Oregon Continues Its Dismal Employment Slide

When the January Oregon employment figures were released, they showed a slight uptick in total state employment — an improvement of about 1,100 jobs. Even the casual observer was skeptical given the visible signs of a continuing deep jobs recession. And sure enough the number was as phony as the administration charged with producing them.

In a March 10, 2010, press release the Oregon Department of Employment — a particularly misnamed agency — noted:

“New numbers for 2009 and prior show that Oregon’s unemployment topped out at 11.6 percent in May and June 2009 and payroll employment dropped by 82,800 jobs, or 4.9 percent, between December 2008 and December 2009. This means that Oregon’s unemployment rate wasn’t as high as the figures originally reported, which rose as high as 12.2 percent in May. That’s the good news. However, the payroll employment losses were worse than originally reported – the previously reported drop in payroll employment for the 12 months ending December 2009 was only 72,400 jobs or 4.3 percent.” [Emphasis supplied]

That’s right, the bean counters missed it by 10,400 jobs — 10,400 more Oregonians out of work than previously reported. That means, from peak employment in February of 2008 to the end of 2009, 159,000 Oregonians lost their jobs. And given the fact that during that same period of time, government employment actually increased by 3,500, the reality is that 162,500 Oregonians have lost their private sector jobs with no prospects for improvement in sight.

But it gets worse. The February 2010 jobs report showed an additional 1,200 jobs lost (erasing the 1,100 job gain reported for January). And despite the continuing job loss in Oregon’s private sector, Oregon state government continues to grow with the February report noting another 100 employees added to the state government payroll (which also means that the actual private sector job loss was 1,300).

From February of 2008 through February of 2010, Oregon has sustained a loss of 163,800 private sector jobs — that is an 11.3% loss of private sector jobs.

During Oregon’s last recession, Oregon lost nearly 66,000 jobs between peak employment in November of 2000 and the nadir in June of 2003. It took until December of 2004 to fully regain the 66,000 jobs lost.

This time the job loss is closing on three times as great and the decline much more rapid. How long it will take to recover those 163,800 private sector jobs lost? Given the track record of the Kitzhaber/Kulongoski administrations, Oregonians should expect a long climb out. And no help is forthcoming from the public employee unions dominated Democrat legislature. You can safely assume that the only progress to be made by them is annual salary increases, step increases and benefit increases for the public employees.

Oregon’s economic picture is so bleak that Washington, Idaho, Montana, and Chicago are actively recruiting Oregon businesses to relocate to their states. The Kulongoski administration’s singular economic effort continues to be the pursuit of the “green power” dream. Arizona has been routinely kicking Oregon’s derrière in the quest to locate solar power manufacturing. And Oregon’s nascent wind power industry will collapse when Oregon drops its heavy subsidization — a subsidization that has, to date, primarily benefit manufacturers located just about everywhere but Oregon.

So where does Oregon go from here? Let me reiterate four simple steps that will do more to improve Oregon’s economic picture than all of the “initiatives” undertaken by Oregon’s last three Democrat governors combined. Capital investment is the key to job growth. Diverting money available for capital investment into taxes stifles growth. Freeing money from taxes to be targeted for capital investment stimulates job growth. Each suggestion is targeted towards creating capital investment.

1. Eliminate the state inheritance tax for those portions of the estate that represent farms, ranches and businesses in Oregon. By doing so, Oregon government will not force family members to forego what would otherwise be investment capital in order to pay the taxes.
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 January 1, 2010 2009 until January 1, 2012.

And if you are worried about revenue neutrality for state government, any temporary reduction in tax revenue can be offset by the following reductions in state spending.

1. Stop making the employees contribution to PERS thus reducing state payments to PERS by six percent. (Oh, you didn’t know that the state was making the payments for the public employees and then matching that amount — thank your local public employee unions and their massive campaign contributions.)
2. Cap the amount of state contribution to employee healthcare at the average private employer contribution level in the state. According to the Kaiser Family Health website, that amount is about $9288 or $774 per month. Oregon currently pays between $1300 and $1500 per month per employee. (Thank your local public employee unions and their massive campaign contributions.)
3. Freeze state employee salaries, including step increases, until the average salary of state government employees equals that of the state’s private sector employees. (Oh, you thought that the state’s public employees earn less than the private sector because they have better job security. Not so — excluding their generous benefits package, public employees, according to Oregon’s Department of Employment, make one-third more than their private sector counterparts — at least those private sector employees that still have a job. Thank your local public employee unions and their massive campaign contributions.)

But don’t hold your breath that any of these proposals will be adopted. Oregon’s government is in the firm control of Oregon’s public employee unions and their wellbeing is not only paramount, it is singular.