Across the United States, a demographic shift is quietly reshaping the economy—and Oregon is no exception. With baby boomers retiring in record numbers, the state faces a dual challenge: a shrinking pool of experienced workers and growing demand for services, particularly in health care.

This wave of retirements is leaving behind a talent gap that’s not easily filled. Many of these workers take decades of experience and institutional knowledge with them, creating a vacuum in leadership and productivity. At the same time, retirees are fueling demand for goods and services with higher levels of discretionary income and increasing health-related needs.

In effect, Oregon’s economy is losing a generation of seasoned talent while simultaneously needing more workers to support an aging population. Complicating matters further, the labor force is not growing quickly enough to keep pace. According to the U.S. Census Bureau, the nation’s population growth has slowed significantly, and Oregon even saw modest population declines over the past two years.

The culprit? A steep drop in natural population growth. With a national birth rate of just 1.78 births per woman—below the replacement threshold of 2.1—Oregon, like much of the country, is now dependent on in-migration to sustain its workforce and economic momentum.

In response, state leaders are turning toward innovation as a long-term solution. Business Oregon’s newly released 10-Year Innovation Plan offers a strategic roadmap for strengthening Oregon’s innovation ecosystem. The plan emphasizes research and development, product design, advanced manufacturing, and workforce training as pillars for future economic vitality.

“The continued health of Oregon’s economy and quality of life depends on our ability to innovate,” the plan states, underscoring the importance of cultivating a dynamic, high-wage economy that can adapt to demographic changes.

By investing in talent development and ensuring entrepreneurs and businesses have access to the capital they need, the state aims to make its industries more competitive and resilient. Innovation, while taking different forms across sectors, will be key in meeting evolving consumer demands and supporting community prosperity.

As Oregon navigates the economic ripple effects of demographic change, fostering a culture of innovation could be the state’s most powerful tool for turning a looming challenge into an opportunity for growth.

The 2024 Oregon Innovation Index, released by Business Oregon, offers a comprehensive evaluation of the state’s innovation landscape. This biennial report assesses Oregon’s performance across 18 metrics, categorized into three primary domains: commercialization, business environment, and skills/talent. These metrics serve as indicators of the state’s capacity to foster innovation and economic growth.

Key Findings:

• Overall Ranking: Oregon secured the 7th position among U.S. states and the District of Columbia in the 2024 Innovation Index.
• Commercialization: The state excelled in university licensing, achieving the top national rank. However, the revenue generated from these licenses remains below the national average, indicating potential areas for growth.
• Business Environment: Oregon demonstrated strong performance in exports and high-tech employment. Nevertheless, the growth rate in these sectors has decelerated over the past five years, suggesting a need for renewed focus.
• Skills/Talent: The state boasts a competitive workforce, with favorable metrics in average wages, educational attainment, STEM workforce participation, and broadband access. Yet, as other states enhance their capabilities, Oregon must continue to invest in talent development to maintain its edge.

Strategic Recommendations:

• Enhance Commercialization Efforts: By increasing venture capital funding and streamlining patent processes, Oregon can better support startup growth and innovation.
• Strengthen Business Environment: Addressing challenges in small business awards and invention disclosures can bolster the state’s innovation infrastructure.
• Invest in Skills and Talent: Expanding educational programs and resources will ensure a steady pipeline of skilled workers, essential for sustaining economic growth.

Putting the Plan into Action:

The 2024 Innovation Index underscores Oregon’s robust innovation ecosystem, highlighting both its strengths and areas requiring attention. By implementing strategic initiatives focused on commercialization, business environment, and talent development, Oregon can continue to foster innovation and drive economic prosperity.

Oregon’s Innovation Landscape in 2024