The Oregon Biz Report - Business News from Oregon

I just updated my economic forecast, taking into account the new GDP data released by the government last week.  Fourth quarter growth came in stronger than I had expected–and everyone has been telling me I’m an optimist!

Here’s how the new forecast looks:

Employers Share Top Staffing Challenges

Offering more flexible work arrangements – 28%
Investing more in training – 21%
Promising future benefits (raises  when the economy picks up) – 18%
Offering more performance-based incentives (trips, bonuses) – 16%
Providing higher salary without the title – 11%
Providing both higher title and salary – 10%
Providing higher title without the salary – 7%
We haven’t been able to hold on to top talent – 6%

CareerBuilder Survey:  – While hopeful economic news has some companies breathing a cautious sigh of relief when it comes to headcount, others continue to face staffing challenges. According to a new CareerBuilder survey, being able to provide competitive compensation (34 percent), maintaining productivity levels (33 percent) and being able to retain top talent (31 percent) are organizations’ top staffing concerns this year. The survey was conducted between November 5 and November 23, 2009, among more than 2,700 employers.

By Tim Duy,
Oregon Economic Forum
University of Oregon Index of Economic Indicators.
sponsor, KeyBank.

The University of Oregon Index of Economic Indicators™ rose 1.2 percent in December to 86.8 (1997=100) from a revised November figure of 85.8.  Since reaching a low in July 2009, the UO Index has risen for five consecutive months as the Oregon economy pulled out of recession. The UO index was revised to account for an annual update of seasonal adjustment and standardization factors; the revisions resulted in only minor quantitative changes.

Highlights of the report include:

•    Labor markets showed welcome signs of improvement. Initial unemployment claims continue to edge down, signaling a slow but steady reduction in the pace of layoffs, while employment services payrolls – largely temporary employment firms – extended the previous month’s modest improvement, rising to the highest level since last July.  This is a sign that some firms need to bolster their workforce in the face of firming economic activity.  Note that overall nonfarm payrolls posted a 2,900 gain on employment increases in manufacturing, education and health services, and the trade, transportation, and utilities sectors.

Federal Government to Crack Down on Misclassified “Independent Contractors?”
by Dennis Westlind
Stoel Rives LLP, Attorneys at Law

It’s always risky to misclassify someone who should be an employee as an “independent contractor,” but President Obama’s 2011 budget proposal will increase the risks for employers.  According to this budget summary from the U.S. Department of Labor, the misclassification of employees as contractors is estimated to cost the Treasury Department over $7 billion in lost payroll tax revenue over the next ten years.  To help make up for this shortfall, the proposed budget includes funds earmarked for a “joint proposal” between the DOL and the Treasury Department to eliminate legal incentives for such misclassification, and an additional $25 million to target misclassification with 100 additional enforcement personnel and competitive grants to boost states’ incentives and capacity to address this issue.

By: J.L. Wilson
Associated Oregon Industries,

February 2010 Talking Points on Education and Fiscal Policy

1. Senator Diane Rosenbaum (D-Portland) is introducing legislation – SB 1045 – that would prohibit employers from using credit reports to make employment decisions. Over half of Oregon employers use these types of reports in hiring key personnel, usually in positions of “trust” (handling company assets, customer assets, or sensitive information).  The AOI Board of Directors voted to oppose this legislation as introduced, but AOI will work with the sponsor and others to explore opportunities to make the legislation workable for employers.

Markets Don’t Stay Bad Forever: Cycles, Trends, and an Oil Refining Example
By Bill Conerly,
Conerly Consulting, Businomics,

Valero Energy Corp. is selling oil refineries that it had bought a few years ago.  We used to have a shortage of domestic refining capacity, but now we have an excess—even though there has not been a new refinery built in the United  States in years.  Capacity at existing refineries was expanded through new technology, our demand for refined products lagged, and imports of refined products have increased, thanks to expanded capacity overseas.  (It used to be that only crude oil was shipped in, but now gasoline and diesel are imported in tankers.)

Who would buy those refineries from Valero?  One very sharp businessman named  Thomas  O’Malley, the same guy who sold the refineries to Valero back in 2005.  He’ll likely pick up his old properties at a steep discount to the price he received for them near the peak of the market.  The Wall Street Journal quotes O’Malley:  “Markets don’t stay bad forever.”

Excerpts from Senate Democrat February 2010 Agenda

Getting Oregonians Back to Work

Last session, through our investments in transportation, infrastructure, health care, and affordable housing we created and maintained thousands of family-wage jobs in all 36 counties. In the February session, we will continue to prioritize preserving existing jobs, creating new jobs, and giving unemployed Oregonians new opportunities to return to the workforce. Senate Democrats will do this by:

• Supporting unemployed Oregonians by providing emergency benefits for an estimated 18,600 workers so they can feed their families while continuing to look for work

• Providing oversight and accountability over the 2009 session jobs packages to make sure our investments are putting Oregonians back to work

Strategy for Measure 67 Taxes – Do you operate your business as a C corporation?
By Patrick J. Green and John A. DiLorenzo, Jr.
Davis, Wright and Tremaine LLP

With the Jan. 26, 2010, passage of Measure 67 in Oregon, taxes on corporations with sales in the state will increase retroactively to 2009. C corporations will pay a higher minimum tax and higher corporate income tax on income in excess of $250,000. Other business entities will pay an increased minimum tax regardless of profits.

This advisory provides a brief analysis of Measure 67’s implications and describes a strategy for tax reduction for businesses operating as C corporations.

New corporate minimum tax

C corporations filing Oregon income tax returns on Oregon source income were targeted for tax increases under Measure 67. Before passage of Measure 67, businesses operating as C corporations paid a minimum annual tax of $10 and a 6.6 percent income tax on profits. Measure 67 has increased the minimum annual tax to $150 regardless of profits.

The Vancouver newspaper — The Columbian Editorial
Oregon voters deliver two more reasons for businesses to move to Clark County

Thursday, January 28, 2010

Whatever government revenue might be generated by the passage of Measures 66 and 67 in Oregon on Tuesday, make no mistake that one result is simple and straightforward. It has allowed those who make decisions with taxpayer dollars to skate. Rather then solving the problem of paying too much out to everything — including salaries and benefits to Oregon state workers — legislators simply asked for, and received, more.

We hope Washington state is not next, but we suspect that all states — including ours — are in the reaching-deeper-into-our-pockets mood instead of getting their expenses under control.

In the meantime, we put out the welcome mat here in Clark County for Oregonians who want some relief. Our community has always been a great place to do business; as of Tuesday, it just got better. More than any immediate or statistical impact (we noticed no long line of northbound trucks moving companies here Wednesday morning), the benefits to Southwest Washington will evolve slowly and will be related to overall business climate. Even several days before the vote, a Saturday story by The Columbian’s Libby Tucker included this quote from Bart Phillips, president of the Columbia River Economic Development Council in Vancouver: “(Tuesday’s election has) already had its impact whether or not it passes, just because the specter of it causes instability. It shows the legislature is willing to increase corporate taxes …”