March 20, 2025
Many states are actively recruiting Oregon businesses, and this competition poses a threat to the state’s economy. The loss of businesses and private investment could lead to job losses, reduce tax revenue and slow Oregon’s economic growth.
This is the conclusion of a report (see link to the right) released March 20 by Business Oregon, the state’s economic development agency. To prevent the loss of business investment, the report offers several recommendations, including improving Oregon’s business climate and prioritizing business retention and expansion.
In states that compete successfully for business investment, “recruitment … is a team sport operating under strong leadership at the governor’s level and clearly articulated roles for every player in the economic development ecosystem,” the report concludes. In response, the report argues, “[t]he Governor’s office should make economic development a more prominent priority.”
“I am grateful that Business Oregon has looked more deeply into this issue and shared their findings. The issue is not new, but it can no longer be ignored,” said Angela Wilhelms, president and CEO of Oregon Business & Industry. “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.”
Business survey findings
To gauge the extent and success of recruitment efforts, the University of Oregon’s Institute for Policy Research and Engagement surveyed hundreds of state businesses. Of those that responded to the survey, 24% reported being approached by recruiting agencies outside of Oregon. And of that 24%, an astounding 68% – well over half – reported moving or expanding outside of Oregon.
As a result, the report notes, “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.”
Why businesses invest elsewhere
Oregon businesses choose to invest in other states for a variety of reasons, including some – like access to markets – that are not shaped by public policy. Often, however, policy-driven conditions in Oregon lend a powerful assist to states recruiting Oregon businesses.
Such policies – or “push factors” – include Oregon’s regulatory climate, its tax burden, its business climate (including anti-business sentiment) and the cost of land and housing. Such push factors can, and do, frequently override “anchor factors,” of which the report identified many. They include family ties, access to Oregon’s natural amenities, existing workforce and duration of residence in Oregon. Businesses want to succeed in Oregon, but the state’s business environment makes that difficult.
“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 notes.
“What businesses told the researchers is sobering, but it isn’t surprising,” said Wilhelms. “OBI’s members, 74% percent of which are small businesses, have talked to us and to policymakers about Oregon’s ‘push factors’ for years.” “
Report echoes OBI research, national rankings
Oregon’s effective business tax burden increased by roughly a third between 2019 and 2023, according to a 2024 report prepared by consulting firm EY for the OBI Research and Education Foundation. Significant contributing factors include the state’s corporate activity tax, adopted in 2019, and Paid Leave Oregon.
According to the nonpartisan Tax Foundation, Oregon’s corporate tax environment ranks 49th out of the 50 states, and its individual income tax structure ranks 40th.
Meanwhile, CNBC ranks Oregon only 48th for business friendliness in its most recent America’s Top States for Business rankings
Such conditions have consequences. According a 2024 analysis of Oregon’s manufacturing sector prepared by the OBI Research and Education Foundation by ECOnorthwest, Oregon ranked only 45th nationally in manufacturing growth between June 2023 and June 2024. It ranked among the bottom 10 states for job growth in several other sectors.
Increasing Oregon’s competitiveness
“Business Oregon’s findings, OBI’s own research and national rankings are all pointing to one thing: Oregon is becoming steadily less competitive for business investment,” said Wilhelms.
That matters because business investment creates jobs, prosperity and the revenue needed to fund public services.
“Increasing the state’s competitiveness won’t happen overnight,” said Wilhelms. “But acknowledging that Oregon has a problem, accepting its root causes and committing to address them is an important first step.”
Released in December, OBI’s Oregon Competitiveness Agenda contains dozens of policy proposals that would address many of the problems identified by Business Oregon’s report, including the state’s regulatory and tax environments.