Oregon’s Economic Outlook Slips Again in 2012

economymoneycashdollar.serendipityThumb Oregon’s Economic Outlook Slips Again in 2012Hit hard by the national recession, Oregon lawmakers started the regular 2011 legislative session―and then the new shorter annual 2012 session―with calls to create jobs. By the time those sessions ended, little had been done to encourage job growth in the state. And virtually nothing was done to address the major factors that determine the state’s Economic Outlook, as identified by the national organization of fiscally conservative state legislators, American Legislative Exchange Council (ALEC).

Every year since 2008 ALEC has compiled and reported on the 15 policy variables influenced by state legislatures that appear to signal the economic outlook of the states. These variables are:

• Top Marginal Personal Income Tax Rate
• Top Marginal Corporate Income Tax Rate
• Personal Income Tax Progressivity
• Property Tax Burden
• Sales Tax Burden
• Remaining Tax Burden
• Estate/Inheritance Tax Levied?
• Recently Legislated Tax Changes
• Debt Service as a Share of Tax Revenue
• Public Employees Per 10,000 of Population
• State Liability System Survey
• State Minimum Wage
• Average Workers’ Compensation Costs
• Right-to-Work State?
• Number of Tax Expenditure Limits

ALEC published its 2012 report, Rich States, Poor States: ALEC-Laffer State Economic Competitive Index, in early April.

How does Oregon rank? Oregon now ranks number 26 out of 50 states in its actual economic performance over the last ten years. Looking forward, however, Oregon has slipped from number 35 in 2008 to number 45 in 2012, dropping from number 43 in 2011. Our economic outlook is now worse than 44 other states, again, based on policy variables that the state legislature could change.

In May 2011, Rich States, Poor States authors Arthur Laffer and Stephen Moore published an article in The Wall Street Journal in which they identified the two policies that “have consistently stood out as the most important in predicting where jobs will be created and incomes will rise. First, states with no income tax generally outperform high income tax states. Second, states that have right-to-work laws grow faster than states with forced unionism.”

How does Oregon rate on those two most important variables? The authors spent almost a full page of last year’s report discussing how damaging Oregon’s 2010 retroactive income tax increases on wealthy individuals and corporations are to the state’s economic outlook. They mentioned Cascade’s analysis of those two measures, 66 and 67, which were approved by voters in January 2010. They noted that “Oregon is tied with Hawaii now with the highest state income tax rate in the nation,” a fact likely to deter entrepreneurs and other high-income individuals from coming to Oregon and to cause some who are here already to leave. Initial results confirm what we feared: These tax measures generated far less revenue than voters were led to believe, and the state had some 8,000 fewer high-income tax-filers in the first year of these measures than the state predicted.

Oregon also ranks poorly on the right-to-work variable. Over time, economic growth in states with strong union protections has significantly lagged growth in states with more worker freedom. Twenty-three states have right-to-work laws which prohibit agreements between labor unions and employers that make membership or payment of union dues or fees a condition of employment, either before or after hiring. Twenty-seven states, including Oregon, require that all employees of unionized employers must become union members or pay dues to the union within a specified period of time or lose their jobs. Cascade is promoting the economic benefits of Oregon becoming a right-to-work state.

So, Oregon fails both important economic outlook tests: We have one of the highest income tax rates in the nation, and we require workers in unionized companies and government entities to join those unions and/or pay union dues. We also fare badly on other variables, including the fact that we continue to tax estates, and we have the second highest minimum wage in the country.

Again, the 15 policy variables taken into account to determine our economic outlook are all within state lawmakers’ control. Of course, there are national and international policies and conditions that are outside our control. But that is the case for every state. Oregon lawmakers must take responsibility for the factors they can control. Unfortunately, they haven’t, and our economic outlook continues to decline relative to other states.

Talking about creating jobs is great, but actually reducing taxes and protecting workers against forced unionization would go a lot farther in turning Oregon’s economic outlook around. Slipping from 35th to 45th since 2008 is bad enough; let’s encourage Oregon’s legislators to enact policies that will start turning that economic outlook ranking back up.


An analysis of Oregon’s 2011 economic outlook can be found here.


Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Posted by at 05:00 | Posted in Economy, Government Regulation, Leadership, Oregon Government, Oregon House, Oregon Senate, Right-to-Work, Taxes | Tagged , , , , , , , , | 68 Comments |Email This Post Email This Post |Print This Post Print This Post
  • 3H

    Cascade is promoting the economic benefits of Oregon becoming a right-to-work state.
    In other words, getting government involved in determining what workers can ask for in a contract with their employer.  Funny how it’s bad when the government comes to the aid of the average working person, but it’s fine when government is called on to protect the employer from their employees.  It has nothing to do with “protecting” workers.  If the intent was to let workers protect themselves, there wouldn’t be “Right to Work” laws.

    Lets be honest: Right to Work should be rightly called Right to Be Compensated Less.  

    I also believe that it seems apparent to me that the CPI is more of a conservative Republican institute and less of a libertarian institute.

    • Rupert in Springfield

      >In other words, getting government involved in determining what workers can ask for in a contract with their employer.

      Hate to tell you this, but contract law is premised on the basic idea that some things are and are not permissible within a contract. Been that way for quite some time.

      Really what you are trying here is the flawed logic that if one is against a single thing, one must be against all things to be consistent.

      In general are Republicans tend to be for less regulation. That’s one thing. The idea they are for elimination of contract law is quite another.

      • 3H

        I’m actually addressing the Libertarian argument of as little governmental intervention as possible. I’m quite certain that they feel that many things that are restricted in contract law is wrong.

        But they are for more regulation when it comes to hobbling the power of workers?

        The whole argument rests on the premise that if passing a Right to Work law helps the economy of the state, then it is a good, or necessary, law. How about a law that forbids a company to move their headquarters, or redirect their capital, to another state? How about a law that requires that large corporations price their products so they don’t drive small competitors out of business?

        Better yet, how about a Right to Invest law? One that protects small investors of receiving less return on their investment because the corporation spends their money on frivolous political issues?

        • JoelinPDX

          If the government ever makes up a law that says a company can’t relocate its headquarters wherever it sees fit, I will move my company to Barbados or somewhere elevens offshore where they don’t believe in communism.

          • valley person

             Promise?

          • JoelinPDX

            You can take it to the bank.

        • Rupert in Springfield

           >But they are for more regulation when it comes to hobbling the power of workers?

          I’m not sure eliminating a regulation that one has to join a union is more regulation. Obviously you see it differently.

          >How about a law that forbids a company to move their headquarters, or
          redirect their capital, to another state? How about a law that requires
          that large corporations price their products so they don’t drive small
          competitors out of business?

          An adoption of the Atlas Shrugged “Anti Dog Eat Dog” rule? Hmmm….interesting.

          • 3H

            It is not a regulation, it is a clause that is negotiated into a contract.  A Right to Work law would prohibit such language.  

            As far as I know, there is no regulation that requires fair-share.  It is negotiated between union and employer.

          • 3H

            And let me clarify and make explicit…  fair-share is only required when negotiated into a contract.  If there is no provision in the contract, there is no regulation that still requires fair-share payments to a union.

          • Rupert in Springfield

             Im not really sure why it really matters at this point when you have argued the government set what should be paid for something according to ability to pay rather than what something is worth. 

          • 3H

            By the way, I’m wasn’t serious.  Unless people are serious about “Right to Work” laws. If you’re going to throw as many obstacles as possible in the way of unions effectively representing workers, a free market solution, by the way, and especially if you’re willing to use the power of state regulation to do it, then I think you should also be prepared to have the state intervene in setting wages and benefits for people formerly represented by unions.

            However, here’s a better idea – we keep things as they are and drop the “Right to Work” silliness.

          • Rupert in Springfield

            Right – So a regulation saying you cant have that in a contract is hardly more regulation than a regulation saying you cannot have it.

            Basically you are arguing that banning such contracts is more regulation than allowing them. Thus people on the opposite side of you should be against them.

            This is a really thin argument primarily on the grounds that its hard to see that it really is more regulation.

            Second it fails because it falls into the same old losing liberal position that if someone is against some regulation, then they must be against all regulation. The classic false dichotomy.

            It doesn’t fail, but certainly isn’t helped – by your suggestion that government regulate what someone is paid not by what the job is worth, but by ability to pay.

            Strategies (sorry, but I feel you need them now)

            Claim that your suggestion regarding NLRB set pay for everyone was a joke. Even though you reinforced it with suggestions about banning companies from relocating some people might buy into it.

            Argument diversion – try topic shift towards definitions of “regulation” and hope your revealing that you really just want government to set prices for everything is lost in the shuffle.

          • 3H


            Right – So a regulation saying you cant have that in a contract is hardly more regulation than a regulation saying you cannot have it.”

            I’m not sure what you’re trying to say.  

            If there wasn’t a huge difference, then why are some conservatives all hot and bothered about “Right to Work” laws?  

            Why should the state, in this case, be involved and forbid the inclusion of “fair-share” agreements in a contract between worker and employer?  

          • valley person

             Joining a union is not a “regulation.” Its a private contract between workers and an employer.

            I thought you were a legal expert?

          • Rupert in Springfield

            I have never claimed to be a legal expert. However I have claimed that you are an idiot in the clinical sense.

            You prove it here again by making up nonsense like this.

            My knowledge of the law is limited, however your buffoonery is boundless.

          • valley person

             You claimed to be a constitutional law expert more than once. Are you retracting that claim?

    • JoelinPDX


      I also believe that it seems apparent to me that the CPI is more of a conservative Republican institute and less of a libertarian institute.”

      Sounds to me like you’re blaming the Republican Party there sport. So were you addressing the Libertarian argument or point your finger at Republicans?

      • 3H

        I believe that the CPI has described itself as libertarian. I’m arguing that they are not so much Libertarian as they are Republican.   Everyone is free to draw their own conclusions as whether that is good or bad.  ;)

        • JoelinPDX

          Correct you are, Cascade is a Libertarian think tank. So why, in a very accusatory way did you suggest that this horrible right to work stuff was a Republican plot. It was your tone 3, Not that there is anything wrong with right to work…it’s called a right for a reason.

          • 3H

            Tone doesn’t come through very well on text.  My point is that the Right to Work law is more Republican than Libertarian.  Libertarians would, I would think, be more willing to not limit the rights of parties to contract with each other.   

            So, you would argue that there is a Right to work?  I’d be careful with that one.

            It’s called that because the proponents wish to hide the true intent.  It’s a marketing phrase, nothing more.

  • Bob Clark

    As boomers retire they become foot loose and able to go where the taxe rates are low; and that ain’t, Oregon.  Fortunately, it ain’t California nor even Washinton state for that matter.  And these are Oregon’s most significant competitors.  If Oregon can just keep to its existing tax rates, maybe loosen labor regulations some; Oregon will gain significant economic advantage against these competitors who are seeking significant tax rate increases.

    You know measure 5 has a great concept called Tax Compression, whereby local government can’t tax property at more than $10 per $1k in real market value; and public education levies can’t total more than $5 per $1k in real market value.  What would de-politicize life for me would be if the concept of Tax Compression were extended to all government fees and taxes.  A national and state by state constitutional amendment whereby government confiscation would be defined as when total government taxation (including fees) exceeds say 30% of one’s income.  Such Constitution amendment would cause governments in pro-rata form to refund taxation amounts in excess of this 30% rate. 

    The beauty of universal based tax compression would be governments could tax anywhich way they so desired but at the end of the day the individual is left “whole” and not having to fight every nickel and dime tax and fee scheme dreamt up by some fat and happy government bureaucrat with an insatiable appetite for spending other peoples’ money.  Then, too, the only way for government to expand under such regiment is for it to help grow the underlying economy (i.e, incomes).  This to me would be true Americana.

    • Rupert in Springfield

       Love your idea, a 30% aggregate cap. However I think that figure would not run government at anywhere near the level of current services. I’m not arguing thats a good thing, it isn’t. However I bet that 30% total taxes and fees would probably run things through about June at best.

  • Earthboy

    Oregon is right to sacrifice a healthy economy for maintaining an earth-friendly stance toward the envoironment. I applaud the courgage of our leaders in this area. Wind, solar, hydro, bottle bill, car inspections, etc. have led the way in the US for all others to envy despite our horrible economic numbers.
    If we care for the earth she will care for us.

    • Suck It Loser!

      Sorry eco-boy! Nevada is light years ahead of Oregon in solar and geothermal power. And best of all, it has the idiots in Claifornia to buy every KW of excess power it doens’t use in state.

  • 3H

    If there is to be a “Right to Work” law, how about a law that requires binding arbitratioin on the employer? The NLRB can be expanded to provide arbitrators that will conduct fact finding and will determine what the company can truly afford, not just what they say they can afford.

    • JoelinPDX

      Geez, you pro-union goons are all alike. Yeah, let’s require binding arbitration on the employers but not the unions…and let’s create more government while we’re at it. What total BS.

      • 3H

        Actually, binding arbitration is just that… binding on both parties.

        • JoelinPDX

          Hmmm, you must have confused me when you wrote “on the employer.”

          • 3H

            ahhh!  my mistake.  Binding arbitration on both parties.

          • JoelinPDX

            Kind of like a Democlown strategist huh? You make your admission only after you’re caught.

          • 3H

            Wow..  and here I thought admitting that I had misstated my position would be good enough.   

            You mean did I realize my mistake after you pointed it out?  Absolutely.  Admitted it, and corrected it.  Given as many errors as you make, I thought you might be a little more understanding.  Wrong again I guess.

      • 3H

        And, keep in mind, “Right to Work” laws are creating more governmental regulation and interference.

    • Rupert in Springfield

       That sounds like a great idea. Have the NLRB determine what a company pays people.

      I’m sure that will work out swimmingly. Actually I love it.

      Lets have the NLRB also determine how much you pay someone who works on your house. If you hire a plumber, and the NLRB determines you can pay more, you pay what they say rather than the market rate.

      In a restaurant, the price you pay is determined by what you make. If you make more, they get paid more and all get a raise for the evening.

      Some kid mows your lawn? No double saw buck and hes off. If you make more, you pay more, if you make less, the kid gets paid less, but still has to mow.

      I like the idea, one central planning authority that determines how people are paid based on the ability of the person buying the service or goods, rather than the marketplace making the determination.

      It would be a really exciting few months until it all fell apart. But the absolute destruction would be amazing to watch.

      • 3H

        Hey.. if you’re going to get the state to hobble unions, shouldn’t there be some quid pro quo?  Why is the regulatory power of the state to be used to strengthen employers at the expense of workers?

        The only way, that I can see, that “Right to Work” helps is employers is by lowering the cost of labor.  Less pay, fewer benefits.  In whose best interest is that?

        • Rupert in Springfield

          >Hey.. if you’re going to get the state to hobble unions, shouldn’t there be some quid pro quo?

          Why does this follow?

          Can you please tell me the quid pro quo the unions suggested when they lobbied for measure 67?

          >The only way, that I can see, that “Right to Work” helps is employers is
          by lowering the cost of labor.  Less pay, fewer benefits.  In whose
          best interest is that?

          Pretty much everyone’s.

          If you make it too expensive to hire someone business tends to not come here, or to relocate.

          I understand you want a police state, where government forces business to remain in one place and sets what it will pay people.

          Even if that would work, and it wont, we don’t have that. Business is free to leave, and leave they are.

          Absent your police state solution, it might be better to try something different than we have been doing here the past several decades.

          • valley person

             The only way, that I can see, that “Right to Work” helps is employers is
            by lowering the cost of labor.  Less pay, fewer benefits.  In whose
            best interest is that?

            “Pretty much everyone’s.”

            Except for people who work for a living, or sell goods or services to people who work for a living. Other than that, everyone would certainly benefit.  

            Rupert, if your claim is true, then why are the right to work states almost uniformly poorer than the right to organize states? 

            I mean, is being poorer the new better off?

          • 3H

            I understand you want a police state, where government forces business to remain in one place and sets what it will pay people.”
            Then you understand nothing. 

            You want the state to interfere and help lower the wages and benefits of workers (and doesn’t that sound like a police state to you?).  No problem.  When I suggest that  the state could step in to help workers after shafting them, and not leave them without recourse, that’s wrong.  

            I get it now.

          • Ardbeg

            Rupert wants a police state as long as he is the only one with a badge.

          • Ardbeg

            Pretty much everyone’s.”

            O.K. pretty much the dumbest thing I’ve ever heard you post. If you can’t tell the difference between lowering wages as far as possible to benefit Corporations and finding a balance so corporations AND employees can all make money and benefit the economy, then you are truly hopeless and are someone who should not be taken seriously.

          • valley person

             “then you are truly hopeless and are someone who should not be taken seriously.”

            I think that point was established a long time, and many topics  ago.

  • valley person

     ” First, states with no income tax generally outperform high income tax states. Second, states that have right-to-work laws grow faster than states with forced unionism.”

    Of the top 10 states by GDP per capita, 9 are “blue” states that have state income taxes and “forced unions”, which I guess means they don’t have “right to not be union” laws. Only 1 right to work state, which is Virginia, and who’s income is propped up by having a high number of unionized federal workers.

    Of the 10 poorest states, I think none have an income tax and only one is not a “right to not be union” state.

    I’m sure Steve B has an explanation as to why the states that follow the model prescribed by ALEC are poorer than the ones that do the opposite.

    • Steve Buckstein

      Right to Work states are not poorer than non-Right to Work states. You’re just looking at income, without considering cost of living. I’ll quote an analysis that has looked at a number of studies and concluded:

      “On a nominal
      basis, wages are lower in Right to Work states, but proponents argue, and this
      paper confirms, that once the above statistic is adjusted for cost of living,
      real spending power is at least the same and perhaps higher in Right to Work states.  For example, when the National Institute for Labor Relations Research used The
      Economist Magazine’s data to adjust the poverty rate in 2001 for cost of living
      they found that this adjusted rate was 10.8% in states with Right to
      Work laws as compared to 12.9% for non-RTW states (“Independent Study”). 
      Now we will turn out attention to other studies of the 1970’s,
      1980’s and 1990’s which look at the wage issue and adjust for differences in
      cost of living.”

      source: http://www.johnwcooper.com/right-to-work-laws/right-to-work-laws.pdf

      And, another analysis finds:

      Cost of Living-Adjusted Compensation Per Private-Sector Employee (2010)

      Right to Work States . . . . . . . . . . . . . $56,575

      Forced-Unionism States . . . . . . . . . . . $55,420

      National Average . . . . . . . . . . . . . . . . $55,896

      Missouri Economic Research and Information Center (MERIC);

      BEA; Department of Commerce, Bureau of the Census (BOC)

      source: http://nrtw.org/en/blog/new-fact-sheet-shows-right-work-states-benefi-10262011

      • 3H

        The results seem to be more varied than you portray:

        http://www.bsu.edu/news/article/0,1370,-1019-65536,00.html 

        http://econweb.umd.edu/~davis/eventpapers/OzbeklikRight.pdf 

        And my favorite quote:

        “In promoting new right-to-work laws as the answer to
        the jobs crisis, the National Right to Work Committee
        trumpets the fact that “in the past decade, non-agricultural employment in Right to Work states grew twice as fast compared to that in non-Right to Work states.”1 This statement is statistically true, but only in the same way that it is true that if Bill Gates walks into a bar, everyone in the bar is suddenly, on average, a multimillionaire.”

        http://www.irle.berkeley.edu/cwed/wp/right_to_work.pdf 

        • Steve Buckstein

          Thank you for noting those two studies; both of which and a number of others are cited in Cascade’s recent report, http://cascadepolicy.org/pdf/pub/RighttoWork01.31.12.pdf.  Yes, the results are varied, but the overwhelming weight of the evidence when you look at all the studies comes down on the side that Right to Work does improve a state’s economic outlook.

      • valley person

        You guys are promoting right to work as important for Oregon’s economic growth. Maybe you should change your sales pitch and promote it as keeping our cost of living down. 

         

        • 3H

          Well, in February it was over 12%.  But that can’t be true, since they are a R2W state.  

    • Valley Boy is a LOSER!

      Hey Valley Idiot! We moved to Nevada in late 2009 and saved over $14K in taxes we are no longer paying to the idiots in Salem. And best of all we don’t miss any of those “services” all the public piggie union people are saying are so vital.
          If anything, the weather is 100% better than anything in Oregon and we live in a home in a gated community that is light years better than anything we’ve seen in the Portland area.

      • valley person

         Hey loser, what’s the unemployment rate in Nevada?

        • 3H

          Responded to wrong comment above…

          Well, in February it was over 12%.  But that can’t be true, since they are a R2W state.   

        • Valley Boy is a LOSER!

          Hiya penis breath! Unlike wage slaves like you, we live off of investments. Sort of like your LIB “hero”, Warren Buffett. The unemployment rate is of no concern to us at all.

          • valley person

             Oh I see. You and the 2% of the population that live off your investments can promote policies that screw the rest of us. Thanks for sharing and enjoy your non-work day. 

            Funny thing though…you seem awfully angry for someone who has it made. Why is that?

          • Just doing the math

            You really should not reply. Another
            name caller that we all need on the
            OC webpage. Probably angry
            because he or she has to much
            time on their hands.

          • valley person

             You know how these savvy investors are.

            Don’t you wonder why a savvy investor who could live anywhere would choose Nevada? Maybe she is gambling away her investments.

  • Lonewolf

    All right to work states are bad because without laws forcing people to join unions the unions would not be able to get any dues-paying members.

    • 3H

      There is no law that forces people to join unions.  None.

      • JoelinPDX

        Yes 3, we’ve heard your stupid argument that no one is forced to join the union. But that’s only true if people don’t want to work because, as we all know, in Right to Extort states it is much easier to form a union and force people to join if they want to work. That is, after all, the reason for Right to Extort laws.

        • 3H

          You can be required to pay fair-share… but you don’t have to belong to the union.

          • Lonewolf

            How is that different??? Paying for something you don’t want? American?
            No – union thug! You are a fool if you think what you say makes any sense. A fool.

          • 3H

            I pay for many things I don’t want Lonewolf.  I pay for police and fire protection for churches that actively work to keep friends of mine from getting married.  I’m currently paying for two wars in Afghanistan and Iraq.  Newsflash my friend, we all pay for things we don’t necessarily want.

             

          • valley person

             1 war 3H. We are not fighting in Iraq any longer.

            You will however pay for the war we did have there for many years.

          • 3H

            LOL.. 1 war then. 

    • JoelinPDX

      Truer words have never been keyboarded.

  • Just doing the math

    How did this become an argument for Right to Work? There
    are 15 variables that were listed in this study that affect the
    economic outlook of states and Right to Work was near the
    bottom of the list. In fact if you look at the list, you will notice
    most of the variables are about taxation.

    • 3H

      I don’t even think, now, that it’s about the economy.  I think many on the right would simply like to see unions go away because they tend to support the left.  Take out the unions, and the right will have an advantage in fund-raising.  It’s politics, not economics.

      • Just doing the math

        I kinda agree, because the study that is referred to in the above article is mainly focused on taxation, not Right to
        Work.

    • Steve Buckstein

      Actually, the placement of a variable in the list does not imply its relative importance in this study. The authors last year concluded that two of the 15 variables appear to be the most important when it comes to determining a states economic outlook: Personal income tax rates and right to work status.

      States with no personal income tax and with a right to work law tend to outperform other states. Oregon fails both those tests, especially since our top personal income tax rate is one of the highest in the nation.

      • Just doing the math

        I realize that, however you cannot dispute the fact
        that of the 15 variables, 10 are about taxation.
        And the study was focused on taxation; Chapter
        3 alone devoted to the economic impact of the death
        tax. The preface alone discussed the 10 golden rules
        of effective taxation. Didn’t see too much written
        about Right to Work.

  • Laidback

    You right to work people are all nuts. What about the right not to work? That is much more important and believe you me, we have it in Oregon. I know. I live the dream.

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