A Job Market Still In Decline: A Government Still In Growth.


Oregon’s employment numbers for April of 2010 are out and while, at first blush, they seem to be a positive sign, a closer look reveals that Oregon’s economy remains in the tank. As in the past, all of the information regarding employment are taken from the state’s own Oregon Labor Market Information System (OLMIS).

Oregon’s Department of Employment trumpeted the expansion of the job market by 3900 jobs. If that related to the private sector it would, indeed, be good news. However, the monthly employment report went on to note:

“In April, most of the major industries performed near their normal pattern. Only one major industry showed a seasonally adjusted job change of 1,000 or more: government (+2,800 jobs).”


Seventy-five percent of Oregon’s job growth is additional government employees. At the same time Manufacturing jobs fell by another 500 jobs. (It’s a mystery as to why the Department refers to Government as an “Industry” since it does not produce any revenue.) To put that in perspective, another 2800 government jobs mean the following:

ï‚· A recurring annual expense to Oregonians with no offsetting production to generate revenue.
ï‚· A recurring annual salary increase based on generous public employee union contracts negotiated with the very politicians that the public employee unions massive $60 Million biennial campaign war chest helped elect. (Add to that an additional “step” increase awarded simply for showing up for another year.)
ï‚· A recurring annual payroll surcharge of nearly twenty-four percent to keep the overly generous, but nearly bankrupt, Public Employees Retirement System (PERS) afloat.
ï‚· A recurring monthly surcharge of between $1200 and $1800 to pay for the gold-plated healthcare insurance demanded by the public employee unions and agreed to by the very politicians that the public employee unions massive $60 Million biennial campaign war chest helped elect.

I am told by legislators that the “rule of thumb” is that $50,000 is the rough equivalent annual salary per public employee. Add to that the twenty-four percent surcharge for PERS (eighteen percent required by PERS plus the six- percent contribution by employees that the state has agreed to pay on their behalf) and that figure becomes $62,000. There is another 7.65% for FICA and Medicare that brings the total to $65,825. Add to that the approximately $1200 per month paid for the public employees Cadillac health insurance plan and the total now becomes $80,225. Thus the additional 2800 employees hired in April alone increased the recurring expense to Oregon taxpayers by $224,630,000.

At a time when the budget for virtually every level of government is underwater, it would appear to be suicidal to add nearly one-quarter of a billion dollars to government budgets. But this is Oregon and Oregon’s government is in the firm control of its public employees unions who fund the campaigns of Oregon’s Democrat politicians — the same politicians with whom the public employee unions subsequently negotiate their next contract, including pay raises, increased benefits and favorable work rules.

The State of New Jersey faced a similar problem and elected Gov. Chris Christie who is well under way to confronting New Jersey’s budget chaos and the public employees unions who are responsible for much of its excesses. The question for Oregon is whether it will follow New Jersey’s lead and resurrect its flagging economy or continue down the path of its neighbor California into economic oblivion.

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Posted by at 06:00 | Posted in Measure 37 | 40 Comments |Email This Post Email This Post |Print This Post Print This Post
  • eagle eye

    The people of Oregon will get to decide in November. Perhaps the new Governor will follow the advice profered here.

  • Anon

    Great analysis on the new jobs. Also, the same can be said for the existing government jobs and their unstopable increases regardless of if the economy can sustain that level of increases.

    In the private sector, Intel pays profit sharing bonuses (get this…) only if there are any profits.

    The PERS increases, automatic Step increases (through 15th year?), Caddilac Healthcare increases, and new job increases (WTF? in a ressession?) that seem to be mandatory even in a ressession are only going to kill Oregon in a slow death of a thousand cuts. There won’t be enough taxes to cover this unsustained level of government expansion, so the taxpayers will be bled dry, and the remaining government workers themselves will also take a huge hit, in having to work harder as class sizes go up (the remaining teachers left holding the bag as the retired teachers laugh all the way to the bank), and fewer and fewer government workers are left to do the work of both the current and recently retired workers.

    There are only two possible solutions:

    1) Create a massive VAT (or a local 11% Oregon Sales tax).
    2) Suspend or repeal the stupid balanced budget requirement in Oregon.

    We need more taxes!! We don’t have enough money!!!

    (after all, it is for the kids… the kids are our future!)

  • Ron Marquez

    …..”The State of New Jersey faced a similar problem and elected Gov. Chris Christie who is well under way to confronting New Jersey’s budget chaos and the public employees unions who are responsible for much of its excesses. The question for Oregon is whether it will follow New Jersey’s lead and resurrect its flagging economy or continue down the path of its neighbor California into economic oblivion.”…..

    Governator Kitzhaber will most certainly choose California path. Move over, Arnie…..Oregon has the number one spot in economic oblivion in our cross hairs.

  • Steve Plunk

    There is an implied social contract between citizens and their government. We pay taxes and expect the government to be responsible with finances. The sad fact is government at all levels has failed to fulfill their contractual obligations. Now I know there’s no written contract but merely the implied, morally valid one, but when does the citizen’s right to have a responsible government trump the employment contracts negotiated in bad faith?

    Why should I be held to a contract that was negotiated by others and will now bankrupt the state? Why should any taxpayer honor a contract that would be renegotiated through bankruptcy in the private sector? What moral foundation do public sector retirees base there claim that will damage society? These are new questions and a new way of thinking but for the sake of argument why shouldn’t we be thinking in these terms? Why shouldn’t we be able to renegotiate public sector retirement benefits? My Social Security benefits are likely to change as well as my contribution levels.

    We need to think in new ways to solve the coming problems and throw away the idea something is owed to those who obtained these benefits in questionable ways. The public sector painted us into this corner and should pay a price for it. The government class is still not accepting any responsibility for the mess we are in and are making it worse as we speak.

    • Ron Marquez

      …..”but when does the citizen’s right to have a responsible government trump the employment contracts negotiated in bad faith?”…..

      When we wake up and elect a Chris Christie like governor who would relish taking on the unions. Even a Dudley governorship would likely bring little change to the status quo.

      …..”Why shouldn’t we be able to renegotiate public sector retirement benefits?”…..

      A rhetorical question I’m sure, however for clarity, I’ll state the obvious. We do have a say through our elected officials who get substantial financial support from the unions they negotiate with. The outcome is casual to the most obvious observer.

      The key to any reform along these lines is the changing of the political makeup of the liberal strongholds in Lane and Multnomah counties. As long as blue is the predominant color, the public sector will continue to prosper at the expense of the private sector. An ugly but unavoidable fact of life.

      • Steve Plunk

        I agree Ron, we have an obligation to change the political make up but by the time we do some of these problems are irreversible. My comments are more thinking out loud than real policy suggestions but it’s clear we need some new thinking. Just moving back toward prudent financial decision making doesn’t undo what’s done and make things all that much better.

        There are basic assumption we have long held like “public service” which really means government job. We also still fall for the idea government workers can make much more in the private sector (yet they never go get those jobs). And my favorite government falsehood of “if we don’t spend now we’ll have to spend more later”. Nonsense beliefs like those have nearly ruined us and may yet.

        My basic question is still about this ‘contract’ for retirees. If the contract is unsustainable and somebody has to lose why must it be the taxpayer? Why can’t the retirees take a hit as well?

        • Ron Marquez

          …..”we have an obligation to change the political make up…”…..

          I don’t know if it’s our obligation or if it’s something that a champion can make those at the trough understand why the trough will be empty if they don’t go on a diet. Sizemore has the right message but his public image will keep him on the sidelines long past the time action is needed.

          …..”My comments are more thinking out loud than real policy suggestions”…..

          Understood but fiscal responsibility is just not part of the makeup of Oregon’s leadership. Those whose votes keep sending and returning fiscal illiterates to office bear as much responsibility as those in office.

          …..”Nonsense beliefs like those have nearly ruined us and may yet.”…..

          One only has to look at New Jersey and California to see this yet we in Oregon seem blind to what’s happening beyond our borders. Those of us that can either won’t or don’t know how to help our fellow Oregonians see the light.

          …..”My basic question is still about this ‘contract’ for retirees. If the contract is unsustainable and somebody has to lose why must it be the taxpayer? Why can’t the retirees take a hit as well?”…..

          Because the taxpayers don’t have a champion to defend them. A strong personality with the ability and resources to get the message across to all Oregonians that we are heading for the fiscal abyss.

          I’m as frustrated as you but hopeful that fiscally responsible governors like Christie succeed and that voters across America demand the same level of fiscal discipline.

    • eagle eye

      Steve, if you dislike how Oregon governs itself so much, there’s a solution: move someplace more to your liking. My grandparents did it when they moved to the U.S. I have done it within the United States, more than once.

      Stop whining. If you think enough people agree with you, get them to elect people more to your liking, statewide, at that school board in Medford, everywhere. But if it’s that intolerable, there are plenty of other places to go.

      • Steve Plunk

        Moving away from Oregon is to give up. This is my birth place and home. How about I stay and fight for fiscal responsibility and proper governing?

        I’ve always found the “if you don’t like it then leave” argument intellectually weak. I have also noticed you spend more time dissecting me and my motives than engaging the ideas I present. I’m not that interesting.

        • eagle eye

          I agree that your ideas are not that interesting. What bothers me is your utter lack of responsibility, always blaming government workers entirely for the mess that has been created, the appeal to the idea of the state declaring bankruptcy (which is probably not legally a valid concept; absolutely ruinous to the state if it were; and unnecessary in any case). You seem as if you are constantly burning with anger toward anything or anyone connected with government. From what you’ve said, I gather you have been completely ineffectual in influencing even affairs in Medford!

          You appear to want to run away from the obligations the state has entered into. As residents of the state, that is impossible. We can’t just throw a tantrum and expect to have our way.

          You CAN take practical steps in the real world. An example that has been pointed out here is taking on the public unions locally. If you think PERS is too expensive, cut teacher pay in Medford 10 or 20% or whatever is appropriate. It won’t be easy — it will probably mean taking on the unions, experiencing a nasty strike. It can be done though, it’s been done several times in Eugene with various unions.

          I doubt that things are going to change enough at the state level to make you happy. The Courts have already ruled that the state can’t walk away from its contractual obilgations. You may say that you didn’t sign the contract — I can say that about a lot of things! — but the government did, and if you want to live in this state, you have to live under the state government.

          If all of that is too hard, there is one way out, though: if it’s really that bad, leave.

          • Ron Marquez

            …..”The Courts have already ruled that the state can’t walk away from its contractual obilgations.”…..

            So what do you do, eagle ? Do you just rollover and play dead and let the unions bankrupt the state or reduce services to zero ?

            Contracts in the private sector are often negotiated. Why should the public sector be exempt ?

            I’m not familiar with what was done in Eugene but as governor, I’d try to renegotiate the public employee union contracts and if that failed, I’d selectively cut the work force until the state remained solvent.

            It wouldn’t be popular but it would be fiscally responsible, a concept that seems to be foreign to most of the populace.

          • Ron Marquez

            …..”are often negotiated”…..

            renegotiated that is.

          • eagle eye

            See below.

            As to the strikes, there are three in Lane County that I remember: one by SEIU against UO (and perhaps the whole OUS system); one against Lane Transit District; one against the 4J (Eugene) school district.

            Selectively cut the state work force? Sure, that will almost automatically happen if needed to balance the budget.

            That’s why all the talk about state bankruptcy is ridiculous, at least for now. The state might have to get along with 10% fewer workers to fund PERS, but it won’t go out of business.

          • a retired professor

            I think that’s right about the strikes, I remember those three. There was some give by all three sets of strikers, not much, but a little. It would take a long series of bitter strikes. Unless the state outlaws strikes by public workers. Not likely without a really huge crisis first. By the way, I was not in a unionized faculty at UO.

          • Steve Plunk

            Eagle, You can disagree if you want but my pointing out the failures of our government is not irresponsible. In fact it’s the responsible thing to do rather than just get along with everybody. I endure criticism like yours but I’m still saying the right things, things that need to be said. I’m not burning with anger either. Like I have said before I’m a likable guy but when it comes to posting on a political website I am going to say it like it is within the boundaries of civil discourse.

            No one wants to run away from legitimate obligations but I question the legitimacy of contracts negotiated in bad faith and with fraudulent assumptions. Our elected leaders failed us so what moral obligation do we have? I could argue we have grounds for a renegotiation of PERS based upon those failures.

            You still don’t get the idea of staying to fix things rather than move away. Think about it some more and realize most everyone who posts here is trying to make things better.

          • eagle eye

            Take it to the courts if you think those contracts can be negated. They just can’t.

            I don’t see much of anything positive here. I’ve even suggested some things that might help — adjust pay to compensate for high pension benefits; endure strikes (which you will have to do).

            Not a bunch of incredibly destructive nonsense about voiding past contracts or declaring state bankruptcy.

            Believe me, if Dudley runs on a platform anything like advocating state bankruptcy or even trying to void the contracts (and in the process flouting state court decisions), he will be destroyed in November.

  • John Fairplay

    You know, I don’t think I’d mind all the government job growth if I ever saw any evidence that they were actually doing anything useful. At least when a private sector employee is hired, he or she has to produce something – a good or service people want to buy – or they can count on not having that job for long. What are all these new government employees doing, exactly? How many times can you count paperclips, or move a pile of paper from one side of your desk to the other? We know they aren’t teaching fourth graders to read, so what are they doing?

    • eagle eye

      Uh, John, the 4th graders are being taught to read and Oregon doesn’t do bad at it. There are street repairs being done all over Eugene by those public workers, it’s impossible to drive anywhere with all the work. The U of O is almost singlehandedly keeping the Eugene heavy construction industry alive with its construction, especially the arena. (Of course, most of it is private money.) They have a couple thousand more students than last year. Maybe that’s one reason there are more public employees.

  • Bob Clark

    I can’t see why the public thinks it fair for government desk jockies to retire as early as 55 years of age with full retiree benefits while the rest of the working population is lucky if it retires by 65, something more akin to social security age threshold for full retirement. This move alone would probably right the PERS funding gap. It would also lessen the need to hire new government workers as existing government employees will most likely work a fuller life, instead of taking their PERS benefits and heading out of state to Washington or other lower income tax rate states.

  • Rupert in Springfield

    Actually there is a pretty simple solution to the problem of union contracts that threaten the state with insolvency. It would solve the entire problem with PERS as well as get state worker salaries more in line with the planet earth.

    Simply pass an excise tax on PERS benefits and state paychecks.

    Its simple and it would be real hard to argue it wasn’t fair.

    • valley p

      “Well, the tax on PERS benefits to recapture some of the excesses would certainly be a legal and fair way to go.”

      Maybe so, but unless you are math challenged you can’t finance a benefit by taxing it at less than 100%. The amount you could recapture in a tax would be piddling, and recall that Democrats control the tax making body. And….even if Republicans by some miracle win back the legislaturey they cannot enact a tax due to the 3/5 majority requirement. Better to simply negotiate harder at the next opportunity.

      “You don’t get to make up the rules as you go along.”

      That is what some of us have been trying to get through to you. You can’t wish away PERs contracts already signed. And you can’t simply declare state bankruptcy.

      “PERS retirees can go to court all they like, the fact is you cant get blood from a stone.”

      Yes, well they already did and they won. Oregon governance is a multi-billion enterprise, not a stone. Pension payments are a fraction of government spending. And before you get all excited, I’m not saying they don’t need to be negotiated downward. They do. And already have been to an extent.

      “If you think people are going to tax themselves into oblivion to pay for your retirement, good luck with that. Aint gonna happen. ”

      We agree. And it also ain’t necessary.

  • a retired professor

    Re contracts: when I resigned my position, I had a definite pension benefit figure from PERS for the years I was under the PERS system at UO. (Only a fraction of my time there, but nobody is ever interested in how this worked. Dudley has talked about it, though.)

    So, I gave up my job, which actually had a tenure contract, like a property right, with the understanding that I was giving up one contractual right (my job) in return for receiving another (my PERS pension).

    So, if y’all succeed in breaking the PERS contract (which you won’t), I’ll be expecting y’all to offer me my job back.

    There will be plenty of others ready to take you to court too.

    • Rupert in Springfield

      Well, the tax on PERS benefits to recapture some of the excesses would certainly be a legal and fair way to go.

      I am not saying it is likely to happen, but it is certainly one legal way to pay for the it.

      >with the understanding that I was giving up one contractual right (my job) in return for receiving another (my PERS pension).

      Well, unless you have that understanding, you get your job back if your retirement is cut, in writing then I am afraid you are out of luck. Sorry, you cant be insisting on upholding the letter of the law when it comes to enforcing the PERS contract and then expect anyone to have sympathy for you wanting legal fudging when it comes to some sort of “understanding” you had in your head.

      The system is very heavily slanted towards union pay offs like PERS. However that level of incline is finite. You don’t get to make up the rules as you go along.

      >There will be plenty of others ready to take you to court too.

      PERS retirees can go to court all they like, the fact is you cant get blood from a stone. Oregon is rapidly reaching a point where there will be no one left to pay for you guys anymore. You guys can go to court all you like, but if you think people are going to tax themselves into oblivion to pay for your retirement, good luck with that. Aint gonna happen.

  • eagle eye

    I’m afraid your notion about taxing PERS benefits being legal is about as fantastic as most everything else you say.

    The PERS people have a pretty good track record of winning in the Oregon courts, if you care to look.

    I don’t know about the prof’s legal argument, but it seems plausible to me. It would be interesting to see what the courts would say. Except, they aren’t going to let retirees be screwed out of their PERS benefits. So the prof isn’t going to have to ask for his job back.

    Anyhow, it is not necessary for anyone to tax themselves into oblivion. (Remember, I voted against the recent income tax measures.) As I said above “The state might have to get along with 10% fewer workers to fund PERS, but it won’t go out of business.”

  • an UN-retired professor

    You know, all this talk about negating PERS, state bankruptcy, etc. makes me nervous. I may put off retirement longer than I expected. At the salary of people with my experience, it might be more expensive for the state to scare us away from retirement. Something to think about.

    Incidentally, the state can’t just fire me because (1) I have tenure and (2) I do a good job.

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