to provide assistance to underrepresented businesses.
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