The housing and jobs connection

More than a year has passed since progress on Eugene’s downtown riverfront district went off the rails.

Amid a dispute between the developers and the Oregon Bureau of Labor & Industries over wage requirements for construction workers on the project, the developers’ Portland attorney wrote to BOLI that “rental rates in Eugene are simply not high enough when compared to prevailing wage rates to render the projects economically viable.”

It wasn’t the point of the back-and-forth, but it was a stark admission: Eugene, the economic engine of Lane County, doesn’t have enough high-income earners to pay the rents developers demand in order for market-rate apartments to make financial sense.

Are developers inherently greedy, hoping to raise rents as high as possible to get every last dollar out of tenants? That’s certainly true sometimes.

Yet for all but the biggest developers with national portfolios, basic economics dictate whether they’ll build in Eugene. Will the projected income from rents exceed the costs of construction, bank loan repayments (with interest) and operating expenses like maintenance?

It doesn’t matter how much a developer might want to build here. If those numbers don’t work, the building doesn’t get built.

The driving force of Lane County’s housing crisis is a lack of options for residents earning the area’s median income or less, to be sure. But years of lackluster job and income growth are making it harder for local workers of all income levels to keep up with mortgages or rent payments. Efforts by the government to control prices — notably, Oregon’s rent stabilization law, which generally caps annual rent hikes at 10% — are only so effective when living expenses consistently outpace income growth. If a low-income tenant gets a 3% raise at their job, but their rent increases 7%, they’ve lost money.

Persistent inflation, kept high by Trump administration tariffs and its war with Iran, has raised costs for everyone. But Lane County’s problems can’t all be pinned on an unpopular president.

Coming out of the pandemic, job growth has been slower in the Eugene-Springfield Metropolitan Statistical Area — which covers all of Lane County — than all but one of Oregon’s major metros, and lower than the state as a whole.

When you strip out government positions and look only at private-sector job growth, the gap between the Eugene-Springfield metro and the rest of the state is even steeper.

Editor’s note: Graphics were created with assistance from Artificial Intelligence tools. All data were manually compiled and reviewed, and no AI was used in the reporting or writing process.

Oregon’s 5% unemployment rate is tied for third highest in the country and is nearly a percentage point higher than the national jobless rate.

Take all these factors into account, and it’s clear that Lane County’s housing affordability crisis is a two-pronged problem: not enough supply to drive down costs, and not enough jobs to help workers afford their monthly payments.

The poor economy could have pushed home prices lower, had Lane County’s population declined. But even though population growth has slowed compared to the years before the pandemic, Lane County is still growing by about 1,000 people a year — driven entirely by migration into the area, as opposed to births.

More than 90% of that growth is in Eugene, according to data from the Portland State University Population Research Center. And many of the new arrivals are bringing proceeds from home sales in their previous city. Without more supply, buyers and renters alike compete with these new arrivals for housing. Prices go up as a result.

Higher wages would be an antidote for our existing workforce. But here, again, Lane County is trailing.

Of Oregon’s seven most populous counties, only Jackson County has a lower average annual wage than Lane County, and just barely. In 2015, our average wage was comparable to Marion and Deschutes counties, home to Salem and Bend, respectively.

Today, Marion County wages are about $4,000 higher than Lane County, and Deschutes County wages are about $7,500 higher.

The Salem and Bend metro areas have added jobs faster than any other large Oregon metro since the pandemic. It’s no coincidence their counties have also seen the biggest wage gains over the past decade.

We’ve taken this long to set up the scope of the problem. It’s much harder to identify the right local policy solutions. More high-paying jobs in engineering, technology and advanced manufacturing would certainly be welcome. And it’s possible greater regional coordination through initiatives like the Southern Willamette Valley Innovation Corridor could help.

But Eugene will also have to be more welcoming to business than it has been historically. The City Council has long been influenced by anti-growth voices. Some of that sentiment made sense: Look at what unchecked growth has done to Bend, after all.

But Eugene in recent years has felt a bit like the anti-Bend. And that has brought its own problems, as we’ve explained throughout this series. 

We’re not expecting a culture shift on the council overnight. But we do see one industry primed for a concerted economic development effort that should be easy to find common ground on.

Lane County has a smaller share of construction jobs relative to its population than any large Oregon county.

Building that workforce would do two things at once — open a route into well-paid work that doesn’t require a four-year degree, and give the region more capacity to build.

Lane Community College already runs apprenticeships in carpentry, plumbing and electrical work. The Lane Workforce Partnership, our region’s nonprofit workforce development board, partners with institutions like LCC and existing businesses to match local workers’ skills with local companies’ needs.

Elected bodies like the Eugene City Council or Lane County Board of Commissioners should embed themselves more deeply into economic development work, so they can better prioritize funding for the programs and partnerships with the most impact.

We know that economic growth brings its own problems. It increases traffic. It changes neighborhoods. It can cause housing prices to rise, which obviously cuts against the housing solutions we need.

But Eugene and Lane County are seeing the consequences of stagnation: wages that haven’t kept up with inflation, strained public budgets, young people who can’t afford to stay. And housing prices that rose anyway as new residents moved in.

Government at all levels will play a role in solving our housing crisis. (In the final part of our series, the Lookout Eugene-Springfield Editorial Board will make its housing affordability recommendations, including roles for the Oregon Legislature to play.)

But it also takes private employers paying enough for a family to carry a mortgage or pay the rent on time. Those two truths don’t have to stand in conflict with each other.