Issues
Two Paths for Oregon’s Economy: Innovation and Creative Leadership or Sustained Mediocrity and Lack of Will Power
Oregon stands at an economic crossroads. Changes sweeping the global marketplace and a disturbing set of economic and fiscal trends at home offer us a choice between two futures.
One path presents an Oregon defined by thriving businesses that lead their industries in ideas, innovation and design, market reach, and staying power. This path heralds a future of good paying jobs that resist migration and sustain local economies and communities.
On the other path, Oregon becomes strictly a regional consumer market and a branch-office outpost for industries whose key ideas, research, decisions, innovations, and initiatives occur elsewhere. It becomes a commodity producer whose industries pay average or lower wages and are always vulnerable to cheaper sources of labor and supply elsewhere.
Healthy Communities Initiative envisions the growth and success of leading edge, traded sector industries – clusters of allied businesses that ring up sales outside Oregon and create good paying jobs that buoy local communities. While all Oregon companies improve the state’s economic well-being and quality of life, we stress traded-sector industries because they pay high wages; and by selling their products and services outside Oregon they bring in fresh dollars that fuel local businesses and tax revenues.
Traded sector industries tend to cluster. They draw competitive advantage from their proximity to competitors, skilled workforces, specialized suppliers and a shared base of sophisticated knowledge about their industry. In the 1970s Oregon’s largest industry cluster was forestry and wood products. Oregonians, urban and rural, enjoyed high wage jobs in this industry. Today, while still a world leader in timber and agriculture, Oregon has an array of innovative industry clusters. These include natural resource industries, advanced manufacturing, high tech, footwear and sports apparel, and clean technology.
While the destiny of these industries is in their own hands, it is critical that Oregon’s leaders pursue initiatives to create the environment that helps our traded sector industries succeed. The initiatives we recommend and support can improve the culture of innovation. They can enhance the work skills of our people, boost the quality of life that drives talented people to Oregon, and strengthen business infrastructure needed for productivity and competitiveness.
Despite the remarkable economic diversification described above, in recent years Oregon has fallen off course. After a surge in the 1990s, Oregon’s per capita income has been declining compared to the national average for the past twelve years. Per capita income is the total income earned in the state divided by the population. It is a key measure of economic well-being and determines how much money is available to spend on schools and other public services.
In recent years Oregon’s unemployment rate has tracked well above the national average. Moreover, the boom and bust economic cycles have been particularly hard on Oregon companies and workers.
Declining per capita income, combined with exploding costs for health services and prisons, has crowded out investments in education – especially higher education. Because education and income are inextricably linked, this trend could push down personal incomes even further.
Looking forward, Oregon’s challenges are greater. An aging population will continue to put upward pressure on spending for human services. The legacy costs of a poorly conceived public pension system have come due. And the continued rise in health care costs is unsustainable for both the private and public sectors.
Our unbalanced and unstable tax system continues to be a drag on high-wage job growth. With the passage of Measure 66, Oregon has the dubious distinction of having the highest capital gains tax and second highest income taxes in the nation. This policy discourages investors and high wage earners from locating here. Yet without a sales tax or an adequate reserve fund Oregon still lacks the ability to provide stable funding for public services.
Oregon is trapped in a “Circle of Scarcity.” Breaking this circle is the single most important task for Oregon’s business, elected, and community leaders to tackle together.
The challenges Oregon faces are immense. They can only be addressed if Oregon’s business, elected, labor and community leaders work together.
Eliminating PERS for Legislators and Judges Takes Away Conflict of Interest
PERS was created in 1945 to provide retirement benefits to Oregon’s public employees. Legislators and judges were not eligible to join PERS. Everyone affected by PERS was fairly represented when PERS laws were made and PERS disputes were decided by neutral judges. That, however, began to change in the 1970’s. By 1984, the legislators had changed the law so that they could retroactively join PERS and judges automatically became PERS members. Thereafter, PERS members have made all of the PERS laws and they have decided every PERS lawsuit. That is the problem with PERS.
Oregon will have $3 billion less to spend in 2011 – 2013 then it had in 2009 – 2011. But laws passed by PERS legislators guarantee that this shortfall will not reduce the money paid to PERS. The PERS budget for 2011 – 2013 has been increased by $1.1 billion, to $7.5 billion. PERS members have also decided that during the 2011 – 2013 biennium the people of Oregon will pay over $870 million to pick up employee PERS contributions for PERS members. That money could have been used to provide services to all Oregonians but instead it will be used for PERS members only. This is what happens when PERS members have total control over the PERS decision making process and it is a serious problem.
The solution to the PERS problem is to remove legislators and judges from PERS. Legislators are the elected representatives of the people, not hired employees, and they should not receive employee benefits. Judges should have their own independent retirement plan, just like they did prior to 1984. These changes would restore the fairness that existed when PERS was established in 1945 and they would end decades of financial abuse that has cost the people of Oregon billions of dollars.
Article written by Daniel Re
Unnecessary Regulations Strangle Job Growth and Business Expansion
Nearly every day in Lane County the unemployed stream into local businesses looking for work. They can’t pay their mortgages. They can’t pay their bills. They can’t feed their families. They don’t have health insurance. Their jobs are being choked off as the manufacturers, industries, farms, ranches, trucking companies and others who employed thousands here with good family-supporting wages, benefits and vacations, are just quitting.
We need good quality of life regulations. But excessive regulations are unnecessarily limiting the use of our best assets: our natural resources and population of willing workers.
The key areas in which we could expand our economic development are private businesses and industries consisting of manufacturing, construction, agriculture, transportation and other industries noted below. Oregon and Lane County are unique in that they possess the natural assets that could pull us out of our economic doldrums. We can grow and make products; we can add to their value; we can sell and ship them across the nation and around the world. Local entrepreneurs and established businesses will create real jobs – if we just get out of their way.
Take agriculture, which has been one of the larger and more stable sources of employment for workers in the region. Before the 2009 recession, Oregon’s agriculture industry was linked to a workforce of 214,511 full or part-time jobs & $25.8 billion in sales. Oregon’s agricultural exports grew 71.6% and comprised one of the top two export industries through the first quarter of 2008 on a year-over-year basis.
Often, private job creation is hobbled by excessive planning processes and resulting regulations. Region 2050 Problem Solving Program, Envision Eugene, LTD’s West Eugene EmX, Lane Livability Consortium and Smart Communities Project just to name a few. Lane Livability Consortium alone proposed 193 scheduled meetings over the next three years as it plans to duplicate and triplicate efforts of local elected governments in an effort to create a spaghetti-like tangle of regulations and processes. The strategy seemed to be to overwhelm citizens with thick reports and paperwork, then burden them with a multitude of monotonous meetings that accomplish little.
The past two decades have generated a record number of rules, regulations, fee increases, taxing districts, overlay zones and additional government controls. We need good regulations that help maintain our high quality of life. Traditional blue-collar workers, who once earned a living wage of about $50,000 per year from manufacturing industries or trades, are losing their jobs in record numbers, in part because their employers – the job providers – simply cannot comply with unnecessary, burdensome regulations and still stay in business. The table below shows the loss of jobs in manufacturing and trades over the last five years here in Lane County.
Since the early ‘80’s, which marked the beginning of spotted owl litigation, our government, state and local agencies and regulators have continued to aggressively restrict and tax the private businesses that create jobs. These private industries and businesses used to purchase millions of dollars of local consumables each year, putting even more people to work. Now they are downsizing, closing or moving out of Oregon. These employers are being forced away because it can be more profitable doing business elsewhere. We need these jobs back. We need to encourage our Job Providers while maintaining reasonable quality of life regulations.
Our Job Providers are not on strike. They simply gave up and sought out more hospitable business environments.
Cindy Land
Eugene, OR
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Business, Not Government, Creates Jobs
How many times have you listened to a politician, whether on TV or in person, and heard him or her say that government will be creating thousands of jobs over the next x number of years? This is where government officials completely miss the point. Did you know that in my 10 years as Mayor of Springfield I never once said we are going to create jobs over the next x number of years?
“Why?” you may ask? Because that is not the role of government. The role of government should begin with the premise that “We want your business to come into our state/county/city. Now, what can we do to make you want to do business here?”
Finally, once we’ve attracted you, government’s role is to get the business its permits in an expedited manner.
My goal was to personally meet with the sitting consultant, or possibly an executive of the firm and invite him or her to do business in Springfield/Lane County. Then I would provide a roadmap for the decision makers showing them how we can quickly and efficiently get them their permits.
My thought was that if we provide this kind of service then jobs and investment will be created. In ten years while I was Mayor, over $1 billion of private sector investment came to Springfield, bringing with it thousands of new jobs.
Business, not government, creates jobs. Government, at its best, makes it easy for business to do so.
Article Written By Sid Leiken, Lane County Commissioner and former Mayor of Springfield