Our unemployment is historically higher than the national average. Currently, Oregon’s unemployment is the third highest in the nation. The problem of unemployment has plagued Oregon since I have been the job market. Is Oregon just unlucky? Is it a curse? Is it us?

One answer is that Oregon’s economy happens to rely on industries that are heavily impacted by recessions. That, is not our fault. It is just how our economy is. However, the impact of these economic downturns is multiplied by the state’s poor leadership and understanding of how economics works. When it comes to the health of the economy, the state government looks for quick fixes to make it look like the government is doing something.

We can’t control the economy. But, we can impact it. For the 1 in 10 unemployed Oregonians, this is the issue for 2010. Our survival as a state depends on us building an economy that can consistently deliver jobs. To understand our economic problems, we are going to discuss why recessions hit Oregon so hard. Then, we are going to discuss opportunities to put Oregonians back to work.

Why do Recessions Impact Oregon so hard?

Manufacturing, tourism, and agriculture all make up major portions of Oregon’s economy. They are all heavily impacted by recessions. I want to discuss manufacturing and agriculture in depth. Tourism doesn’t need an in-depth look because it is impacted by people taking less vacations because of job losses.

Manufacturing

Manufacturing goods are impacted by the ups and downs of the economy. Luxury items made in Oregon like RVs and boats have been severely impacted. Both items require financing to purchase. When the credit crunch began, these were very easy items for people to do without. Second, Oregon’s size is a manufacturing drawback. It limits the area that goods can be made cheaply. We build things along the major transportation corridors to Washington and California to reduce the costs to ship them. So, our manufacturing base won’t be expanded outside that small area.

Agriculture

I divide agriculture into food production and natural resources. The food producing activities are pretty recessions proof. A family of four will cut a lot of other expenses prior to cutting wheat or beef out of their budget. Wine, cheeses, and beers however can be impacted by job losses because people don’t need them.

By natural resources, I mean fishing, timber, and hunting. Natural resources are impacted because of prices and environmental regulation. In a shrinking economy, demand for raw materials is less which translates into dropping prices for Oregon’s natural resources. Additionally, Oregon has never found the middle ground between environmental regulation and job creation. We need to manage natural resources for the benefit of all Oregonians over all time. I am planning on writing another post on how to balance economics and the environment. Getting that right is critical to our future.

Policies that Create Jobs for Oregonians:

In order to control our economic situation. The state government needs to follow policies that either bring business to Oregon or provide incentives to Oregonians and their businesses. Below, though not a complete list, are just a few ideas to provide incentives to get Oregon out of this economic disaster.

• Protect our competitive advantage: Currently, our economy depends on us being able to make goods at a relatively cheap rate. Oregon can’t keep firms here by force of law. We have to create a business friendly environment to keep firms. We have to protect the companies that we have.
• Nurses: We have known about the nursing shortage for years. The Oregon University System needs to be building capacity in the programs that are high demand like nursing. If we can get more Oregonians through the schools, we know that we have jobs available for them. In this case, we are talking about an industry that is recession proof.
• Liquified Natural Gas: The LNG proposals are set to bring jobs to Oregon. Some of the gas will be transported through Oregon to other markets. This is a complicated issue, but how do we get to yes? How do we address the concerns of people involved? Energy is an area that is relatively recession proof.
• Manage our forests: We need to be able to manage forests. If we could cut trees, we could eliminate the Secure Rural Schools Act that has held our counties hostage for a decade. The expiration of Secure Rural Schools Act represents an impending catastrophe. We have spent hundreds of hours and thousands of dollars lobbying the federal government for a handout. Oregon has the talent and work ethic to be self-sufficient. We just need to be given the opportunity. If we are allowed to manage our forests, we could reduce the fire hazard that threatens to put thousands of tons of carbon in the air. Most importantly, we could protect our healthy trees from devastating pests like the bark beetle.
• Reduce the capital gains tax: Oregon has the second highest capital gains tax in the country. Capital gains taxes the money that is made from stocks and investments. However, small business requires access to affordable capital to invest in growing their business. We want to promote Oregonians to invest and keep that money in Oregon. If we can’t reduce the tax rate, then maybe we allow Oregonians to keep the first $5,000-$10,000 of their capital gains tax free. Investing in Oregon is an investment in our future.

Here are additional ideas: Invest in the Port of Coos Bay; Partner with local credit unions to provide micro-credit; invest in fiberoptic lines for rural Oregon to be laid during road projects; make it easier for returning vets to get certifications in Oregon; lease government-owned, dark fiber optic to private industries; promote biomass solutions like Seneca Mills in Eugene; address issues with Eastern Oregon resorts; follow the Main Street Incentive Plan that promotes investment; and by no means is that all that can be done.

The point of this list isn’t that we need to do everything on it. There are some politically sensitive issues. The point is we can do something about this economic mess. We shouldn’t just sit ideally by waiting for jobs to just happen. We’re Oregonians. This economy works for us. We should start acting that way.

Conclusion

In the last decade, the economic growth in Oregon has hidden our poor economic policy. The state government didn’t have to make tough policy decisions when people had jobs. The lesson to be learned is we have to use the rich years to invest in Oregon’s future and prepare for the next downturn. But most importantly, we need political compromises on economic issues so that we create policy that is consistent. We are in tough economic straights in Oregon. But, don’t let anyone tell you there is nothing we can do about it.