Think again

A little DNA testing tells a lot about Oregon job creation

By TIM NESBITT

You may have missed the press release, but Oregon now has more jobs than ever before and one of the best job-creating economies in the nation. We’re generating new jobs at twice the rate of the rest of the country.

So it won’t be long before Gov. Ted Kulongoski and Republican legislative leaders, whose ideas about government’s role in the economy don’t often coincide, start bragging that they made it happen.

Victory has a thousand fathers. And, a new job has as many proud parents as there are elected officials within its reach. But we don’t usually do any DNA testing.

So, let’s do some testing, starting with the 2003 legislative session. That’s when Kulongoski had just taken office, the state was reeling from its worst revenue losses since the Great Depression, and jobs in Oregon declined to their low point of the recession. Almost every debate on the floor of the House and Senate mentioned jobs — either the promise of new jobs or the fear of losing more jobs if we did or didn’t do what our representatives then proposed.

The Oregon AFL-CIO’s Legislative Updates chronicled four big debates over jobs in that 2003 session. One had to do with the governor’s transportation package. Others revolved around attempts to freeze the minimum wage and to reduce taxes on corporate profits — both of which their supporters said would save jobs or create jobs. The fourth related to raising taxes or cutting services.

So we have four test cases that could provide bragging rights or rebuttals in upcoming debates over the job gains we’ve experienced this year.

Test case #1: The transportation package. Kulongoski was the prime mover on this one, although Republican Rep. Alan Brown became the sponsor of the final bill. The package raised fees on cars and trucks to back revenue bonds that will eventually total $1.9 billion. The promised employment payoff was 4,700 jobs per year when fully implemented. Some 250 of those jobs should have shown up by last June, since the Oregon Department of Transportation was expected to put $100 million into new projects by then. In checking with the Employment Department, I found that employment in road and bridge building in Oregon had increased by 122 jobs between March 2004 and March 2005 — and that each of those jobs would generate another job in businesses that manufacture guardrails, produce concrete and make other construction materials. So this is one jobs bill that appears to be delivering what it promised.

Test result: Positive for Kulongoski. Mixed for the House and Senate Republicans, who split on the package. Negative for Sen. Jason Atkinson, now a candidate for governor, who voted against it.

Test case #2: The minimum wage. House Republicans argued unsuccessfully that we should cancel the voter-approved cost-of-living formula before it started killing off minimum wage jobs. That was when the minimum wage was $6.90 per hour. Now it’s $7.25. And those minimum wage jobs? In the sectors that have the greatest numbers of low-wage workers, the job gains over the past two years for which the Employment Department has data have been exceptional: Food services and drinking places (+8.3 percent ), administrative and support services (+12.3 percent) and crop production (+9.8 percent), compared to a 6.1 percent gain for the economy as a whole.

Test result: Negative for House Republicans.

Test case #3: Corporate tax cuts. The effects of tax cuts generally are harder to assess, since the Legislative Revenue Office (LRO) says tax changes have a gestation period of about five years before their full effects materialize in the economy. Still, LRO’s computer model reveals that the corporate tax reduction championed by Republican Rep. Wayne Scott in HB 3183 won’t be much to brag about when fully implemented. It should produce 21 new jobs at a net cost of about $302,000 per job.

Test result: Nothing to brag about for the majority of Republicans and minority of Democrats who voted for the bill.

Test case #4: Public services. The effects of spending on public services are even harder to measure over short periods of time.

Test result: Inconclusive, with a footnote.

Here’s the footnote: There should be little doubt that public spending can create and support jobs in the private sector. But what’s the best way to spend our tax dollars to achieve that much-desired result?

A Harvard economist named James Medoff has developed a formula that shows how many good-paying jobs are created by different kinds of public spending. At the top of Medoff’s list are: education, which showed more good jobs generated per dollar spent than any other public investment; highways, water and air facilities; and police and fire fighting.

That’s not a bad set of priorities for a gubernatorial candidate either.

Now let the debate about jobs begin. And, let’s make sure it’s an educated debate in which the participants are willing to take some responsibility for what they advocate. We’ll have the test tubes ready.

Tim Nesbitt was, until Nov. 15, president of the Oregon AFL-CIO. He will continue to contribute a column to the Northwest Labor Press. For more information, check out the Oregon AFL-CIO online at oraflcio.unions-america.com