The Oregon Biz Report - Business News from Oregon

October Most Ridiculous Lawsuit Poll – The ‘Price of Beauty’ Edition
By Tim Gilmore
By U.S. Chamber of Commerce

Neanderthal Man gave way to Cro-Magnon Man, who gave way to Modern Man, who gave way to The Metrosexual Man – the species of man that routinely gets his hair styled, spends more time shopping than ever before, and is no stranger to the G-T-L. But nobody ever said such progress would be easy – indeed, it can often be traumatic. Case in point, a Maryland lawyer is taking a nail salon to court, calling their policy of charging males $2 more than they charge females discriminatory. He was too distressed by this to even enjoy his evening, so now he wants $200,000 for such an outrage.

Labor Force Participation by Group Unemployment Rates Increased Among All Groups
By Oregon Employment Department

Oregon’s unemployment rate jumped from 6.4 percent in 2008 to 11.5 percent in 2009 as the effects of the recession spread throughout the state. Unemployed Oregonians in all race and ethnicity groups struggled to find employment, but the labor market problems faced by blacks and Hispanics were especially difficult last year. The unemployment rate was 15.2 percent for blacks or African Americans and 14.0 percent for Hispanics or Latinos in 2009. These figures were considerably higher than the 11.1 percent unemployment rate for whites and the 6.0 percent unemployment rate for Asians.

Bend Couple Charged with $4.4 Million Investment Scheme
Federal Bureau of Investigations _ Portland

EUGENE, OR—A federal grand jury sitting in Eugene, Oregon today returned an indictment against Tamara Sawyer, 47, and Kevin Sawyer, 58, of Bend, Oregon, on a variety of charges, including conspiracy, wire fraud, bank fraud, and money laundering.

According to the indictment, defendants Tamara Sawyer, a licensed real estate broker, and her husband, Kevin Sawyer, used three of their companies, Starboard LLC, Starboard Indiana LLC, and Synergyz LLC, to solicit individuals to invest more than $7 million in real estate. Reportedly, defendants enticed investors by falsely promising high rates of return, typically 12 percent, and secured the investments with promissory notes. As stated in the indictment, defendants, rather than investing the money as promised, used it to fund their other companies and ventures and to pay personal expenses, including cars, credit cards, and the construction of their vacation home in Mexico. Additionally, as contained in the indictment, defendants, as the scheme progressed and investors began to demand a return on their investment, used new investor money to pay older investors. According to the indictment, defendants caused investors to lose more than $4.4 million.

Prepaid Registration: Will U.S. Consumers Be Required to Show Photo ID When Buying a Cell Phone?
By Bob Stankey, Danielle Frappier, and Bradley W. Guyton
Davis, Wright, Tremaine LLP

The use of a prepaid mobile telephone by the Times Square bomber has again raised the question of whether the identity of prepaid phone buyers should be verified and kept on file. Currently, there is no requirement in the United States, either at the federal or state level, to register end users of prepaid mobile wireless devices or subscriber identification module (SIM) cards.

Recently, however, Senators Charles Schumer and John Cornyn introduced a bill that would require retailers of prepaid mobile wireless communications devices or SIM cards to verify consumers’ identities and forward certain identification information to the underlying wireless carrier. The bill comes as foreign governments are considering the introduction of similar requirements.

A Note on Public Sector Worker Pay
By Patrick Emerson
Oregon Economics Blog
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I have no beef with Ted Sickinger’s nice piece on compensation for public and private workers. He does as good a job as one could ask for in trying to make sense of the issue, and I especially like how the article emphasizes the entire compensation package, not just salary. For me, the generous benefits helped to make up for the fact that the pay I accepted was far below competing offers from places in California, Ohio and North Carolina. [But they suck and Oregon is sweet!] I also really like the fact that he brought up education and job skills as they are very important considerations in any discussion of pay.

Last Saturday the Wall Street Journal printed this editorial over the State of Washington’s initiative I-1082.  The editorial is below.

Oregon Vs. Washington
By Wall Street Journal Editorial Board

In the battle to promote growth and job creation, Washington state is especially important this election year. While the Bill Gates family and government unions work together to impose a state income tax, the business community is bidding to bust the state monopoly over workers’ compensation insurance.

The fight is over ballot initiative I-1082, which would allow private insurers to compete in the market for insurance providing medical benefits and wage replacement to workers injured on the job. Many large Washington companies self insure, but others are required to buy this insurance from the state Department of Labor and Industries. Washington is one of four states that retains a monopoly, with predictable results.

By Oregon Tax News,

Newspaper circulations are continuing to decline but at lower rate according to numbers released by the Audit Bureau of Circulations. The Oregon newspaper fell 4.05% when the average was 4.99%. This is positive news since in previous cycles The Oregonian has led national average circulation declines.

The only top 25 newspapers to gain circulation was the Wall Street Journal at 1.82% and the Dallas Morning News at .25% growth. The Oregonian circulation change fared 8th best when compared to the other 25 newspapers. All the numbers show a gradual decline in the rate of subscription drops which indicate that most newspapers seem to be settling into longer term levels. Sunday circulation declined an average of -4.45% drop and The Oregonian fared better than this average with a -3.50% decline.

How they rank

1. WALL STREET JOURNAL, + 1.82%
2. DALLAS MORNING NEWS, + 0.25%
3. ST. PETERSBURG TIMES, -0.19%

Trade War: What Does It Mean for Business and the Economy?
By Bill Conerly,
Conerly Consulting, Businomics

“Trade wars” proclaimed recent headlines. Here’s a guide for what business leaders should know about the controversy. There are two battle tactics to understand: exchange rate devaluation, and tariff/quota policy.

The U.S. dollar exchange rate has been falling, while other countries also want their own currencies to fall. However, it’s clearly impossible for every country’s exchange rate to fall. When one exchange rate falls, the trade partner’s exchange rate rises. The easiest way to understand the dollar’s exchange rates with many different countries is to average them, using weights based on how much trade we do with each country.

U.S. Chamber Warns Against Moves That Would Harm Money Market Funds
– Removing Stable Pricing Would Harm Businesses, Investors, and Recovery
BY US Chamber of Commerce

WASHINGTON, D.C.—The U.S. Chamber of Commerce expressed concern over the report issued by the President’s Working Group on Financial Markets (PWG)  regarding the regulation of money market mutual funds.

“Forcing money market funds to float their Net Asset Value will not make them safer and will directly harm American businesses that rely on money funds to finance short-term needs such as payroll and inventory,” said David Hirschmann, president and CEO of the Chamber’s Center for Capital Markets Competitiveness. “We support appropriate steps to preserve and strengthen this vital source of business financing, but floating the Net Asset Value is one proposal that should be rejected outright.”

Survey Reveals Top Areas for Seasonal Jobs
By Career Builders,

CHICAGO, October 20, 2010 – Seasonal jobs may be the foot in the door job seekers are looking for in a competitive job market, according to a new survey from CareerBuilder. Two-in-five employers (40 percent) who are hiring seasonal workers in the fourth quarter this year said they will likely transition some into full-time, permanent employees, up from 31 percent in 2009. The top five areas employers are recruiting holiday help for include retail (33 percent), customer service (31 percent), administrative/clerical support (17 percent) shipping and delivery (12 percent) and hospitality (10 percent). The survey was conducted among more than 2,400 employers between August 17 and September 2, 2010.

Oregon sales, jobs likely to double-dip
By California Lutheran University,
CLU Center for Economic Research & Forecasting

Highlights:
- Oregon will likely avoid a double dip recession, barely.
- Retail sales and jobs will probably show a double-dip.
- Foreclosures will remain elevated, sales are likely to increase modestly and median home prices are expected to remain flat.

Three Essays Below
1.  Oregon Economic Forecast
2.  Economy Review
3.  Status of Real Estate

Measure 71 – Continuing Annual Sessions – Limited (sort of)
By  John Ledger
Associated Oregon Industries

How this works, it’s not what you might think.

There are few things that affect your business as much as a legislative session. In about a week you will get a chance to vote on Measure 71. Annual Sessions for the Oregon Legislature. Let’s take a look at what Measure 71 would change.

Here is where we are now:
In odd years – “Regular Session.” No limit on session length.

In odd or even years – “Special Sessions.” Called by Legislature. No limit on number or length.

– Below are two charts, one showing Oregon’s employment stagnation and the other showing where jobs have grown and shrunk
Data and Analysis from Oregon Employment Department,

Oregon sues to recover $10 million connected to misleading filings by University of Phoenix
– Oregon students and investors suffered because of the company’s alleged practices
By Oregon State Treasurer,

SALEM – Oregon Treasurer Ted Wheeler and Attorney General John Kroger today announced a securities fraud lawsuit against Apollo Group Inc. of Arizona, the parent company of University of Phoenix, and several executives, for misleading investors in the company’s financial statements.

The for-profit college allegedly deceived investors about its revenue between 2007 and 2010, a practice that sparked an investigation by the U.S. Securities and Exchange Commission. The loss to the Oregon Public Employee Retirement Fund as a result of the misrepresentation is estimated at roughly $10 million.

The company’s financial practices also hurt Oregonians who were pursuing higher education. The company allegedly did not follow proper steps when dealing with federal student loans, and improperly canceled loans and left students on the hook financially for classes they did not take.

“With this lawsuit, we are taking a clear stand that we will not tolerate businesses practices like those used by the University of Phoenix to take advantage of their students and their investors,” said Treasurer Wheeler, who sits on the Oregon Investment Council. “As a responsible investor, the Oregon Treasury takes action against companies that violate the public trust and fail to act in shareholders’ best interests.”

“Companies that cook their books will have to answer to Oregon in court,” said Attorney General Kroger.

Apollo Group allegedly misrepresented its income by failing to account for losses that were the result of student withdrawals from classes. The practice was disclosed in an October 2009 filing, at which time Apollo disclosed the SEC investigation.
In reaction to the disclosure, shares of Apollo plummeted, losing 17.7 percent in value in a single day, on Oct. 28, 2009. The pre-disclosure price dropped from $72.97 per share to $60.06 per share, wiping out nearly $2 billion in market capitalization. The Company’s stock price continued to trade lower over the next several months and remained deflated with an average closing price of $58 per share in the 90 days subsequent to the disclosures.

In 2010, Apollo’s stock price continued to crumble in reaction to, among other things, political calls for more oversight of the for-profit college industry, and Congressional hearings that exposed certain of Apollo’s unsavory and improper business practices.  By Aug. 2, 2010, Apollo’s stock was trading in the $46 range, but it was again rocked when it was revealed during a Senate investigation and in a report submitted and presented to Senate investigators by the Government Accountability Office that Apollo was committing widespread fraud in marketing its services to prospective students.  By Aug. 13, 2010, shares of Apollo were trading at $38.94.

In the lawsuit, filed in U.S. District Court in Arizona, Oregon is joining a class action suit and seeking lead plaintiff status.

The suit accuses Apollo Group Inc. and its executives of violating securities law by making statements to investors that were materially false and misleading because they misrepresented and/or failed to disclose information crucial to investors’ ability to accurately assess the risks of their investments.

The Oregon Public Employees Retirement Fund, which had a value of $51 billion as of Aug. 31, is diversified and invested around the world. Oregon invests in several passive strategies, including variants of the S&P and Russell index series.  Apollo Group, Inc. (APOL) is a part of those indices and, therefore, is a holding.

Apollo Group is one of the largest private education providers in the nation and has been in the education business for more than 35 years. There are four locations of University of Phoenix in Oregon.

The company derives a majority of its revenue from federal student loans, and is the largest single recipient of student loan funds in the United States. Institutions receiving loans are required to follow federal regulations, including limits on the percentage of defaulted loans extended to students. Institutions that violate these requirements risk losing their federal loan accreditation.

Forbes Ranks Oregon No. 6 in Business Climate
–Hunt Says Recent Expansions Proof that Oregon is Business Friendly
By Oregon  House Speaker‘s Office

Oregon House Speaker Dave Hunt said today that a new Forbes ranking placing Oregon as the sixth best in the country for business and careers is further proof that the recent wave of relocations and expansions into Oregon is proof that Oregon is business friendly.

Hunt pointed to the Intel expansion announcement set for next Tuesday, plus recent announcements from Vestas, Hi-Tec, Facebook, Fed-Ex and other national companies as proof that Oregon’s business climate is strong and improving. (See list below).

Hunt noted that Oregon moved up four spots from No. 10 a year ago.

More than One-Third of Workers Wish They Had Majored in Something Different in College, Finds New CareerBuilder Survey
By Career Builders

CHICAGO, October 13, 2010 – A tight job market may have some workers pondering their educational paths and heading back to the classroom. According to a new CareerBuilder survey, 36 percent of workers with college degrees said they wish they had chosen a different major in college. More than one-in-four (26 percent) said the market for jobs in their chosen field worsened from the time they entered college and when they graduated. This survey was conducted among more than 2,000 workers with college degrees between August 17 and September 2, 2010.

While more than half (56 percent) of all workers with college degrees reported they found a job in their desired career path within one year of graduation, others’ pursuits still haven’t come to fruition. Nearly one-in-five (19 percent) of all workers with a college degree still have not found a job in their desired field.

By Mimi Henninger,
SPHR, Human Resources Consulting Division Manager,
AmeriBen / IEC Group

A couple of years ago, the news was all about the Baby Boomers reaching retirement age and the estimate that our work force would shrink drastically as this generation started turning 62 and headed out to enjoy some golf. Then the economy took a turn for the worse and many Baby Boomers looked at their retirement savings, did a reality check and decided to stay in the job market. According to Money Magazine, 72% of workers age 60 and over are putting off retirement because they don’t have enough saved to fund their retirement. Lack of savings is not the only reason workers are staying on the job past 60. Other leading factors include enjoyment of their jobs and feeling needed at work, the need for health insurance provided by the employer and the feeling that retirement would be boring.

Studies show that older workers are loyal, reliable and able to keep pace with their younger counterparts. Employers have a real opportunity to benefit from this group if they provide an environment where the older worker can thrive. Conflict and misunderstandings can arise however, as a younger generation steps in to manage this aging population. Some tips on managing the aging workforce include:

Don’t stereotype the older worker – Older workers are individuals just like everyone else in the work group and should be treated as such.

Judge Rules in Favor of NFIB, Allows Healthcare Lawsuit to Continue
By National Federation of Independent Business

Washington, D.C., October 14, 2010— Karen Harned, executive director of National Federation of Independent Business Small Business Legal Center, issued the following statement in response to U.S. District Judge Roger Vinson’s decision, allowing NFIB and 20 states to move forward in their lawsuit against the federal healthcare law:  “Today we are one step closer to overturning the unconstitutional federal healthcare law. NFIB is pleased Judge Vinson ruled in favor of allowing our case to move forward. It is critical to small business owners and all Americans for the court to weigh in on the important constitutional questions at the heart of our lawsuit over the individual mandate.

“Judge Vinson correctly recognized that the individual mandate, which forces all Americans to purchase health insurance, whether they want it or not gives the federal government an unprecedented amount of power over our individual lives.

In his opinion released today Judge Vinson stated (pages 63-64):

Media defends Chamber from White House accusations
by Kevin Ganster
U.S. Chamber of Commerce

Having run with unsubstantiated accusations that the U.S. Chamber used foreign money to fund political ads, the mainstream media is now finding those accusations a little hard to swallow. Examining facts often has that effect. Somewhat surprisingly, the New York Times was first out of the gate on Saturday with a piece saying,  essentially, there is no there there.

Other examples:

• When White House advisor David Axelrod  told Bob Schieffer on “Face the Nation” that it he had no proof of his allegtaion and that it was up to the Chamber to disprove it, Schieffer responded incredulously: “Is that the best you can do?”

• The LA Times reports today that not all Democrats are happy about this attack on the Chamber, saying, 

Washington County stealing the good job growth — or at least the good business headlines as of late
By Oregon Small Business Association,

While most of the state of Oregon suffers the effects of an economic slump, Washington County appears to be booming with new jobs, expanding companies and incentives for new businesses.  The recent positive news in Washington County shows means more jobs for the greater Portland area.

- Nike sees “record” growth,
- Intel sees “record” profits,
- ACS adds 450 jobs,
- Tektronix expands

Beaverton based Nike, Inc. rose to the highest since the company went public in 1980, beating some analyst’s estimates.  Most of the sales growth were in North America and China. Sales from the Nike North American brand have increased 8 percent to $1.9 billion and Nike’s apparel sales rose 16 percent to $515 million.  Sales in China are strong too, with an increase of 11 percent to $460 million.  Orders of Nike products are up 23 percent in China.  Nike has strong brand loyalty and as consumers have more dispensable income, they are choosing to use it on their products.   Intel, which has a large presence in Washington County, set an all-time records for revenue and operating income in the third quarter with a net income of $3 billion.  This is great news for the 15,000 Intel workers in Washington County.