Oregon Business Leaders Publish Report on Oregon's Business Climate
Rich Rodgers
Oregon Business Taxes: Lowest in the West
In today's Oregonian, Steve Duin takes on the claims that have been thrown around regarding Oregon's business climate:
When 41 percent of Republicans, according to CNN, continue to insist Barack Obama wasn't born in this country, we hardly need another reminder that perception is driving too many of us to loopy conclusions. One of the local favorites is that Oregon is inhospitable to business.
The grousing over the passage of Measure 67, which raised corporate taxes, continues to fuel that perception.
What does Duin find? A group of Oregon business leaders who are tired of the complaining, and who have just published a report comparing Oregon's business climate to other Western states.
The CEOs who've put their name on this study are less troubled by state and local business taxes -- which account for less than one percent of their total costs -- than by the tactics some take to avoid paying taxes altogether.
"As an investment advisor, I see clients move to Washington to save on the income tax," Tony Arnerich said. "You're an Oregonian all your life and suddenly taxes become a philosophical burden and you run to Washington. That's a good example of how my generation morphed from 'We the people' to 'Me the people.'"
The report that Duin cites was published this week by six prominent Oregon businesspeople, and is titled "Is the Grass Really Greener in Other States? An Oregon Perspective".
The report compares Oregon's business climate to other Western states. The authors' conclusions, based upon solid data, are clear: while things are difficult all over, Oregon actually holds its own in comparison to other Western states. In fact, business owners in other Western states would no doubt love to have Oregon's overall business climate instead of their own.
Among the Western states that were the subject of the study (Arizona, California, Idaho, Nevada, Oregon and Washington), Oregon's business taxes represent a significantly lower percentage of Gross State Product than any other state. That includes the impacts of Measures 66 & 67, passed with a very strong majority of voter support in January, 2010.
Meanwhile, take a state like Nevada, thought to be something of a business-friendly economic powerhouse during the recent boom years. Nevada is in terrible shape, with a very high unemployment rate, and state budget deficits far worse than Oregon's.
Republican-controlled Arizona, facing budget woes similar to those that we face here in Oregon, recently passed a 1% increase to its statewide sales tax. Arizona's job performance in 2010 is roughly equivalent to Oregon's, though fallout from the controversial anti-immigration policies are expected to hurt Arizona's economy in the coming year.
In 2010, Washington also increased its Business & Occupation tax, along with a grab bag of other tax increases, leaving Washington with an effective corporate minimum tax nearly five times that of Oregon's new minimum following the January election.
Every state has its quirks, but Oregon is at least as friendly to business as its Western neighbors. This is the perspective of business leaders with decades of experience starting, managing and investing in businesses in Oregon and elsewhere.
In the appendix of their report, the authors highlight a large number of recent success stories from the second quarter of 2010 alone, including new jobs, business expansions, new IPOs, and huge growth in venture capital coming to Oregon. Prominent among them: the state of Oregon and its local governments have scored big in their recruitment of the renewable energy industry. Thousands of new jobs and a huge influx of dollars are coming from Oregon's red-hot solar industry, built on the foundation of Oregon's semiconductor industry. And this week, the City of Portland announced that the wind power giant Vestas will make Portland its North American headquarters, just one more success among many for Oregon's wind power industry.
The hard work needs to continue, but the facts show that Oregon is doing a good job remaining friendly to business.
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11:19 a.m.
Aug 24, '10
Full disclosure: I helped with some research on this report.
7:39 a.m.
Aug 26, '10
Full disclosure – I have twice moved a business largely due to government actions that had made my business uncompetitive. First I moved from the SF Bay Area due largely to increased restrictions on painting and sandblasting, plus increased fees and inspection costs. The second was from the Sacramento Valley to Yamhill County, Oregon for many of the same reasons, plus (and this was the most significant reason) a desire to live in the Willamette Valley. As was pointed out by others, rarely was it due to government attitudes toward business alone. I know as a fact that people do move businesses due to a wide variety of factors but key among them is government attitude/action in relation to business.
I think many of the comments here are far off the mark. They appear to want nothing more than to find fault with others. Except for Bob Wiggins’ comment, little is added to the post. I have three basic problems with the report and one with the post. First, the report was written by “business leaders.” An Accountant? A financial consultant? A guy who sold his business at the top and may care less about the business climate? Why not some representatives of small businesses? Since small business provides the majority of jobs in America, it might have been helpful to learn how a cross section of small business people feel about Oregon’s state of business friendliness. Second, it appears that if the facts are true (I have no reason to believe otherwise), then at least the facts are well chosen to show a desired outcome. Why not compare with neighbors Montana and Utah, both closer than Arizona, used in the report? I suspect it would have shown Oregon in a less favorable light. Third, I dislike the fact that I had to read the entire post and the report before I found out (in a comment) that the poster had a role in preparing the report. My problem with the post is simple. Rich’s conclusion is not supported by the report. “The hard work needs to continue, but the facts show that Oregon is doing a good job remaining friendly to business.” The report concludes nothing of the kind. It says that compared to our (selectively chosen) neighbors we are not doing badly. From what I hear other small business people say, the biggest problem with the passage of both 66 and 67 is the attitude displayed. It says that businesses and ‘the rich’ should pay our bills. It also says to me that we don’t have the guts to attack the cost side of the equation. Neither of these sentiments is attractive to business. As the report says, “Trashtalking our own state is not a smart economic development strategy.” Nor is biting the hand that feeds it.
3:13 p.m.
Aug 26, '10
Thomas
I don't know the specifics of your situation, obviously, but limits on painting and sandblasting do not sound like onerous governmental regulations.
The fact of the matter is that some business procedures that were acceptable in the past are no longer acceptable, in large part because we recognize that there are negative externalities associated with the activity.
For instance, it may have been (and still may be) cheaper to paint with lead paint. But we don't allow it. That's not a bad policy to have, is it?
4:40 p.m.
Aug 26, '10
Paul, I'm not sure what the purpose of your comment is but I am happy to expand on what i mentioned as reasoning for moving, remembering that there were many factors, not just one. I don't believe I said the restrictions, fees and inspections were onerous, just that they played a role in the decision. When we had to buy paint that cost $90 per gallon and our outside-the-area competition used $10 per gallon paint, we were less competitive. When we had to pay thousands of dollars per year to permit spray booths to paint legally while competition sprayed in the open air, we lost market share. This had an effect on our business whether right or wrong, moral or immoral. We made business decisions for business reasons.
We could have a discussion of morality or environmental consciousness of these decisions, by my job was to keep my company alive so the owner could continue to invest in it and the 50-60 employees could continue to provide for their families. Where your comment might lead us is to a discussion of how the State might best balance business and the environment. I would want to be part of that discussion. I find that a majority of the people who want many more environmental restrictions on business are NYMBYs and the majority of businesses who don't are balancing costs of compliance with returns on investment. Thanks for the comment, Tom
11:27 a.m.
Aug 24, '10
It’s dynamite to see a group of business people step up and ask, “Is the grass really greener in other states?” They studied our neighbors, and concluded that it’s not greener, and in some cases it’s browner.
While reading the report, check out the bios of the folks who decided to seriously ask the question.
12:19 p.m.
Aug 24, '10
Yes, thanks to the folks who put out this report. I agree with its conclusion.
But we could and should do better than our neighbors, and part of what holds Oregon back, IMHO, is the lack of vision by our business leaders. For example, the Oregon Business Plan has put its draft proposals for the 2011 legislature online. There is no call to increase Oregon international exports in their economic proposals. This is disgraceful! See my blog post "Oregon Business Plan initiatives lack international dimensions" (here).
While many in the business community huff and puff about 67 & 68, they are failing to advocate for smart public policies. They are letting us all down.
12:42 p.m.
Aug 24, '10
Please stop the hard sales lines.
Your quote "the facts show that Oregon is doing a good job remaining friendly to business."
I run business, One of them also works with business as a counsultant, I been in Oregon business for over 30 years.
Oregon is taxing and regulating us out of jobs. More now than I could ever remember
Oregon is "only" helping the business the "state" selects to help,"green energy" not small business, and yes the green business while sucking in government funds will tell you things are good.
Plus these green energy are being funded off balance sheet. Which many scholars thing is illegal with Oregon balance budget requirement. This off Balance sheet is help kill Enron.
"Oregon has lost 10,600 jobs in the past year, ranking No. 42 among all 50 states" - Portland Business Journal
and
"Oregon’s unemployment rate ranks as the seventh-worst in the country" - Portland Business Journal
This is putting perfume on this economic pig.
2:15 p.m.
Aug 24, '10
"Oregon is taxing and regulating us out of jobs"
Can you name any jobs that have been lost in Oregon due to taxes or regulations. Specifics please.
6:23 p.m.
Aug 24, '10
Randy, read the report. All of us are business people like you. None of us are involved in the green energy industry. You would not be happy any where on the west coast, because each state is doing some version of what Oregon is doing in terms of taxes, spending cuts, and increased fees. In the past 7 months Oregon has gained jobs. Not much, but better than 2009.
7:43 p.m.
Aug 24, '10
It seems endemic to the nature of (some) business folks - to assume that things must be just terrible wherever it is that they live, and the business environment just must be better somewhere else.
Sort of like how liberals think the media is conservative and conservatives think the media is liberal -- the truth is that they're both right from time to time, it depends on who exactly you're talking about.
Yes, there are states that are better than others for particular kinds of businesses (local sales, national sales, import/export, consulting, manufacturing, etc.) --- but when you're talking policy, you have to look at the overall picture.
Thanks to the authors of this report for doing exactly that.
4:02 p.m.
Aug 24, '10
"Oregon is taxing and regulating us out of jobs."
I might ask that you go a step further and explain where you are hearing these statistics and reports that seem to be leading so many to conclude Oregon is "anti-business"
I'm not saying you're right or wrong but I can't seem to find any statewide economic information that actually backs that up, and yet so many seem to believe it. Again and again on blueoregon folks assert this as fact, are challenged to give examples and do not follow through and do so. It really would be helpful to find out what the source of this meme is and be able to take a hard look at the data and ascertain if it actually holds water.
5:44 p.m.
Aug 24, '10
I'm glad to see someone from the O is taking on this issue, especially someone as high profile as Steve Duin. The Repug plan is to keep repeating things enough until someone believes them. Their long term hope is that they can convince everyone to scrap a progressive income tax system in favor of a national sales tax in which their GOP corporations and businesses pay nothing.
8:44 p.m.
Aug 24, '10
Three cheers for the business people who produced this report. Negative Nellies in the business community refuse to acknowledge that when the national economy does well so does Oregon. And as Steve Duin noted, state and local taxes amount to less than one percent of the cost of doing business nationwide. Too often the business community seeks to cut taxes and then demand better public services...we can't have it both ways, and we need the latter to have a truly good business climate.
9:43 p.m.
Aug 25, '10
Surely you would have voted for a similar percentage increase in everyone's taxes? Or is it only insignificant when it comes out of someone else's pocket?
11:13 p.m.
Aug 24, '10
Gees guys, I guess your right on this quote by Rich Rodgers "Oregon and its local governments have scored big..renewable energy"
The Oregonian quote "State criminal investigators are looking at efforts by the Oregon Department of Energy to steer federal money to a company run by Cylvia Hayes" Kitzhaber honey pot.
If you going to pick a poster child for success like this board does with renewable energy, you really shouldn't let the bureaucratic cronies and their pork, greed, and cronyism entangle the democratic hopeful governor, especially with words like "subject to an ongoing criminal investigation"
These types of articles on Government greed help brings out the facts that social engineering never works, or Russia, Cuba, East Germany, and North Korea would have been successful, They also beleive it would work just like this board does.
I think Ringo Starr of the Beatles got it right.
His Quote is "Everything Government Touch turns to Crap.
It looks like Oregon Renewable Energy program is full of Crap, but good job cover this pig with lipstick.
10:01 a.m.
Aug 25, '10
I actually encouraged Ms Hayes and two other Oregon firms to apply for the larger Department of Energy contract. I found two of the three on the web. It wasn't personal, I didn't Ms Hayes or her company, but ODOE wasn't getting applications, the study was essential if the Legislature is to make good decisions, and these were Oregon businesses. I encouraged some national firms as well, but I was hopeful that the money would stay in state. Maybe someone at ODOE did something underhanded, but to encourage a Seattle company to spend some of their money in Oregon, on an Oregon sub-contractor makes some sense to me, if the local company has the capacity.
9:08 p.m.
Aug 25, '10
Especially id said Oregon company just happenes to be run by the long time girlfrind of the democrat contender for governor. What a coincidence.
11:12 a.m.
Aug 25, '10
Anyone who uses and believes in the categorical phrase, "Everything the government touches turns to crap" is so ignorant and dogmatic that nothing they say deserves to be taken seriously.
Besides, since when do conservatives care what foreigners think? Particularly, billionaire foreigners like Ringo Starr. Oh, wait...you guys worship Rupert Murdoch.
6:34 a.m.
Aug 25, '10
“ 'Columbia expects record sales in 2010' 4/30/10 Columbia Sportswear CEO Tim Boyle said he expects records sales in 2010. The company handily beat analyst expectations for sales and profits. Now do you love this little hypocrite? Boyle was a major contributor to the opposition to 66 and 67. Personally I will not buy another garment from Columbia which shows how I voted and will continue to vote.
7:16 a.m.
Aug 25, '10
While the leaders of Columbia and Nike opposed M66/67 they remain in Oregon personally, pay Oregon taxes, keep their companies in Oregon, and their companies have many Oregon employees. I would hope that you would continue to support your friends and neighbors who work there by buying their products.
One of our goals in writing this report was to get people on both sides of the ballot measure to recognize that we are in this together and we have a lot going for us if we can come back together to support Oregon and the people who live here.
8:05 a.m.
Aug 25, '10
John: We all have to buy food, clothes, etc. It seems to me that Theresa is simply suggesting that we try to spend that money wisely...like not giving it to a corporation that will contribute to right-wing politicians/campaigns/causes.
I would like to see a "Progressive Business Network" which would make it easier for people to spend their money w/ businesses that are more likely to support progressive causes. Money is power, we should try to keep more of it in the hands of those who share our interests/values.
11:28 a.m.
Aug 25, '10
So all 3000+ Columbia Sportswear employees are Republicans?
2:40 p.m.
Aug 25, '10
Micheal: It's a real simple concept. Progressives/liberals/Democrats should try to keep money out of the hands of people who are more likely to use that money to fund right-wing campaigns/politicians etc. Tim Boyle is the CEO, he's the one writing checks to protect the rich at the expense of essential services. His success, his ability to effect change, depends on our patronage, our choices.
If more progressives start buying their clothing from say Joe Progressive's clothing company, instead of from Columbia, someone gets fired, someone gets hired, and more money goes to progressive causes, less money goes to Chris Dudley.
9:24 a.m.
Aug 26, '10
So you support conservative groups who boycott stores that provide benefits to partners of gay employees as well. I mean, they are just trying to support stores that support their beliefs.
Nothing personal against you, but this is why I am a nav.
7:37 p.m.
Aug 27, '10
Let me try this one more time.
In a capitalistic economy we vote with our dollar. Our consumer choices have consequences….they mean something. You may be familiar w/ progressive campaigns like “Buy Organic.” The basic idea is if more people buy organic products, less chemicals are used, our land, air, and water stay cleaner, our food is healthier, and we are healthier. We reduce pollution, improve public health, and reduce healthcare costs. Buying organic clearly helps advance progressive priorities.
You see Michael, the very simple idea here is as a consumer who must buy certain products, is to try to make that money work in your favor. As a progressive I try to support businesses/people that share my values. If I support a company that uses their profits to fund right-wing anti-education causes/campaigns it works against me.
Of course I don't support anti-gay boycotts because I'm not a right-wing religious bigot, I'm a progressive. I do however recognize the power and importance our consumer choices just like the conservative groups do. I choose to use my power to advance my priorities just like they do.
You seem to either not understand basic economic principles or you disagree w/ the idea of using your consumer power in a way that helps improve this place we call home. Do you care who gets your money? Do you care what they do w/ it? Do you think any responsibility comes w/ your consumer choices?
8:07 a.m.
Aug 25, '10
From State Rep. Sal Esquivel HD6 Medford in his recent newsletter - "Over the past few months as we have all watched as the new "party in charge" has worked at the state level to destroy the business atmosphere in Oregon and then watched in horror as the changes at the National level begin to destroy the very esssence of this Nation we love it moved me to find a way for all of us to get more involved." Esquivel invites everyone to join the taxpayers union usa. On the surface it seems twisted to invite people who strongly dislike unions to join a union. But then again, Esquivel was the legislator who stated the economy was stable back in 2008.
The economy is still faltering partly because Chambers of Commerce across the state are bellowing that Oregon isn't business friendly. Its a strange way to attract new investments in Oregon and is the counter opposite of strategic thinking that would attract new businesses.
The six business folks who published the report have pointed out that even in tough economic times large investments and new jobs are coming to Oregon.
9:33 a.m.
Aug 25, '10
"The economy is still faltering partly because Chambers of Commerce across the state are bellowing that Oregon isn't business friendly."
Paulie,
That is pure conjecture. The economy is faltering for many reasons. But blaming the Chambers of Commerce is just as insidious as Republicans blaming Obama. This blame game doesn't do any of us any good. There are very systematic problems with Oregon's tax structure, and business foundation (continued lack of diversification). Those are the issues that we should be debating and figuring out how to solve; not arbitrarily blaming one group or another for the economy's demise.
11:18 a.m.
Aug 25, '10
Regarding the various Chambers state wide, it might be useful to get a campaign going to get members to actually read the danged report. It wouldn't hurt to have every progressive activist read it too. What we found at the Sandy Chamber during the election cycle, was that members were getting all of their info from the "antis" and that when they actually got the facts, they were quite capable of taking a more nuanced approach to these issues.
11:37 a.m.
Aug 25, '10
I just sent a message out to many of the Salem chamber members with a link to the report.
12:08 p.m.
Aug 25, '10
Sorry to pop your balloon Jason. My Chamber has regularly printed newsletter articles about "suffocating" (their word) regulations, taxes and more. It is imperitive that government and business work together. Pat Ryan is correct that the "anti" message is the message given to most members.
It is refreshing that business leaders published facts demonstrating that businesses are not only moving to Oregon but expanding and adding more jobs. I'll tip my hat to that!
2:50 p.m.
Aug 25, '10
I read the report. John Calhoun and his fellow writers made an honest effort to present a case that our neighboring states' business tax systems have issues of their own, and that taxes are not the sole consideration in where a business locates.
That isn't the end of the discussion though. Oregon's highest-in-the-country personal capital gain tax rate is a problem. It is a fact that our high capital gain rate, coupled with the ability of taxpayers to easily change their state of residence from Oregon to somewhere else, results in out-migration of wealthy individual taxpayers. Measure 66 made this problem worse.
Wealthy people buy goods and services, invest in new businesses, hire employees and pay taxes. When they establish residence somewhere other than Oregon, our state is worse off. The fact that other states have sales taxes or certain business taxes that Oregon doesn't have doesn't matter; when a wealthy individual is faced with a six or seven figure Oregon capital gain tax that he can easily avoid by establishing residence in some other state (and can even keep his Oregon house as a second home), the fact that the other state has a sales tax really isn't a big deal. Not everyone in this situation moves (witness Phil Knight and Tim Boyle), and the Gates Senior tax in Washington, if it is enacted, will make Washington a less likely location to move, but many wealthy (former)Oregonians have changed their state of residence, and we're worse off for it. (For what it's worth, the class warfare rhetoric of the yes campaign on Measure 66 didn't help matters either.)
I do not know of any businesses that have moved out of Oregon or shut down because of Measure 67 per se. Contrary to the quote in the report, however, Washington is not the only state that taxes the gross receipts of unprofitable companies; thanks to Measure 67, Oregon does so as well. I think the gross receipts tax will cause this to happen, but we'll see.
I agree that it doesn't do us any good to "bash" the business climate in Oregon. My fund is still here and we've invested in 3 Oregon businesses and I've personally invested in many more. Expressing a view that the tax measures were a mistake isn't bashing the Oregon business climate, however; it's trying to improve the state's political climate. I will continue to fight for tax policy that helps our state. And you really should be happy there are people willing to continue to fight for policies you don't like; that means we're still here and that we still care about our state.
3:51 p.m.
Aug 25, '10
I do not know of any businesses that have moved out of Oregon or shut down because of Measure 67 per se.
Thank you for acknowledging this.
9:30 a.m.
Aug 26, '10
Will you acknowledge that it will take several years for us to see the effects (biz leaving) of M67 due to the fact that most businesses are encumbered by a lease?
To suggest that no business has left in the first 6 months since the passing of the measures shows proof of your point isn't really fair either.
11:55 a.m.
Aug 26, '10
Businesses relocate, add, or close locations all the time. The legislature passed the law over a year ago. It has been 8 months since the vote. Surely, out of the many, many businesses in the state we would have seen some relocate, or move an operation if they felt forced to do it by the measure. So far not one clean example.
That is not to say that I don't agree with your basic premise that it will take years to see the full impact.
12:16 p.m.
Aug 26, '10
I'm not so sure John.
If the business was failing, the gross receipts tax may have just been one of the nails in the coffin, and the business would have quietly shut down. Not likely to generate a news report.
Moves out of the state are trickier. Obviously some companies, by their nature, can't just move out of the state on a dime (or, in the case of some businesses, like agriculture for example, they probably can't move at all.) If some small businesses moved or sold out, I doubt they would even have been newsworthy.
As to whether the gross receipts tax will influence some larger businesses to move, I suspect we will see some examples of that at some point, but the fact that we haven't seen any high profile ones yet (at least as far as I am aware) doesn't really mean much. And, as you also know, if a business does move, it probably has lots of reasons. To the extent M 67 is a reason, it's just a "last straw" kind of thing, probably not the sole factor. And businesses that do move or sell out may have good reasons for not going public with their reasons for moving, or may have motivation to attribute the move to taxes when that is only one of a bunch of reasons. Some businesses may even be waiting out the results of the November election before making any decisions.
I think it's just to soon for either side to say "see, I told you so" on Measure 67. (On 66, on the other hand, individual changes of residence from Oregon seem to be continuing at an unfortunate pace.)
12:36 p.m.
Aug 27, '10
There have been 3 businesses in the industrial area where my business is located that have left. I don't know why they left. I don't know if they shut down or moved or to where.
You see, the media doesn't cover 99.9% of businesses in the state. Just b/c the media hasn't reported it doesn't mean it hasn't happened.
9:17 p.m.
Aug 25, '10
Thank you Bob. I believe that you have stated the real issue in the debate about the tax structure as it relates to this issue and it is the personal and capital gains rates, not the business taxes. The issue that needs to be resolved is how do we lower income taxes without a sales tax and still keep the state functioning. Well worth a discussion off line.
3:22 p.m.
Aug 26, '10
Bob has ID'd the issue. Unfortunately, the focus has been on corporate "job killing taxes" versus, "corporations pulling their weight", when the issue is relatively high personal income tax rates on high earners while remaining competitive in our business taxes.
That's is a hard discussion for everyone because it's more nuanced than the pro and anti tax consultants like, and it asks progressives to understand Oregon is in a competition with other States to retain high earners.
Maybe I'm wrong here, but John seems to infer that the solution could be that Oregon could consider higher corporate taxes as long as we remain competitive vis a vis comparable states, and then lower capital gains and personal income rates.
6:01 p.m.
Aug 25, '10
I'm encouraged to see the report, but it begs the question why, if the report is true, does our economy continue to lag relative to our neighbors?
I mean we can shout until we're blue in the face that our business climate really isn't that bad, but I wonder if it rings hollow to the workers who can't find jobs.
In short, if things are so good then why are the economic indicators so bad?
7:02 p.m.
Aug 25, '10
Not sure what metric you use to argue that we lag our neighbors. Do you not consider California and Nevada to be Oregon's neighbors? Both are in the top 5 in the country in unemployment.
9:09 p.m.
Aug 25, '10
While Washington state has done better on unemployment over the past five months, Oregon has actually done better over the past 12 months. Of course, neither state has shown meaningful job growth.
Paul, the truth is that Oregon will do about the same as the rest of the region in terms of job growth. Our unemployment rate has been higher for years because of a large set of factors including the fact that a lot of people want to live here and will wait a lot longer for a job here than in North Dakota. However, job growth is dependent mostly upon the industries and companies that currently exist here. As we said in the report, nothing the state can do will increase the demand for wood products or semiconductors.
3:21 p.m.
Aug 26, '10
Rich and John
It's my understanding (I'm struggling right now in another browser window to find comparative stats) that Oregon has lagged for a long time, so there is something more structural here than just a regional downturn.
I think of Portland's competition for the creative classes as Seattle, the Bay Area, Salt Lake, Austin, the Research Triangle. Perhaps a few others. I wish I could find the posting now, but I compared all of these about a year ago and found that Portland has consistently lagged these cities for quite a long time in employment.
John, I absolutely agree it has to do with the industries we have. And with Kari's comment that is is our lack of a research university. But these seldom enter into the conversations that I hear.
We try to offset perceptions about business conditions--and rightfully so--but don't seem to want to wrestle with the much more difficult question of how create a balanced, sustainable, vibrant economy with good working class jobs.
3:34 p.m.
Aug 26, '10
Paul,if you are willing to go macro for a moment, go read: Betrayal of American Prosperity by Clyde Prestowitz. It was just published this spring and documents the failure of American trade policy and lays out what we need to do. Fundamentally we need to fix our problems nationally. We can only tweek the edges at the state level.
12:47 a.m.
Aug 26, '10
Paul: I believe a critical reason that Oregon lags behind Washington and California - at least with respect to venture-funded technology startups - is the lack of a major research university in the largest city and commercial center in the state.
Seattle has UW. North California has Stanford, Berkley, UC Davis, and UCSF. Southern California has USC, UCLA, UC Irvine, UCSD, and Caltech.
According to the 2009 edition of "The Top American Research Universities Report" (pdf, page 22-28):
OHSU comes in at $287m, which is all well and good - but a far cry from what even second-tier schools like Davis and Irvine are doing.
Oregon State comes in at $189m, while UO lags far behind at $61m. Portland State isn't listed, which means it's under $40m.
If Oregon wants to be a generator of significant scientific, industrial, and commercial innovation, we need to make a serious investment in developing a major research university in the Portland metro area.
9:31 a.m.
Aug 26, '10
I could not AGREE more.
3:25 p.m.
Aug 26, '10
David
I couldn't disagree more. The American higher education system is the envy of the world. The stories you have read about costs are overblown.
There are no "zero cost" higher ed programs that I am aware of. Most online programs up to now have delivered lousy education for a high price, and are basically propped up on student loan income.
And never, ever should we allow state legislators to "target" what they think constitutes appropriate research. Politicizing fundamental scientific research would be an utter disaster.
10:51 p.m.
Aug 27, '10
Paul,
On costs, I tend to worry that John Robb is largely right in his quote (here):
"For example, costs for collegiate education have increased 4.39 times faster than inflation over the past three decades and has now eclipsed affordability for most households (median incomes have stagnated during this same period) with no appreciable improvement in the quality of graduates. Worse, there is reason to believe that costs of higher education (direct costs and lost income) are now nearly equal (in net present value) to the additional lifetime income derived from having a degree. Since nearly all of the value of an education has been extracted by the producer, to the detriment of the customer, this situation has all the earmarks of a bubble. A bubble that will soon burst as median incomes are adjusted downwards to global norms over the next decade."
As for online education being "lousy" education, the Federal government has found and stated that "instruction conducted wholly online was more effective in improving student achievement than the purely face to face instruction." (here) All online education is certainly not "lousy." You are too quick to dismiss its value.
As for the costs of online education, how's $99 per month for all the classes you want (anytime, anywhere) (here). Compare that to the Oregon University System institution costs.
Finally, as for research, I share your concern about legislative directed research. But, in my view of the future, the forces of online education (above) are going to undermine the financial foundation of the existing model of higher education (think newspapers and the internet). If we want to preserve our research institutions (and even grow them), we need to find a way to fund them more directly.
2:25 p.m.
Aug 26, '10
Kari, I generally agree but with significant caveats. I think there is a good chance that the current university model is not going to survive much longer into the digital age. First, their cost structures are completely out of control. And second, competing, low-cost online university programs are going to undercut their educational component. There are near zero cost higher ed program developing online now. Why should Oregon subsidize students at its traditional residential schools when it could serve far more online?
So we need to rethink our model for higher ed, IMHO.
I generally think Oregon should shift over time to higher ed vouchers (good online as well as institutions in state) to assist more students and direct funding of targeted research. And, per your thoughts, increase the targeted research as much as possible. Research is one of the engines that could drive our economy.
We need to be smarter with what high ed funding we do have.
6:49 p.m.
Aug 25, '10
Rich, this is all fine and dandy (good post, btw), but we're still in the bottom percentile for jobless folk (44 out of 50 according to fed data), Crook County for example is at 17.7%.
And unemployment in July increased in all central counties.
I'm also a bit puzzled that the latest jobs bill passed by Congress funded green jobs mostly in Arizona - right during all the fodder over immigration.
Jobs and unemployment is going to be THE issue in this election, I think, and Kitzhaber's message on the issue is resonating, although it's still going to be a money and ground game.
And business seems to be supporting Dudley over Kitz. So, let's simplify the talking points and come up with a message people who are out of work can appreciate.
We need to push our candidates to bring jobs to the state. We need a really big win here attracting some major dollars from an established business to relocate here.
7:07 p.m.
Aug 25, '10
Tom, I agree. Though a key point here is to recognize that Oregon has not done anything to damage the business climate relative to its neighbors, and in fact there are many success stories.
While the job data here isn't as bad as it is in Nevada or California, it's plenty bad along with the rest of the country. But perhaps the difference between Oregon and say, North Dakota is that when you lose your job in Oregon, you don't leave.
Check out the appendix of the report. There is a lot of good news building steam. Not enough to have turned the tide yet, but a good foundation for strong industrial growth to last for a generation or more.
5:54 a.m.
Aug 26, '10
For all those who believe Washington is the cat's meow, just remember that the Dept. of Defense pours in massive amounts of money into its economy. Joint Base Lewis-McChord, Bangor and other Naval bases and Boeing just to name a few of the employers relying on the government teat. AEC employs a few thousand at Hanford also.
2:00 p.m.
Aug 26, '10
I had not commented on Blue Oregon since the change to Facebook (a program I almost never use and don't really understand). I was unaware that my comment would be buried above so am reposting here at the end of the string.
Full disclosure – I have twice moved a business largely due to government actions that had made my business uncompetitive. First I moved from the SF Bay Area due largely to increased restrictions on painting and sandblasting, plus increased fees and inspection costs. The second was from the Sacramento Valley to Yamhill County, Oregon for many of the same reasons, plus (and this was the most significant reason) a desire to live in the Willamette Valley. As was pointed out by others, rarely was it due to government attitudes toward business alone. I know as a fact that people do move businesses due to a wide variety of factors but key among them is government attitude/action in relation to business.
I think many of the comments here are far off the mark. They appear to want nothing more than to find fault with others. Except for Bob Wiggins’ comment, little is added to the post. I have three basic problems with the report and one with the post. First, the report was written by “business leaders.” An Accountant? A financial consultant? A guy who sold his business at the top and may care less about the business climate? Why not some representatives of small businesses? Since small business provides the majority of jobs in America, it might have been helpful to learn how a cross section of small business people feel about Oregon’s state of business friendliness. Second, it appears that if the facts are true (I have no reason to believe otherwise), then at least the facts are well chosen to show a desired outcome. Why not compare with neighbors Montana and Utah, both closer than Arizona, used in the report? I suspect it would have shown Oregon in a less favorable light. Third, I dislike the fact that I had to read the entire post and the report before I found out (in a comment) that the poster had a role in preparing the report. My problem with the post is simple. Rich’s conclusion is not supported by the report. “The hard work needs to continue, but the facts show that Oregon is doing a good job remaining friendly to business.” The report concludes nothing of the kind. It says that compared to our (selectively chosen) neighbors we are not doing badly. From what I hear other small business people say, the biggest problem with the passage of both 66 and 67 is the attitude displayed. It says that businesses and ‘the rich’ should pay our bills. It also says to me that we don’t have the guts to attack the cost side of the equation. Neither of these sentiments is attractive to business. As the report says, “Trashtalking our own state is not a smart economic development strategy.” Nor is biting the hand that feeds it.
5:53 p.m.
Aug 28, '10
Well stated. I could not help but get the same impression. "Oregon - we're not as bad as the states to the north and south of us." Being no worse is a low bar and I would point out that per capita, our debt in Oregon is much higher than California's.