Creating Jobs in Oregon – The Role Of Business

By Christopher Gergen

In the last installment of this series we discussed specific steps that Oregon and Lane County governments can take to improve the climate for job creation in Oregon. They are:

1. Restructure PERS.  As it is currently structured, the funding demanded for fueling PERS is pushing Oregon toward the financial abyss that awaits somewhere between 20 and 31 other states in the not too distant future.
2. Lower (or, preferably, eliminate) government spending for non-essential programs and projects and redirect these funds to essential functions such as public safety and education. Sending Public Utility Commissioners on junkets to Armenia and spending $900,000 on unnecessary bike path signs are not a formula for economic growth.
3. Repeal Measures 66 & 67. Besides missing their revenue targets by about 50%, these measures have encouraged businesses and tax-payers to either locate elsewhere or leave Oregon.

To read the entire article which is summarized above, follow this link.

Today we’ll continue our discussion on job creation in Oregon by recommending steps that businesses can take to improve the economic climate.

1. Enact Right to Work Laws.  Right to work laws, governed by the 1947 Taft Hartley Act, prohibit unions and employers from agreeing that a union can require that the employees of a business join that union or pay union dues as a condition of employment. They have been enacted in 23 states.

     In a paper published by the Cato Institute on the subject of the effects of unions on economic freedom and prosperity the authors note, “Right-to-work laws also appear to help economic development, as Palomba and Palomba (1971) and Moore and Thomas (1974) note, which can factor into the debate. Calzonetti and Walker (1991) present survey data showing that firms do consider right-to-work laws in their location decisions.”

Currently, Oregon is not a right to work state and as such is subject to the increased labor costs that inevitably coincide with the use of Union labor.  If businesses in Oregon are serious about bending the cost curve of labor downward, they must make a serious push to enact Right to Work laws for Oregon workers.

1. Achieve profitability that will justify paying wages that are in line with the local cost of living and that attract high quality employees.  In times of economic downturn workers are forced to work in jobs for which they are underpaid and overqualified.  This is a reality of supply and demand—when the supply of workers far outpaces demand for workers, wages decline or hold steady.

It’s important to note here that businesses can only pay wages that are justified by their profitability. It is my belief that, given the achievement of healthy profits, Oregon businesses will direct an appropriate portion of these funds toward paying competitive wages that will attract the best employees.

Obviously I am not advocating that anyone overpay labor in some feckless attempt at income redistribution. I am advocating that businesses pay competitive wages because, given the profitability that allows it, it is in their best interest to do so.

First and foremost, when businesses can afford to pay what it takes to attract highly productive employees they have a better chance of getting…and keeping them.

A “knock-on effect” is that when workers have more money to spend in the economy it naturally increases demand.  And an increase in demand spurs economic growth and increases business revenues.

Again, I am not advocating that businesses forego funding expansion in an effort to “be nice” to employees. Business is not charity. It exists to return profits to its investors. But I am advocating that, given sufficient profits, business pay what is necessary (no more, no less) to attract and hold productive employees. The vast majority of businesses already do just that.

The net effect of increased productivity due to high quality employees and lower turnover is higher profitability.  Higher profitability leads to business growth and increased employment…and higher wages.

I have now presented some ideas on the roles that both government and business can (and should) play in order to create job growth in Oregon. I’d love to hear your thoughts on this crucial issue.

In the next issue of “Lane Solutions” I’ll summarize the points I’ve made in this five part series and share some final thoughts on job creation in the Great State of Oregon. Be sure to come back and join the discussion.

1.  http://www.cato.org/pubs/journal/cj30n1/cj30n1-1.pdf (p. 14)

Chris Gergen is a Springfield based financial advisor and is the author of The Quality Paradigm: Why You and Your Business Need it to Succeed. He blogs at Be Epic.Daily. He can be reached via email at chris@chrisgergen.com.

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