February 6, 2009 Volume 110 Number 3

Recession deepens

But help is on the way, elected leaders say

By DON McINTOSH, Associate Editor

It’s getting scary out there. The recession that began officially in December 2007 worsened rapidly in November and December. Daily announcements of business closures and mass layoffs are pushing up unemployment numbers to levels not seen in decades.

As of December, unemployment was at 7.2 percent nationally, while in Oregon, the figure was 9.0 percent, the highest level since 1983. As of December, about 175,000 Oregonians were unemployed, 70,000 more than the year before.

And sectors where union workers are concentrated — like manufacturing and construction — are some of the hardest hit. John Mohlis, executive secretary-treasurer of the Columbia-Pacific Building & Construction Trades Council, said 10 to 25 percent of local construction union workers were on their unions’ out-of-work lists as of mid-January, depending on the craft.

“My guess is some are going to be out of work for quite a while,” Mohlis said — because few projects are in the pipeline for the warm-weather busy season.

“The contractors have nothing to bid on,” said Frank Regalado, business manager of Elevator Constructors Local 23. “I think by June we’re going to have problems.”

At the Daimler Trucks North America Portland truck plant (formerly Freightliner) 192 workers were laid off January 30, including members of Machinists Lodge1005, Teamsters Local 305, Sign Painters and Paint Makers Local 1094, and Service Employees Local 49. The company had earlier planned to start week-long shutdowns once-a-month, but instead decided to lay some workers off.

For Daryl Payne, 39, the layoff means he’ll go from $860 a week to $482 — the maximum weekly unemployment benefit. Payne, a 15-year production technician, is looking at taking two years of welding classes at Clark College in Vancouver, which he hopes will help him become a union steamfitter like his father.

Some unions have worked out creative ways to cushion the blow of layoffs. In McMinnville, Cascade Steel Rolling Mills laid off 77 union workers in December, leaving just over 300.

When United Steel Workers Local 8378 President Joe Munger learned further layoffs might be coming, he met with company managers and they came up with a way to match production to lowered demand. Members approved a “rolling layoff” by a strong margin. The way it works, the company shuts down department-by-department for a week or two at a time. Workers get unemployment benefits for the weeks they’re off. Cascade Steel guarantees everyone will work at least two weeks out of every four, and agreed to pay full health care premiums for at least the first month. The two sides will meet each month to extend the deal. It’s good for the company because they’ll be ready if and when demand rebounds; steel industry analysts say that could be six to nine months off. Plans for federal infrastructure investment could help.

As of press time, the U.S. House had passed and the U.S. Senate was considering a $819 billion rescue bill — HR 1, the American Recovery and Reinvestment Act of 2009. The bill increases benefits to the poor and unemployed, lowers taxes on working people, and increases spending on a wide array of infrastructure improvements in order to put people back to work and stimulate economic activity.

The bill would extend unemployment benefits by several months, increase the weekly benefit $25 for all unemployed workers getting benefits, and for the first time, allow unemployed workers who don’t have insurance to get on Medicaid — or have up 65 percent of their COBRA payments reimbursed so they can keep employer-provided insurance. It would also increase funding for food stamp benefits, student financial aid, housing assistance, and employment and training programs. It would increase the earned income tax credit, which provides checks to households too poor to owe taxes. And it would provide a “13th check” (a bonus of one-month’s worth of benefits) to 7.5 million of the poorest people in America — the blind, disabled, and seniors who are entitled to Supplemental Security Income.

A tax credit for individuals would put up to $500 a year directly onto paychecks, through reduced withholding. Workers too poor to be withholding income tax would get the money as a direct subsidy.

To increase employment, the bill appropriates money for highway construction, mass transit, to expand weatherization, to modernize the nation’s electricity grid, promote energy efficiency, improve maintenance at the Forest Service and National Park Service, do environmental cleanup, do wildland fire management, renovate elementary and secondary schools, repair Veterans Administration hospitals, improve maintenance at Veterans cemeteries, and expand broadband Internet Service in rural areas.

State governments would get grants totaling almost $40 billion to stabilize budgets rocked by the downturn.

And there are additional provisions. Employers who get funds under the act will be required to use the government’s E-Verify system to make sure their employees are legally allowed to work in the United States.

All Oregon and Washington Democrats voted for the bill and all House Republicans voted against it.

If passed, the federal stimulus is expected to have a multitude of local trickle down effects. For example, Portland Public Schools could get $20 million for infrastructure improvements, said spokesperson Matt Shelby. Shelby said the money would go to energy efficiency upgrades — new roofs, boilers, duct work, and windows.

The bill also expands the borrowing authority of the Bonneville Power Administration by $3.25 billion. BPA is the federal power agency that supplies much of the electricity in Washington and Oregon. BPA spokesperson Scott Sims said that means a green light for nine projects that otherwise would not have happened, including 4,700 megawatts worth of new wind farms, several new substations along the Columbia Gorge and I-5 corridor, and 600 miles of new transmission line. Oregon’s share of the projects could be the equivalent of about 1,000 construction jobs.

“Infrastructure spending is good bang for the federal buck,” said Oregon Congressman Peter DeFazio in a press statement after the House vote. “It has been proven time and again as a way to create jobs and stimulate and an ailing economy.”

State governments don’t have the bottomless credit of the federal government, but several legislators told Oregon labor leaders Jan. 24 that wouldn’t stop them from digging deep to fund infrastructure.

“We are not going to sit on our hands in this session of the Oregon Legislature and do nothing,” Oregon Senate President Peter Courtney told participants at a legislative conference organized by the Oregon AFL-CIO.

As of press time, the Legislature was expecting to finalize this week a bill to authorize $175 million in bonds to pay for transportation projects and deferred maintenance and capital construction projects at 11 state agencies, 17 community colleges, and seven universities. Gov. Ted Kulongoski pledged to sign the bill, which he said would enable projects from Portland to Pendleton to break ground by April 1.

Even local governments were getting in on recovery plans. On Jan. 13, Portland City Council unveiled a “Portland Job Creation and Business Stimulus Package” that consisted of fast-tracking, over the next 12 months, city public works and construction projects that had been slated for construction over one to three years.

“It’s very encouraging that on all levels — federal, state, and city — government leaders are talking about what they can do to get infrastructure projects out the door as soon as possible,” said building trades Executive Secretary-Treasurer Mohlis.

What remains to be seen is whether the economy can be rescued by public construction jobs and extra money in the hands of the poorest. The current wave of stimulus plans differs from those of the Bush years in that they emphasize infrastructure spending over tax cuts. “Infrastructure,” DeFazio said, “is an investment that we can in good conscience pass on to future generations, as opposed to a tax cut that will be gone, with little to no benefit to the economy, in a matter of months."

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