The economies of the Pacific States — California, Washington, Oregon, Alaska, and Hawaii — represent a diverse mix of industries. Nonetheless, the region has become closely associated with the country’s tech boom, while also helping to supply the world through its robust natural resources.
Central to the region’s economic success is the state of California, the largest state economy in terms of GDP. If California were a nation, it would have the fifth-largest economy in the world. The state is home to Hollywood, Silicon Valley, and the highest agricultural output in the country, among many other industrial touchstones. It ranks first in the nation in new business starts and enjoyed the highest human capital gain in the U.S. between 2011 and 2017.
The Tech and Energy Industries
The Pacific States are located at the epicenter of the tech industry’s rise, arguably the economic story of the 21st century.
“The emergence of the tech industry in North America, greatly positioned on the West Coast, has been and continues to have a gigantic impact on the economy, particularly in Seattle, Portland, and Silicon Valley,” says Lisa Brown, director of the Washington State Department of Commerce. “Companies like Microsoft, Amazon, Apple, Facebook, Intel, and many others are global names that are changing the way we live our lives but are also providing economic stability and incomes to new generations of workers.”
Tech companies based in these hubs tend to fuel each other. For instance, when Zipwhip needed a larger headquarters space, CEO John Lauer says the company knew it needed “to stick around Seattle…There’s no better city to be a startup in right now — the tech community here is so supportive of companies like us, and you really don’t find that everywhere,” Lauer noted in a press release.
Brown says part of the region’s unique quality can be traced to the combination of “tech titans” with well-established manufacturing companies, such as Boeing, and next-generation companies focused on clean technologies, such as grid management, power storage, and more efficient batteries. More commercial airplanes are produced in the Puget Sound area than in any other region in the world, notes Brown, while the region’s clean-tech sector is filled with established companies and startups drawn to energy policies in states that emphasize a transition to clean energy.
Karsten Rodvik, external affairs officer for the Alaska Industrial Development and Export Authority, notes Alaska plays a crucial role in the region by spearheading best practices in the development of natural resources, ranging from oil and gas to the mining of strategic metals. The state is undertaking the development of a new 200-mile industrial road to open up a mining district to access for exploration and development. The state is also working to diversify its economy.
“A significant portion of investments made in Alaska are in the oil and gas sector where efforts are underway to drill for more resources in the National Petroleum Reserve Alaska (NPRA) and on state lands in the western portion of the North Slope,” Rodvik notes. “Alaska’s abundance of important metals such as copper and cobalt is drawing in new investments as these and other metals are needed increasingly for electric vehicles and other high-tech applications.”
Workforce and Locational Advantages
The Pacific States also provide a workforce with a diverse skill set. According to Brown, “This region collectively offers a highly skilled workforce in a variety of disciplines of study or certification. For companies that have a need to hire engineers or scientists, as well as production workers with experience in a wide array of manufacturing settings, we have a lot to offer.”
Among the top challenges that Pacific States are facing is a relatively high cost of living, especially in areas affected by the tech boom and in Hawaii.
Additionally, the Pacific States’ location offers an advantage partly because of ready access to a crucial set of trading partners. International trade remains vital to the long-term economies of the region. For instance, Washington’s recent engagements with China, Vietnam, Japan, Spain, Norway, the United Kingdom and others remain high priorities for the state’s economic development team, says Brown.
The two largest ports in the country — Long Beach and Los Angeles in California — actually handle 40 percent of inbound containerized freight. “The market access to Asia-Pacific is critical to the region and will only continue to increase in its importance as economic growth and advanced technology R&D continue to accelerate in those markets,” Brown explains.
Agriculture remains a core component of the region’s economy. More than two-thirds of the nation’s fruits and nuts and a third of vegetables grown in the U.S. come from California, while Washington produces more than 300 different agricultural crops, and Oregon has more than 250. The West Coast is also the heartbeat of the U.S wine industry: California (No. 1) accounts for 90 percent of American wine production; Washington is No. 2, and Oregon ranks No. 4 among the country’s top wine-producing states.
Hawaii’s top commodities are greenhouse and nursery products, and the state is one of the world’s top producers of macadamia nuts and the only U.S. state to produce coffee. While Alaska doesn’t have a large agricultural industry, it does have a major commercial fishing industry integral to the state’s economy.
High Quality of Life Trumps Costs
Among the top challenges that Pacific States are facing is a relatively high cost of living, especially in areas affected by the tech boom and in Hawaii, which has the highest cost of living in the country. The region also faces higher business costs in some states. California, for instance, ranks No. 47 in business costs and No. 40 in regulatory environment, according to Forbes.
However, a high quality of life — and the benefits it provides for the workforce — helps the region combat these challenges.
“Quality of life is…an important part of the equation, as studies show that employees who can achieve an appropriate work-life balance and develop an active lifestyle outside their employer relationship are more productive while at work and turn over less — which saves money for employers,” Brown says.
Tim Boyle, president and CEO of Columbia Sportswear, cited quality of life as a crucial reason his company has remained headquartered in Portland, Oregon, despite entreaties from elsewhere. “The people who work here love it here, and that’s a positive,” Boyle told Oregon Business magazine.