By Luke Hammill & Mike Rogoway | The Oregonian/OregonLive

By any conventional measure, Oregon's economy is roaring.

The state unemployment rate sank below 5 percent this year for the first time since the mid-1990s. In most cases, home values are higher than ever. Demand for downtown Portland office space is surging as employers - many from the tech industry - race to hire highly paid workers.

At the new downtown office of website builder Squarespace, for instance, employees enjoy free catered lunches of salmon and steak, fridges stocked with bottled kombucha tea, cushioned lounges to relax while chatting with clients, and a playroom featuring old-school video games.

The rising tide, however, hasn't lifted the boats of people like Arlene Hill.

The 59-year-old Portland native has worked her whole life in the service industry. But she's not raking in lavish tips at one of the sleek new brewpubs, taphouses or cocktail bars along Southeast Division Street or North Williams Avenue. Her job at worn and rundown Tony's Tavern exposes her to rough-edged regulars who drink cheap pitchers of domestic beer before trudging back out onto West Burnside Street.

Hill has fallen on hard times herself. After 14 years of never missing a rent payment in her Vancouver apartment and raising a son there, Hill said she was rewarded in the spring with a 30-day eviction notice. The new landlords would raise the rent substantially once she was gone. Hill ended up at a friend's place before eventually finding a place of her own again to rent, but she's barely making ends meet. Homeownership is out of the question, as even the region's cheapest houses are out of her reach.

"I really wish I would have," Hill said of buying a home. "That would have been what I should have done a long time ago, but I didn't. I'm just a renter. ... I don't make a lot of money. So, if it was possible, sure, I would love to buy."

Hill is among a significant number of Portland-area residents who have not reaped the benefits of the region's thriving economy. She is shut out of the housing market and lacks the skills to access the lucrative jobs that often go to the college-educated and the upwardly mobile.

For Hill and many others, the good economic times washing over Portland are actually making life harder. As affluent workers bid up the cost of buying or renting a home, those in low- and middle-income jobs find themselves falling behind by staying in place.

Long-term trends and an ongoing hangover from the Great Recession have combined to hollow out the middle class. The climate is particularly bad for those who, through mistakes or bad luck, fall to the bottom of the economic ladder and are faced with the challenge of trying to climb back up.

"We know the lack of middle-wage jobs means some rungs of the ladder are missing," said Josh Lehner, an economist with the Oregon Office of Economic Analysis.

Stagnant wages, rising home values and demographic shifts

Not only is Oregon's middle class hollowing out, those remaining are suffering stagnant wages.

A report last year from the economic research firm ECONorthwest found that middle-class jobs grew less than one-third as fast as those at the top and bottom of the wage scale between 1980 and 2013.

Oregon has 112 "high poverty hotspots." Nearly half are in rural counties.And the share of people working those middle-class jobs declined from more than two-thirds of the work force to a little more than half.

Yet across the board, home prices are rising quickly and rental vacancies are low.

"Those two things together create a squeeze," said John Tapogna, ECONorthwest's president.

In neighborhoods we call this gentrification: The arrival of wealth displaces longtime residents by making it harder for them to afford rent or to buy homes.

Now, it's happening on a citywide scale. This part of the story isn't unique to Portland - in San Francisco, Seattle and many other cities, particularly on the West Coast, employers and upscale employees are moving back to urban centers.

Portland job growth began outpacing Washington County's three years ago and the trend has accelerated since as the region's tech sector shifted from land-intensive manufacturing to software and web development in retrofitted warehouse lofts in the Pearl District.

That's great news if you're a software developer who enjoys biking to work, lunching at the food carts and ending the day with a cone at Salt and Straw. State forecasters project that the number of software developers in the Portland area will grow 33 percent by 2024, a field that pays an average wage of more than $103,000 annually.

If you're a renter clerking at a grocery store, though, Portland's record-high housing prices aren't good news. The average sale price in the metro area broke the $400,000 mark in May for the first time. Rents, meanwhile, have been growing by double-digit percentages and the vacancy rate has been hovering near an ultra-low 3 percent.

Portland's recovery from the Great Recession is among the strongest in the nation, but the benefits have accrued primarily to those with well-paying jobs and to homeowners who locked in their housing costs before the surge in the cost of housing that began two years ago.

One reason for the fast-rising home prices and rent rates? Portland's population never stopped growing during the recession. Even as those migrants moved in, existing residents were forced into rentals by the mortgage crisis - all at a time when housing development ground to a halt.

Cranes are dotting the skyline again today, but much of what is going up caters to those for whom the economy is working. Developers are intent on maximizing profits from a limited supply of land. To do so, they have focused on upscale development in Portland - erecting luxury apartments and replacing aging homes with extravagant houses that tower over their neighbors.

At the same time, institutional investors have poured into Portland's housing market at unprecedented levels - a phenomenon that contributed to Hill's eviction notice in Vancouver.

The previous owners of her complex, the Highland Hills Apartments on Northeast 139th Street, sold it to Greystar. That East Coast firm focuses on "generating attractive risk-adjusted returns on behalf of institutional partners through the acquisition of multifamily properties," according to its website.

That means they're looking to exploit low interest rates and double-digit percentage growth in rents to generate profits for pension funds and real estate investment trusts. The region posted more than $2 billion in multifamily building sales last year, smashing a previous record.

Who is affected?

Those without a college degree find themselves without leverage, and out of options. More than 1 in 5 Oregon men of prime working age - but without a college degree - worked in manufacturing as recently as the 1990s. Now it's fewer than 1 in 10, according to work published by Lehner earlier this summer.

The same phenomenon is true of Oregon women in office and administrative support jobs such as administrative assistants, typists, switchboard operators and clerks.

The number of middle-wage jobs for residents without college degrees, in other words, continues to fall. The middle class shrinks, and state statistics show that an increasing number of Oregonians without college degrees give up looking for work altogether.

Nathan Lee is one of those without a college degree. The Beaverton native, 45, is a year short of an associate's degree. It didn't hinder him much before the recession; he worked for 15 years as a security guard, most recently at Vancouver-based Phoenix Protective Corp., he said.

But then Lee underwent an onslaught of hard times. First, his brother suddenly died at only 25 years old. After the tragedy, he moved in with his mother to help, and then health issues eventually cost her a job at a bank.

Then the Great Recession hit. There were cutbacks at Phoenix, and Lee found himself without a job as well. Mother and son struggled to make rent payments. Sometimes, they would pay late. With two months left to go on their lease, he said, they received an eviction notice.

Lee and his mother were on and off the streets for the next few years. They'd sleep behind garbage bins in Tualatin and sit during the day near the Beaverton Transit Center.

"Everybody thinks homeless people choose to be that way," Lee said. In some cases, he said, "there's nowhere else to go."

Finally, with help from employees at Beaverton City Hall and members of a church in Newberg, Lee and his mother secured a roof over their heads - at a motel in Tigard, where they have been for the past year.

Lee found a job at a Tualatin-based retail distribution company. He recently earned a promotion to supervisor, a position that pays $12.50 an hour and requires 40 to 50 hours a week, he said. His mother also qualified for federal disability assistance.

The problem? Now, Lee and his mother earn too much money to qualify for many public benefits, but they continue to be denied apartments because of the previous eviction. They still need to pay back fees owed their previous landlord, and the $410-a-week motel burns through most of their income.

Lee, consequently, doesn't want to hear about how the economy is booming.

"It's not helping the people that are in...poverty and below," he said.

Alan Trunnell, a city of Beaverton employee, spotted Lee at the transit center and tried connecting him with social services and job assistance. He said the fact that Lee and others like him are often transient - jobless and changing addresses frequently - makes it difficult to track them. That could distort the economic numbers, overstating their strength.

"We're not really capturing that data," Trunnell said. "And it's hard to come up with a solution when you don't really know the extent of the problem."

Generational gap

Segments of the population are more likely to be feeling the pinch - middle-aged folks without college degrees who lost manufacturing or office support jobs, or younger workers shut out of homeownership and balancing rising rents with student debt repayments.

But many older workers, too, are finding themselves left out of the new economy. For instance, Intel laid off 784 employees in Oregon earlier this year, the first part of a major reduction in its work force. People over 40 were two-and-a-half times more likely to lose their jobs at the company than were employees under 40.

In the tech world especially, companies often prize younger workers because they tend to be more familiar with digital skills and they cost less.

Louanne Moldovan wants a job in marketing, or as an executive assistant, but those kinds of jobs are in steep decline. So she has a contract gig with the city of Portland's marijuana policy office, which she hopes might turn into long-term work with benefits. The city's economy "seems really skewed to high-tech, finance," Moldovan said. "If you're not riding that wave you're left in a desert."

Louanne Moldovan, of Southeast Portland, is looking for a job in marketing or as an executive assistant. Right now, she works a temp job with entry-level pay and no benefits in the city's marijuana-policy office. Moldovan, who says she's somewhere past 50, said it's a good job but she needs more to make ends meet. She said she is in debt and renting out her basement to a widower.

The realities of the new economy stunned Moldovan when she tried interviewing for a job at the tech company Squarespace over video chat. The last of five screening questions: "What's your favorite '90s jam band?"

"We are speaking different languages," Moldovan said. "It's no one's fault. The generation divide is massive."

If you're not "riding that wave" in the tech or finance sectors, she added, "you're left in a desert."

-- Luke Hammill and Mike Rogoway

mrogoway@oregonian.com

503-294-7699

@rogoway