by Oregon Senator Doug Whitsett 3/24/11

The Oregon Legislature recently enacted two laws to extend the payment of benefits to unemployed Oregonians. This is good news for unemployed Oregon families. However, it may be bad news for future job creation.

Senate Bill 637 provides for the extension of federal unemployment benefits by changing the method of calculating those benefits from a two year formula to a three year formula. This change allows the state to take advantage of another $214 million in federal funds to be used to extend unemployment benefit payments to Oregon families from July until the end of this year. This act also requires the state to draw $11 million from the Oregon Unemployment Trust Fund in order to meet federal requirements.

Senate Bill 638 provides for the extension of state unemployment benefits totaling up to $30 million. This money will be drawn from the Oregon Unemployment Trust Fund. The bill was enacted primarily to extend support for about 17,500 Oregon families that have exhausted their unemployment benefits. Extended state payments will bridge the gap until the extended federal payments become available in July.

Unemployment tax rates for Oregon employers automatically adjust to account for the increased demand on the Oregon Unemployment Trust Fund. Those premiums are already at the highest level allowable under Oregon law. Oregon business employers are now paying more than $250 million per year in additional unemployment insurance taxes to pay for the previous extensions of Oregon benefit payments. The two recently passed legislative acts will cause about $35 million more to be drawn from the already stressed Oregon Trust Fund. The certain result is that the business community will be required to continue to pay the highest unemployment insurance rates for a longer period to replenish the fund.  Every dollar paid in unemployment insurance premiums is a dollar that cannot be used to create new jobs. Simply put, the repeated extension of Oregon unemployment benefits means less money to hire the unemployed.

These were difficult votes for me to make because I know that neither choice will actually address the causes of the unemployment problem.

The current official unemployment rates for counties that are entirely included in our Senate District 28 are;

• Crook County 17.6% unemployed with more than 1,000 families already having exhausted their unemployment benefits,
• 
  Klamath County 13% unemployed with more than 2,250 families having exhausted their benefits,
• 
  Lake County 14.5% unemployed with nearly 200 families having exhausted their benefits.

We all know that these published unemployment rates are grossly understated. For instance, the Oregon Department of Employment quotes the state unemployment rate at 10.2%. However, the Department also quotes the total unemployed, plus all persons marginally attached to the labor force, plus total employed part-time for economic reasons to be 19.5% of the Oregon labor force. More simply stated, nearly one out of every five employable Oregonians are either unemployed or
underemployed. When we apply that formula to Crook County we find more than one out of every four employable people are without a full time job.

My yes vote on both bills to extend the unemployment benefits was certainly the right vote for those tens of thousands of people who cannot find work because there are no available jobs.

On the other hand, the yes vote also perpetuated the problem by taking money from Oregon businesses that could otherwise have been used for business expansion and job growth. The annual cost to business to pay the increased unemployment insurance taxes is actually about equal to the tax increases that resulted from Measures 66 and 67. 

The ability of the Oregon business community to continue to pay these huge tax and unemployment premium increases is finite. At some point the escalating costs will drive them out of business, creating even more unemployment.

This downward spiral must be interrupted by creating a better environment for Oregon businesses to form and to flourish. We have no hope of improving the outcomes if we fail to address the actual causes of the unemployment problem.

The sad truth is that our Oregon business community is being stifled, smothered and repressed into submission by excessive taxes, charges, regulations and land use restrictions enacted by local, state and federal governments. Both new business start-ups and growth in existing businesses have virtually ceased. Job growth has stagnated, per capita income has fallen nearly 10% below the national average, and investment capital is leaving Oregon rather than being brought to the state.

Moreover, our State’s natural resource and manufacturing sectors, that have traditionally sustained our communities, have been systematically targeted for regulatory reduction. Government leaders continue to perpetuate the myth that regulation for the alleged purpose of environmental preservation creates a favorable environment for business to locate in Oregon. The fact of the matter is that decades of those failed policies have both prevented business in-migration and have driven existing businesses out of the state. The certain result is Oregon’s persistent national leadership in unemployment, poverty, hunger and homelessness.

In my opinion, Oregon’s economy and job growth will not recover until we declare Oregon “open for business” and actually take action to make that happen. That action must include revisions in what is now among the highest personal income tax, corporate excise tax, capital gains tax and inheritance tax in the nation. We must stop punishing those with the temerity to attempt to invest their capital in Oregon opportunities.

Further, that action must reverse the burden of the growing plethora of additional costs of doing business in Oregon. The unconscionably long delays in obtaining required permits as well as the
myriad charges, fees, licenses, and registrations make it nearly impossible to invest venture capital in our state.

Land use and environmental regulations must be scaled back to achieve a balance between the environment conditions that we need to achieve and the use of our resources that is required to sustain our families and communities.

In short, we must get our government out of the way of economic growth and job creation.

Remember, if we do not stand up for rural Oregon, no one will.

Best regards,

Doug