Erik Lukens: Business climate rankings give Oregon falling scores
For nearly every year but one between 2010 and 2019, Oregon’s overall ranking stood in the top half of all states. And as recently as 2018, Oregon was ranked 18th.
But things have changed — rapidly. Last year, Oregon slipped to 28th. This year, it tumbled 11 places to 39th.
CNBC does rate Oregon well in some areas, including technology and innovation (14th) and quality of life (19th). But these strengths are counterbalanced by low scores elsewhere, including cost of living (45th), the cost of doing business (43rd) and — lowest of all — business friendliness (47th).
Oregon’s fall may have come as a surprise to many people, but state business leaders are not among them. In fact, the problems CNBC highlights echo things business leaders have described for years.
That’s why CNBC’s rankings will seem familiar to anyone who’s read OBI’s Oregon Competitiveness Agenda, which we released in advance of the 2025 legislative session. Our report identifies three problems that must be addressed to encourage business investment here:
1. Oregon is an expensive state in which to live and operate a business.
2. Oregon creates unnecessary obstacles to opportunity and success.
3. Oregon’s political culture undervalues the state’s private sector.
My purpose in pointing to these problems, and to the national attention they’ve received, is not to say “we told you so” or engage in gratuitous criticism. It is, instead, to help address them.
Like any other state, Oregon needs a healthy private sector to provide good jobs, to support philanthropic activity and — not least — to generate the tax revenue upon which the public sector relies.
Unfortunately, if not surprisingly, Oregon’s economic performance has tracked its faltering reputation as a place in which to do business.
Between January 2022 and August 2025, according to the Federal Reserve Bank of St. Louis, employment growth in Oregon (3.6%) trailed that of the nation (6.3%) as well as that of neighboring Washington (5.2%), Nevada (7.8%) and Idaho (9.2%). Of Oregon’s neighbors, only California (3.1%) has struggled more.
Meanwhile, the state economist has pointed on multiple occasions to Oregon’s manufacturing recession and worried aloud about its stagnating population growth.
Improving Oregon’s competitiveness will require bold action by legislators and the governor, beginning with a commitment to economic development and a willingness to revisit policies that have tarnished the state’s reputation and stunted its growth.
Because such an effort will require a basic understanding of underlying conditions, OBI recently released The Oregon Scorecard, a collection of web pages that contain data, rankings and other information shedding light on Oregon’s business climate and economic performance. It can be found at oregonbusinessindustry.com/oregonscorecard, and will be updated by OBI throughout the year as new information becomes available.
Information is organized into four categories: business climate, quality of life, economy & employment, and government & education.
For most data points and rankings, The Oregon Scorecard includes a chart showing up to 20 years of historical information. Charts also include information sources, allowing users to verify data and explore further on their own.
What do the data show?
I will acknowledge first that many factors influence Oregon’s economic performance, including plenty not reflected by The Oregon Scorecard. Still, there is an identifiable trend.
Between the Great Recession and about 2019, Oregon generally outperformed the U.S. in many categories, including GDP growth rate, overall employment growth and private-sector employment growth. Beginning in roughly 2020, however, Oregon began to trail the nation — sometimes badly — in many of these same categories. So Oregon’s competitive slump is not new.
The Oregon Scorecard also highlights the effects of policy changes that have eroded the state’s competitiveness.
Oregon has contended for many years with a handful of well-known competitive disadvantages, including high personal income tax rates, high housing costs, a generally high cost of living and doing business, and public schools that underperform on nationwide assessments. At the same time, however, the state also enjoyed a number of competitive advantages, including the lack of a sales tax, a generally low business tax burden and inexpensive electricity.
In recent years, Oregon has done little to address its longstanding competitive disadvantages. Several of them, in fact, have declined further. Meanwhile, tax and regulatory policies have chipped away at the state’s competitive advantages. Oregon’s commercial and industrial electricity prices have shifted the state closer to the middle of the national pack.
Finally, the 2019 adoption of the corporate activity tax immediately eliminated the state’s corporate tax-burden advantage. Since 2020, Oregon’s corporate tax burden has been above the national average when it used to fall well below it.
In March, Business Oregon, the state’s economic development agency, released an eye-opening report produced by the University of Oregon. Its purpose was to gauge the success of efforts in other states to recruit Oregon businesses.
Roughly a quarter of businesses surveyed said they had been approached by recruiting agencies outside Oregon. Of this group, an astounding 68% reported moving or expanding outside the state. A Business Oregon economist later called this “just an insane success rate for recruitment efforts.”
The report identified several factors pushing businesses into the arms of competing states. They include Oregon’s regulatory climate, its taxes and tax policies, and its business climate. To improve Oregon’s competitiveness — and its economic performance — policymakers must begin with these.
OBI’s Oregon Scorecard uses a sports metaphor for the same reason the Tax Foundation calls its annual report the State Tax Competitiveness Index. It’s an acknowledgement that states compete with one another for business investment, and many states have worked in recent years to improve their tax and regulatory environments even while Oregon’s have eroded.
To use one more sports metaphor: Oregon policymakers cannot sit on the sidelines while the economy continues to struggle. They need to join us in acknowledging and accepting there’s a problem; they need to do no more harm; and then they need to prioritize policy improvements that can lead to real economic and business development — i.e., job creation.
Only then can we once again see the necessary growth in business investment, job creation and personal incomes that underpin prosperity, philanthropy and tax revenue.
About the writer: Erik Lukens serves as communications director for Oregon Business & Industry, Oregon’s statewide chamber of commerce. Before joining OBI, he spent more than 20 years in editor roles at newspapers in Oregon, including four years as editorial page editor of The Oregonian. This essay first appeared in the Oregon Transformation Newsletter. The Oregon Scorecard it references may be found at https://oregonbusinessindustry.com/oregonscorecard.
Comments
Don Dix
Not a good look for Oregon, and there is more -- PERS. Oct 8, 2025 · Today, PERS’s unfunded liability is nearly $30 billion, about the size of Oregon’s entire general fund revenue for two years. That unfunded liability belongs to every Oregon resident, and growing yearly.
The Ds in the legislature and most of Oregon's elected officials have slipped between the sheets with the public employees unions, and they don't seem to care if anyone watches. The unions get their wishes, and the Ds get re-elected. When the legislature included themselves in the PERS payouts, the circle was complete. So now, anytime it comes to PERS reform, nothing. it's akin to a pack of wolves and a sheep voting on what's for dinner!