The Oregon Biz Report - Business News from Oregon

By J.L. Wilson,
By Associated Oregon Industries
Oregon’s largest business advocate

Last week, The Standard, Portland Business Alliance and Associated Oregon Industries hosted Glenn Spencer, Executive Director of the Workforce Freedom Initiative, US Chamber of Commerce. Mr. Spencer gave a presentation to members on the federal legislative and regulatory agenda of Organized Labor.

Organized Labor facing major challenges. Unions across the US are facing major challenges which are driving its legislative agenda. The primary challenge faced by unions today is declining membership, which has fallen from 35 percent of the workforce in the 1950′s to just over 12 percent today.  Most notably, the failure of unions to recruit private sector workers has translated into just 7.2 percent union membership in the private sector compared to 37 percent unionization among government workers. In addition to membership problems, most union pension plans are now in “endangered” or “critical” status, meaning they will have difficulty paying out promised benefits.

Portland is one of the largest cities that has no sales tax
By Oregon Tax News,

A recent report released by the Washington D.C. based Tax Foundation, shows how major metropolitan cities compare with sales tax.  Portland and Anchorage, Alaska have the title of the largest cities in the country with no sales tax. The study evaluated cities with population greater than 200,000, which there are 107 in the country.  Behind Portland came Honolulu, Hawaii with 4.5% and a variety of cities in Virginia at 5.0% combined sales tax.  Oregon, Alaska, Delaware, Montana and New Hampshire do not have a statewide general sales tax.  The state with the highest sales tax is Tennessee (9.4%), followed by with California (9.08%) and Arizona (9.01%).  Of the major metropolitan areas, the cities with the highest sales tax were Birmingham, AL and Montgomery, AL at 10%.

States with highest sales tax

1. Tennessee (9.4%)
2. California (9.08%)
3. Arizona (9.01%)
4. Louisiana (8.69%)
5. Washington (8.61%)
6. New York (8.52%)
7. Oklahoma (8.33%)
8. Illinois (8.22%)
9. Arkansas (8.10%)
10. Alabama (8.03%)

August Oregon Ad Watch
By Oregon Small Business Association,

Two full-page advertisements stood out in the month of August for the state’s largest newspaper.

First, Wal-Mart placed a full-page ad going head-to-head with Office Depot by listing 16 school items by price comparison.   The key sell was highlighting the 45% savings and trying to nab the coveted back-to-school market.

Second, in response to the nationwide egg recall the egg farming industry put out a full-page ad.  The key phrase in their simple letter states, “The potential affected eggs, which make up less than 1% of all US eggs, have been removed from store shelves.   You may be wondering if eggs are safe to eat.   Yes they are.”

See larger size of ads below.

U.S. Chamber of Commerce Magazine business poll.

47.1% — Government spending
39.7% — Unemployment rate/overall health of the economy
3.5% — Energy and the environment
2.2% — National security
2.9% — Social issues
4.6% — Other

Latest state economic forecast and impacts of Measures 66 & 67
By Economist Dr. Eric Fruits,
Econinternational

This is a “told you so” story about Measures 66 & 67 …

In December 2009, Randall Pozdena and I published research forecasting the impacts of Measures 66 and 67 on Oregon employment (a copy of the study is attached).  Our study was based on thorough research of peer-reviewed literature and a quantitative analysis of the taxes and economic growth across the U.S. and over a long period of time.  We concluded that the tax measures would have a significant negative impact on Oregon’s employment picture, as shown in Exhibit 1 of the report.

By Tony Wendel
Oregon Employment Department

In Oregon, the union membership rate – the percent of wage and salary workers who were members of a union – rose slightly from 16.6 percent in 2008 to 17.0 percent in 2009. The rate increased even though the number of wage and salary workers belonging to unions decreased by about 9,000 (4%) due to a much larger decrease in the total number of wage and salary workers of about 95,000 (6%).

“This Onerous Provision Will Cost Jobs.” A Good Letter Urging Repeal of New 1099 Rules
By Joseph M. Wallin
Davis, Wright, Tremaine LLP
NW law firm

Many, many business groups and writers have come out against the new 1099 rules which were contained in section 9006 of the “Patient Protection and Affordable Care Act” (P.L. 111-148) (the health care reform bill). I am not aware of any commentators who are not urging the repeal of the new rules. Why? Well, because they are onerous and ridiculous.

If you are in business, and you buy goods in the course of your business, you are going to have to issue Forms 1099 to the businesses from which you buy more than $600 in goods during the year.

By Oregon Small Business Association,

Kantar Media shows where ad spending has increased and decreased in select industry markets.   The time represents from Jan-May 2009 period and compares ti to Jan-May for 2010.   Government has been increasing while travel has been decreasing.

(Data source is Kantar Media.  Chart by OSBA).

Surprise! Wall Street Reform Bill Contains Massive New Affirmative Action Requirements
Written by Wayne D. Landsverk
Miller Nash LLP,
Oregon and Washington Law Firm

With all the media attention given to the Dodd-Frank Wall Street Reform and Consumer Protection Act, there was almost no mention of a far-reaching provision (Section 342) that imposes new diversity requirements on businesses in or connected to the financial industry.
Section 342 requires that within six months of July 21, 2010, each of the following federal agencies establish its own Office of Minority and Women Inclusion (“OMWI”):

Workplace Regulations Are On The Way
By Tom Donohue,
President and CEO, U.S. Chamber of Commerce

1.  The Employee Free Choice Act
2  Labor Dept. rules for employers justifying worker classifcation
3.  New OHSA plan forcing employers to track injuries
4.  Federal agencies to union-only labor agreements

The Employee Free Choice Act—better known as card check—could be making a comeback. In a recent interview, AFL-CIO President Richard Trumka said, “I think you’ll see the Employee Free Choice Act come up again. I think you’ll see it, probably, before the end of the year.” If Trumka’s prediction comes true, it couldn’t happen at a worse time. With unemployment at 9.5%, it makes absolutely no sense to enact job-killing legislation that will also take away workers’ rights to a secret ballot in unionization votes.

More Than One-Third of Employers Use Social Media to Promote Their Organizations
New CareerBuilder Survey

– One-quarter of companies leverage social media to recruit and research potential employees–
– Twenty-nine percent of companies with 500 or fewer employees utilize social media–
– More than half of leisure and hospitality organizations use social media; tops industries surveyed–

Remember that Political Ads By State and Local Candidates Need to Have Candidate’s Recognizable Voice or Picture to Be a Use
By David Oxenford,
Davis, Wright, Tremaine LLP
NW law firm

While most of the FCC’s political broadcasting rules have remain unchanged for almost 20 years, each year there are a few new wrinkles that arise, and seemingly a few misconceptions that make the rounds among advertising agencies that work with political candidates.

One such misconception that seems to be circulating this year is that an ad for a state or local political candidate does not need to have their voice or picture to be a “use” under FCC rules.  Only “uses” are entitled to lowest unit rates and subject to the no censorship provisions.  For some reason, agencies in several states have tried to convince broadcasters that, as long as a spot has a sponsorship identification at the end (and, for television, a textual sponsorship identification 4% of screen height for 4 seconds), that spot is a “use.”  But that is not correct.  A “use” requires that the recognizable voice or picture of a candidate be in the spot – and that is true even for spots for state and local candidates. 

A Man of Principle and Work: Dick Wendt
By Bill Conerly,
Conerly Consulting, Businomics

Dick Wendt, the founder of Jeld-Wen, passed away recently.   Back in 1996 I sat in Dick’s office turning down a job offer.  He wanted me to go to work full time on   public policy issues. He emphasized how much good could be done for people through public policy changes. I looked out the window of his office and across the street to Jeld-Wen’s large Klamath Falls plant, and remarked that a tremendous  amount of good was being done through providing people with quality doors and windows. I was trying to explain to a great capitalist the value of – - – capitalism!

Dick founded Jeld-Wen just a few years out of college, taking over the assets of a closed saw mill.  He spent 8 hours with his workers, and another 8 hours by himself doing set-up and maintenance so that his people would be as productive as possible.  The company grew to 20,000 employees and $2 billion in annual sales (accoridng to outside estimates). Dick appeared on the Forbes 400 list a few times, which embarrassed him greatly. On one of my visits to Klamath Falls, Dick drove me to lunch in an old Jeep Wagoner with a small dent in the front fender.

Business Report News Note: The good news is that Washington added 3,100 jobs helping the unemployment rate to drop for the fourth consecutive month (see report here).  The bad news is that Oregon unemployment rate has been unchanged for nearly nine months.

Oregon’s Employment Situation: July 2010
By Oregon Employment Department,

Oregon’s seasonally adjusted unemployment rate was 10.6 percent in July, essentially unchanged from 10.5 percent in June. The rate has been between 10.5 and 10.7 percent for the most recent nine months. Oregon’s unemployment rate was 11.4 percent in July 2009.

Look who wants to give Washington state an income tax.
Wall Street Journal Editorial Board,
8-14-2010

The battle between taxpayers and government unions will define the fiscal future of the 50 states, and the newest battlefield is Washington state. That’s where a few rich taxpayers led by Bill Gates Sr. and the Service Employees International Union (SEIU) are bankrolling a November ballot measure to create the state’s first income tax.

And not just a toe-in-the-water tax. They’re diving into the deep end with a proposal that would immediately impose a 5% tax rate on income above $200,000, or $400,000 for married couples. The rate would climb to 9% on single filers making $500,000, or $1 million for couples.

As State drowns in projected deficits, the soda tax looks alluring
By Oregon Tax News

The Oregon Public Health Division is working on legislation to enact a tax on sweetened beverages.    This would include many sodas and other sweetened drinks like Gatorade and ice tea drinks.  The cost of a half-cent per ounce would equal to be about 6-cents per soda bottle.   This beverage tax would generate over $160 million  for the State of Oregon Government.

The Health Division is advocating the proceeds be used for anti-obesity programs.     The proposal also comes at a time when Governor Kulongoski has announced that the state is $10.3 billion deficit over the next ten years.    Many product taxes start with a dedicated fund idea and then get diverted to pay for other programs.   This is the fear of every taxpayer who finds a continuing tax increase on more and more products.

Regaining America’s Competitive Advantage: Making our Immigration System Work
Executive Summary
By U.S. Chamber of Commerce

..The analysis in “Regaining America’s Competitive Advantage: Making Our Immigration System Work,” released by the U.S. Chamber of Commerce and the American Council on International Personnel (ACIP), takes a balanced approach to employment-based immigration. It recognizes that problems exist that should be addressed through administrative or legislative means. Moreover, it is understood that in any dynamic situation where a market exists not all will succeed and this will result in anger towards traditional targets, particularly the foreign-born. This analysis finds the admission of high skilled foreign nationals provides significant benefits to the U.S. economy and much of the criticism levied at such foreign nationals and their employers is misplaced.

A recent report by the Department of Professional Employees, AFL-CIO – Gaming the System – gathers together arguments that have become traditional for those advocating a closed door policy for America. As such, it is worth examining the report, explaining where its portrait of highly educated foreign nationals is incomplete or inaccurate, while also addressing which immigration policies are most likely to create more jobs and innovation in the United States.

SNL Fans Prepare for ‘Portlandia’
By Independent Film Channel

IFC has greenlit “Portlandia,” an original comedy series that lovingly skewers illustrates the people and values of Portland, Ore. We’re guessing a lot of recycling, rain gear, and coffee drinking will be happening.  Fred Armisen of “Saturday Night Live” fame and Carrie Brownstein, the vocalist/guitarist from Portland band Sleater-Kinney, will star in the series, alongside guest stars Kyle “Twin Peaks” MacLachlan and Aubrey Plaza from “Parks and Recreation”.

In the series’ premiere, viewers will meet the owners of a feminist book store; a militant bike messenger; an artsy couple who put cut-outs of birds on everything; and a punk rock couple negotiating a “safe word” to help govern their love life. All presented with the trademark humor found in Carrie Brownstein and Fred Armisen’s previous work. Yeah, we’re talking about their brilliant collaboration Thunderant.

The New Fed Policy: Better Than Nothing
By Bill Conerly,
Conerly Consulting, Businomics

The Fed’s decision today was mildly good news in terms of

1. the Fed’s understanding of the sluggishness of the economy, and
2. the small change in policy.

For those of  you into original sources, here is the Fed’s statement

The economy is certainly growing, but not fast enough to make up much of the ground lost in the recession.  We are still at least six percentage points below our potential, so the risk of going overboard on monetary stimulus is slight. The good news: the Fed is starting to understand this.

6 keys to Starbucks record-breaking rebound
By Oregon Small Business Association

In July, Starbucks announced record earnings during the third quarter as U.S. sales rose 9%. The Seattle Coffee Giant participated in new marketing strategies to spur the record comeback that reduce the elitist view of $4 coffee drinks and offer cheaper alternatives to broaden the market outside Starbucks stores.

“There’s no question that improving customer service, quality of beverage and speed of service has had a big impact on revenues,” CFO Troy Alstead said in an interview with the Wall Street Journal.

Burt Helm of Bloomberg reported that the corporation’s fiscal-third-quarter earnings rose 37% based on increased sales. Starbucks also reported earning $207.9 million as compared with $151.5 million a year earlier. In addition, revenue increased from $2.4 billion to $2.61 billion.

Some new marketing strategies include: