Editor's note: This month's column is co-authored by Marcelino Alvarez, CEO, Uncorked Studios.
On the surface, Oregon's economy is thriving.
Last year, the state's gross domestic product (GDP) increased by 3.4% to $213.7 billion, outstripping the national increase of 2.9%. In fact, over the last 10 years, our economic growth has consistently outpaced the national average, as have our employment rates.
Portland regularly ranks high on lists of cities to move to. In 2017, the city achieved the No. 1 spot on the Forbes Best Places for Business and Careers. Buoyed by a cost of living that is still more affordable than other West Coast cities like San Francisco and Seattle, Portland continues to attract tech outposts and young professionals by the droves.
This all seems like great news. But, if we dig a little deeper, we're faced with a critical question: who is benefiting from this prosperity?
According to data from the Oregon Center for Public Policy, income inequality is steadily continuing to widen, and a full-time job is often not enough to keep many households above the poverty line. One-third of Oregonian families struggle to afford housing and the influx of new residents paired with a housing shortage driven by decades of underproduction is only driving rents higher.
Portland has earned a reputation as a magnet for start-ups, life sciences research, and the athletic and outdoor industry, but the data reveals a more complex story. While capital flows easily to larger businesses and tech entrepreneurs with personal connections to Wall Street, Silicon Valley, and Ivy League schools, lending to small businesses has slowed to a trickle. And if you're a business owner who is a woman or person of color, your access to capital is likely extremely limited.
In 2017, less than 20% of loans from the Small Business Administration (SBA) went to women-owned businesses. Over the last decade, there's been a 96% drop in loans to black-owned businesses. Despite these challenges, small businesses remain critical to the region's economic health. After all, they employ more than half the state's workers.
This dramatic under-investment in small and emerging businesses is to our own detriment. As long as we continue to see economic development as separate from community development, we will continue to subsidize corporate decisions that may create a handful of new jobs and raise the median income, but generate little value for people who are here now, taking on the work, risk, and stress of starting and running a business. But there is another way.
In Oakland, city leaders are advancing an economic development strategy focused on attracting and retaining entrepreneurs, with dedicated support for entrepreneurs of color. In an interview with the Kaufmann Foundation, Jose Corona, director of equity and strategic partnerships in the Oakland mayor's office, acknowledged, "while it's not either/or — we need both big and small companies — these new and small businesses actually create more jobs."
In Madison, building an economy around entrepreneurs means dedicating resources to invest in business owners from underrepresented communities. The city is developing a fund that leverages city, state, and non-profit funding to support small businesses started by women and people of color.
And here in Oregon, Prosper Portland is collaborating with the business community to promote inclusive workplace cultures and create purchasing opportunities that support small businesses owned by people of color.
These examples show us that we have the capacity to support economic development strategies and innovative financial tools that generate benefits across our community.
Supporting start-ups and small businesses doesn't mean we should stop thinking big. In fact, we must be more ambitious and more creative than ever to ensure that every public dollar we spend on economic development is creating a stronger, more livable, and more equitable city.
As we consider how to spend public resources to support economic growth, let's pause to ask ourselves: Who benefits?
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