Stopping Oregon’s Job Loss

The October employment numbers are out and they spell more bad news for Oregon. Only someone as economically illiterate as Gov. Ted Kulongoski would characterize the situation as “stabilizing” and “promising”. Yes, the new numbers indicate that Oregon’s total employment only dropped by 1,900 in October as compared to 10,000 for September; however, that same phenomena occurred in July followed by two catastrophic months. Nothing has changed in Oregon that would suggest that the October numbers are anything more than a seasonal fluctuation.

In fact, a closer look at the numbers indicates that “quality jobs” in Oregon continue to decline at an alarming rate. Another 1900 construction jobs were lost in October bringing the total lost since peak employment in August of 2007 to 28,300 — that in spite of the government signs on state highway projects declaring that they are putting Oregonians back to work. An additional 2,400 jobs were lost in Manufacturing bringing the total lost since peak employment in July of 2006 to 45,900 — that in spite of Kulongoski’s vaunted “green jobs” initiative. (Thus far the majority of “green jobs” created — wind generation — have come at a substantial cost to taxpayers in hundreds of millions in government subsidies and have resulted in higher utility prices because of government mandated use of this high priced wind generation.) And while Transportation improved by 800 jobs they are still down 29,000 jobs from peak employment in November 2007.

It is pointless to argue anymore about whom is responsible for this devastating recession. The critical point now is what are we doing about it. On a federal level the “stimulus” package has failed miserably. Most of the jobs that the Obama administration claims to have “created or saved” are bogus as detailed by news organizations throughout the United States — a series of miscounts, double counts and fiction.

On a state level — what? Nothing. Absolutely nothing. The Kulongoski administration and the Democrat legislature — a wholly owned affiliate of the public employee unions — are so bereft of ideas to improve the opportunity to regain employment for Oregon’s working men and women that it is simply painful to watch. Wringing one’s hands about whether we can continue to grow government while over 130,000 private sector jobs have disappeared is criminal but, sadly, the extent of their concerns.

In the meantime, officials in West Point, Georgia announced the ceremonial roll out of the first production automobile from a new Kia plant. (No it wasn’t an electric car or a hybrid, it was a midsize SUV — still the most popular vehicle in America). That plant has already created 1,000 new manufacturing jobs for Georgia and is on track to create 2,500 directly by Kia and another 2500 by suppliers. Honda is exploring expansions in Tennessee and other foreign car manufacturers are exploring opportunities in Alabama and the Carolinas. There is not even a glance toward the Pacific Northwest in general and Oregon in particular.

In contrast, Boeing has announced that it will not open a second plant in Everett to build the new Boeing 787 passenger jet. Instead it will to build the new Boeing jet in Charleston, South Carolina, where Boeing will invest at least $750 million and create 3800 new jobs directly. A Seattle area economist, Dick Conway, has estimated the multiplier effect of additional jobs at 1.7 — for every Boeing job created, another 1.7 jobs are created to support that job. Thirty years of abuse by Washington state government and local unions have created an atmosphere in which Boeing has begun a measured and appropriate migration away from its roots in Seattle/Everett to a less hostile environment outside of the Pacific Northwest.

And finally, Suntech, the massive Chinese consortium of solar panel manufacturers announced this past weekend that it has narrowed its search for an American manufacturing location to Arizona. Suntech’s new plant will be located in either Phoenix or Tucson and, at peak production, will represent eight percent of the total United States solar market. (So much for Kulongoski’s pipe dream that Oregon will be the solar power capitol of the United States.)

Just in case that you think that government spending is the solution for Oregon’s economic woes, let’s also look at Government Motors (formerly known as General Motors). GM announced its “improved” financial picture by showing only a $1.2Billion quarterly loss. Tom Krisher and Dee-Ann Durbin of the Associated Press, in a Tuesday story:

GM said its improved performance was fueled by new products including the Chevrolet Camaro muscle car and the Chevrolet Equinox and GMC midsize crossovers. The companies top sellers through October were the Chevrolet Silverado pickup truck and Impala full size car.”

(Much to the dismay of the Obama administration and all of the GM advertising dollars it directed to fuel efficient and hybrid cars, the nation still prefers big, roomy cars and trucks and disdains smaller hybrids.) However, despite the spin by the new managers of Government Motors, the real turn around came as a result of bankruptcy where it reduced its $95 Billion debt to $17 Billion and its monthly interest payments from $1.1 Billion per month to $250 Million. (Also, General Motors is no longer a publicly traded company and, therefore, the financial results reported do not comply with United States accounting standards — read that as being fully susceptible to government “spin.”)

It is hard to believe that Kulongoski and his Democrat colleagues in the Oregon legislature don’t care about the 130,000 private sector jobs lost over the past two years. I think they are simply intellectually incapable of comprehending and addressing the problem. And that, coupled with their obligation for campaign financing to the public employee unions, drive them toward these absurd tax increases despite their putative leader’s (President Obama) admonition that you don’t raise taxes in a recession.

Not that it will do any good, or that Gov. Kulongoski and his union advisors will even understand it, but following are five simple strategies for improving Oregon’s economic climate with resulting job creation:

1. Eliminate the tax increases proposed in Measures 66 and 67 and reduce state government spending by reducing the number of state government employees. In doing so you will eliminate any adverse impact on schools, healthcare, the unemployed and the elderly.
2. Create a tax free capital gains for all investments made for the next ten years and couple that with a reduction on capital gains tax to one-half of the current rates phased in over the next five years.
3. Accelerate depreciation schedules for all capital investments made to at least equal those utilized under federal income tax laws.
4. Create a tax credit for one-half of the amount that wages exceed federal minimum wage standards for each new job created from November 1, 2009 until January 1, 2012.
5. Create a series of utility corridors throughout the state that will a) result in energy being transported from where it is generated to the state’s metropolitan areas, and b) in which the permitting process will be determined within a six month process.

And finally, stop trying to pick the winners and losers in a free market — end subsidies to inefficient producers and reduce tax burdens on those that are efficient.