RoguePundit

A "Bouncing Along the Bottom" Recovery

Earlier this week...

It's tempting to present the flattening of Oregon's unemployment rate--at 11.3 percent in October--as good news. But economists, dismal scientists to the core, paint a negative picture.

First, October's number--the same seasonally adjusted 11.3 percent as September's revised rate--remains stubbornly higher than the nation's towering 10.2 percent level.

Second, Oregon's jobless rate hasn't fallen from its 12.2 percent May high because employers have embarked on a hiring spree. On the contrary the state lost another 1,900 jobs in October, officials said Monday, following a revised loss of 6,000 in September.

Instead what appears to be happening is that many job hunters--retirees and nonworking spouses who dusted off resumes as the financial sector imploded and stocks plunged--are leaving the hunt. Their disappearance from the ranks of the officially unemployed lowers the jobless rate, said David Cooke, a state labor economist.

Considering that Kulongoski claims he's a "jobs Democrat" (previous blog here), guess we shouldn't be surprised by the following reaction to that data.

Oregon's recession is over. Or nearly over, state economist Tom Potiowsky declared Thursday.

While there's no state agency that officially designates Oregon either as in or out of recession, Potiowsky told state lawmakers "we have enough indicators that technically the recession has ended in Oregon or is about to."

Don't get too excited. Potiowsky also described the state's economy as "bouncing along the bottom." And it's likely to do that for a while.

Oregon economists are sticking with predictions of a "jobless recovery."

"Jobless recovery" is a noxious oxymoron.

By the way, if Potiowsky sounds familiar, he's the guy whose "accurate" economic forecasts have allowed Oregonians to receive several large kicker checks (previous blog here).

Lagging Economic Growth

It simply amazes me that anyone could write an article on this topic and avoid the elephant in the room.

Officials [from the Oregon Employment Department] predict economic growth will add 160,300 jobs in the state from 2008 to 2018, plus about 85,000 jobs opening as Oregon digs out of the current slump. Another 430,000 jobs will become available during the decade as workers quit or retire, the economists expect.

Any forecast of job growth is welcome during a recession. But the predicted 9 percent gain on Oregon's base of 1,765,900 jobs is slightly less than the increase seen from 1998 to 2008 -- and much slower than in many prior 10-year periods. 

...

Such long-term predictions can be dicey, and economists acknowledge their shortcomings. For example, Beleiciks can't predict the state's long-term unemployment rate, which averages 6 percent historically and sits at 11.3 percent as of September and October.

In 17 paragraphs, where was not one mention of the anticipated population growth over the next decade.  The Oregon Office of Economic Analysis produces two population forecasts, a near-term one through 2015, and a longer-term with estimates every five years through 2040.  Both show Oregon's population growing by an average of over 1 percent a year.  If Oregon's jobs only grow 9 percent over a decade, unemployment will rise.

"Health care is supposed to be the fastest-growing industry and the one to add the most jobs," said Nick Beleiciks, the employment department economist who coordinated the study. "We have an aging population, so we'll have more need for health care in the future."

The 10-year projection shows a state transforming from production to services. While retail trade and professional and business services add jobs, manufacturing -- both traditional and high-tech -- decline.

...

Oregon will lose federal jobs, the report predicts, as the Umatilla Chemical Weapons Depot closes after cleanup and the U.S. Postal Service cuts back. State government employment will grow, as will local government especially, with gains in education hiring.

What's going to pay for that growth in state and local government?

Addicted to Gambling Addicts

Governments at the state and federal level make huge sums by taxing addictions.  Oregon's legislature is so addicted to those revenue streams that there's a constant battle to boost sin taxes, yet squeeze the revenue dedicated to prevention and treatment programs. 

Over the weekend, The Oregonian highlighted some rather impressive numbers regarding who generates how much of the lottery revenue.  

More than half the money the lottery collects from video gambling -- about $375 million last year -- comes from a small number of Oregonians, many with big gambling problems.

These gamblers tell the lottery they lose more than $500 a month, every month. They represent only 10 percent of Oregon's video gamblers but account for 53 percent of the money lost, according an analysis of three years' worth of the lottery's data obtained by The Oregonian under the state's public records law.

And then we were offered this absolutely ridiculous excuse.

"People in the Legislature have no idea about these numbers and the damage that is done to people's lives," says Rep. Carolyn Tomei, D-Milwaukie. "It's a message that frankly wouldn't be welcomed in the Legislature right now, because we've become so dependent on the lottery's money."

It must have been her week to be the designated liar.  The leadership in Salem knows...and chooses to not to rank the issue very highly.    

The lottery is a leading player in statewide campaigns to discourage problem gambling, and 1 percent of lottery profits cover all costs for all gamblers seeking state-funded treatment.

"We understand there is a portion of our players that have a problem with gambling," says Carole Hardy, the lottery's assistant director for marketing. "We try to educate them and their loved ones about what's available to help them."

But the lottery doesn't know how many of its players fit the profile of problem gamblers even though officials acknowledge there are ways to gauge that number. Despite spending tens of thousands a year to learn the habits of their customers, lottery officials don't ask the question.

...

State officials say there are about 74,000 problem gamblers in Oregon. To get that number, researchers ask questions such as: Are you borrowing money, lying, not paying bills, or losing time at work or home -- all to keep gambling?

And that number is obviously low, as many gamblers are in denial and can't answer those questions honestly.

About $11 million in lottery profits will go to problem-gambling treatment and prevention programs over the next two years. The lottery spends an additional $1.5 million a year on advertising to discourage problem gambling. Every video gambling machine has a sticker that tells people how to reach the state's hotline, 1-877-MYLIMIT.

The problem is that those ads are like the anti-smoking campaigns designed by cigarette companies...they know what doesn't work.

Less Customers to Serve

Many organizations outsource customer service operations.  This has been good for Sykes, a company of 33,000 employees which turned a profit last year of $60.6 million on revenues of about $820 million.  Its customer service center in Milton-Freewater OR--which is less than 10 miles south of Walla Walla WA--was growing last year.

Sykes Enterprises, Incorporated, a global leader in providing outsourced customer contact management solutions and services in the business process outsourcing (BPO) arena, hosted an Open House on Thursday, February 7, 2008 to celebrate it’s recent growth at it’s Milton-Freewater, Oreg. operations as the Company seeks to hire more than 400 positions within the next six months.

However, we learned this week...

Sykes Enterprises in Milton-Freewater could lay off 336 employees effective Jan. 15, 2010. But City Manager Linda Hall said the company may just be between big contracts and may not cut any jobs.

...

"According to the best information currently available, the layoffs are intended to be permanent," the notice said.

The 336 job losses include 302 customer service agents, 16 team managers and seven quality assurance technicians. Hall, though, said a call from Andrea Burnett, Sykes' director of marketing communications, alleviated some worry.

...

Hall explained Sykes was following the federal law that requires companies to issue notices within 60 days of knowing about a potential layoff.

This article provided further explanation as to why the mayor said "some worry."

Burnett said she didn't know if the company would offer severance payments to laid off workers. 

Unlike so many of the subsidies the state has lavished on green energy initiatives, the financial aid that helped lure Sykes to Oregon looks like it's paid off--even with the threat of layoffs.

Since the 1990s, state and local governments have invested $300,000 directly into the company to attract the jobs. Burnett wouldn't disclose the wages for those jobs. The direct state support includes a $200,000 forgivable loan from Gov. John Kitzhaber's economic development fund. Marc Zolton, spokesman for the Oregon Business Development Department,  said Sykes met job creation targets and the state forgave the loan.

The state also invested another $2.35 million  in infrastructure improvements to the industrial park where Sykes is located, Zolton said.

Would Oregon be one of the 10 states facing fiscal peril if Governor Kulongoski had spent our money on green initiatives more wisely?  Unfortunately with PERS, the answer would still be yes.

ConnectOregon (and Nearby)

Brookings has a small public airport that's not designed for commercial air traffic.  Fortunately though for area residents and visitors, nearby Crescent City CA is served by SkyWest (United)--three flights a day (though one may soon be cut).  That's saves a beautiful though not necessarily relaxing couple-hour drive to Coos Bay or Medford...or Eureka CA.  This helps explain why Oregon might spend some money helping to upgrade the facilities at Crescent City's airport.

Regional Border Coast Airport Authority members voted Thursday to apply for a $7 million grant from the Oregon Department of Transportation to help pay for a new terminal at Del Norte County Airport.

The total cost of the project is expected to be $20-25 million.

The local airport is managed by a joint powers agreement that includes representatives of Crescent City, Del Norte County, the Elk Valley Rancheria and Brookings.

...

In a similar situation, ODOT gave money to the The Dalles Municipal Airport, which is located across the Columbia River in Washington state, he added.

The grant would come from ConnectOregon, a $100 million program to improve transportation in Oregon, explained Jim Aboytes, the project manager for the replacement terminal.

ConnectOregon III, which is funded with lottery bonds, also supports rail, public transportation, and ports.

At least 10 percent of the funds will go to each region of Oregon, and 5 percent will be allocated for rural airports alone, Aboytes said.

There was not a lot of competition last year for the region Brookings is in, Bernard said. Airport projects in Coos Bay and Medford were funded.

...

The airport board's coastal development permit from the county is likely to be appealed, Bernard said, because of a concern about cutting down trees to build the new terminal.

A biologist with the California Coastal Commission will be looking at the woods next week to determine if it's an environmentally sensitive habitat area, he said. Bernard added that the Coastal Commission is willing to work out a compromise.

Wonder what the CCC's going rate is for a compromise?

Still Plenty of Economic Stress

The September Stress Index information was published today.  From the AP article on its metric...

The AP's Economic Stress Index calculates a score from 1 to 100 based on a county's unemployment, foreclosure and bankruptcy rates. Under a rule of thumb, a county is considered stressed when its score exceeds 11.

Nationwide, the average county's stress score dipped to 10.1 in September from 10.3 in August, helped by a steadying of foreclosure and bankruptcy rates. In September 2008, the average county stress score was much lower: 6.73.

The highest stress scores were still found mainly in states that endured housing booms and busts. Nevada had the highest score, 21.95, followed by Michigan, with its battered auto industry, at 17.75. California was next, at 16.2, followed by Florida, 15.4, and Arizona, 14.26.

While the AP's interactive map (here) has data for every county, it doesn't include the overall state scores.  But, its obvious that Oregon remains well up the list in stress, quite possibly in the top 10. 

About 36 percent of counties in September had a score of 11 or higher, down from 39 percent of counties in August.

Twenty-nine states saw some improvement in their Stress scores from August to September.

Oregon is one of the states that saw improvement in September, with only Harney County seeing its stress score (and unemployment rate) rise.  However, 22 of Oregon's 36 counties have stress scores above 11.  The worst 10 are as follows:

1.     18.48     Deschutes
2.     17.90     Crook
3.     15.98     Linn
4.     15.95     Harney
5T.   15.89     Douglas
5T.   15.89     Josephine
7.     14.74     Jefferson
8.     14.65     Jackson
9.     14.18     Klamath
10.   13.63     Yamhill

- Deschutes and Crook Counties easily lead the state in bankruptcies (1.98 and 1.85 percent, respectively), followed by Yamhill, Linn, and Jackson Counties. 

- The foreclosure rate in Deschutes County (3.86 percent) is more than double every county in the state except Jackson...they're followed by Josephine, Clackamas, and Yamhill Counties. 

- Crook County leads the state in unemployment (16.1 percent), followed by Harney, Douglas, Linn, and Deschutes Counties. 

California has a number of counties in worse shape than anywhere in Oregon.  In fact, six of its counties have a stress index in the top (or should we say bottom) twenty in the nation.

1.     33.51     Imperial
6.     23.39     Merced
7.     23.29     Yuba
8.     22.69     San Joaquin
13.   22.37     Riverside
15.   22.16     Stanislaus

All the counties in the North State have a stress index above 11, with the worst being Shasta at 17.93.  

FYI, Imperial County CA (the SE corner of the state) has the highest unemployment rate in the nation at 30.1 percent.  Clark County NV (think Las Vegas) has the highest foreclosure rate at 8.81 percent.  And, rural Gallatin County KY has the highest bankruptcy rate 4.43 percent.  The next three highest counties are along/near the Mississippi River in Tennessee...Shelby County (#4)--home to Memphis--has a bankruptcy rate of 3.59 percent.

Tougher Times for Many Non-Profits

From today's Portland Business Journal...

Demand is up and donations are down for Oregon charitable organizations.

Demand for services increased 12 percent from 2008, according to a survey released Monday by the Oregon Community Foundation. The survey conducted in August and September canvassed 1,234 Oregon nonprofits about the impact the recession is having on their operations.

Actually, the OCF only surveyed 208 nonprofits.  And when it comes to calling them charitable organizations (which the OCF never did), consider that the first group on the report's list of survey participants is 1000 Friends of Oregon, a PAC.  So rather than continuing with the article, let's quote from the report's executive summary.

Half of survey respondents said that private contributions are down so far in 2009 compared with 2008. 39% said that contributions are up, and 11% said that contributions stayed about the same. 61% of arts & culture organizations and 54% of social services organizations saw contributions decline in 2009, while only 41% of education and environment & civic engagement organizations saw contributions decline.

76% of Portland Metro and 60% of statewide organizations saw contributions decrease in 2009 compared with 23% of Central Oregon and 33% of Southern Oregon respondents.

...

78% of survey respondents have implemented cost-saving measures. Specifically, 30% have eliminated programs or services and 31% have laid off staff. ...

On average, demand for respondents' services has increased by 12% since July, 2008. Education and social services organizations reported the largest increases in demand, averaging 17%.

Services can be a squishy measure, as some of these nonprofits lobby politicians, display art, manage property, etc.

Anyway, here are some of the conclusions...

Oregonians who are able to give are doing so. Comments from survey participants suggest that more donors are giving smaller amounts.

Some donors have shifted support to different organizations in these hard economic times.

...

Most nonprofit organizations are under some degree of fiscal stress, likely due in part to decreases in fee income and government payments as well as declines in private contributions. In response, nonprofits are cutting back, implementing cost-saving measures to continue to meet needs in their communities during the recession.

Cutting fat isn't a bad thing, but the muscle...

Dell Buys Silence

In 2007, Dell closed its call center in Roseburg not long after some employees sued over unpaid overtime (previous blog here).  Last year, that lawsuit gained class action status involving multiple call centers and alleged unscrupulous business practices (previous blog here).  Turns out that Dell quietly settled last month.  From today's Roseburg News-Review...

A settlement agreement was filed Sept. 30 in U.S. District Court in Eugene. The agreement came two months before the deadline for lawyers on both sides of the class action suit to submit their pretrial motions to the court.

Terms of the agreement — which affected 1,406 call center workers from Roseburg, Idaho, Texas, Oklahoma and Tennessee — were not made public. U.S. Magistrate Thomas Coffin sealed the judgment in the case, following a request from the attorneys.

Neither lawyers for the plaintiffs or the defendants returned calls seeking comment. It's standard for the parties in employment suits to sign confidentiality agreements in which they're barred from divulging the terms of the agreement.

...

The lawsuit involved only full-time telephone representatives. Coffin ruled that part-time workers, who are covered under different employment rules than full-time workers, could still sue but had to do so individually.

Evidently things were bad enough that Dell chose to buy the silence of its former employees.  That never smells like justice...rather like when school districts would pay molesting teachers to leave quietly rather than prosecuting them.  That may be cheaper and/or quicker, but it doesn't necessarily motivate the needed changes.

I once again submit that closed settlements like this shouldn't be allowed in our legal system.

Outsourcing Jobs via Changing Lightbulbs

GE has spent huge sums trying to position itself as smart and green.  Few companies have lobbied harder for subsides and the proposed cap & trade system, from which it would profit greatly.  It also lobbied hard for the law which set efficiency standards that will essentially outlaw incandescent light bulbs in the U.S. by 2014.  Then this past July...

GE announced it will close the Winchester [Virginia] Bulb Plant 80 miles west of D.C. As a result, 200 men and women will lose their jobs. GE is also shuttering incandescent factories in Ohio and Kentucky, axing another 200 jobs.

GE blamed environmental regulations for the closing.

...

The company said in 2007 it wanted to make sure it was working under a single federal efficiency standard, rather than a patchwork of state regulations. GE also touts its compact fluorescents as one of the green products in its "eco-magination" initiative.

The workers don't buy the green arguments, pointing to the mercury gas that's in the fluorescents. "It's illegal to dump mercury in the river, but not in the landfill," two of them say in unison—it's become a dark joke at the factory.

The nonunion plant, GE's last incandescent bulb-assembly factory in the U.S., will close in July of next year.   Yes, GE manufactures its compact fluorescent bulbs in China.  The same type of thing is happening in Europe.

US industrial giant General Electric said [yesterday] it will axe 2700 jobs in Hungary over the next two years after a decision to phase out traditional energy-guzzling light bulbs in Europe.

The cuts, which were announced at meetings with employees and trade unions on Wednesday, would begin at the start of next year, GE said.

...

A new EU regulation phasing out old-style light bulbs by 2012 came into effect in September.

GE also laid off 500 employees there last year, because of "fierce global competition." Nearly all of the jobs in question are blue-collar and unionized.

Burning Funds on Burning Fields

Eugene is home to several highly litigious environmental organizations.  It's not the economy that's causing problems at the Western Environmental Law Center.

In yet another sign that economic tough times continue to plague Lane County, a public interest environmental law firm will lay off four staff members by the end of the month.

The Eugene-based Western Environmental Law Center has laid off two administrative staff members and attorney Charlie Tebbutt. Attorney Dave Bahr will also be let go sometime in the next few weeks.

Tebbutt has specialized in federal Clean Water Act cases, while Dave Bahr’s expertise is in federal Freedom of Information Act work. He also recently represented local groups in a suit filed against the U.S. Bureau of Land Management over its plan to increase logging on Western Oregon forests.

...

While the nonprofit center expects to finish the year with about the same revenue it had in 2008 — $2 million — Costello anticipates a financial hit in 2010 to be as much as 20 percent.

So rather than waiting to see if revenues actually drop off, WELC is laying off folks now?  That can't be the whole story...and as this poorly-written article finally gets around to telling us, it's not.

The center is adding other projects to its environmental portfolio. It employed a conservation biologist this year to work on the development of wildlife corridors, an effort that has drawn interest from the state agencies and the Western Governors Association, and could lead future grant support, he said.

Tebbutt himself had recently headed a high-profile and successful campaign to persuade the Oregon Legislature to phase out field burning on grass seed farms in the Willamette Valley, an effort that did not involve the courts.

Costello estimates that WELC spent between $250,000 and $300,000 in staff and other costs on the campaign, but that it drew only about $20,000 in public support. It was a good strategic plan with a good result, but a failed business strategy, Costello said. "In the future, we need to align all three," he said.

In other words, if important environmental issues won't pay for themselves, ignore them.  Brilliant.  Guess they're not making enough money suing the government on our dime. 

One other interesting note in the article...

Eugene-based Forest Service Employees for Environmental Ethics saw its revenues for the first nine months of 2009 decrease by 26 percent compared with the same period last year, said Executive Director Andy Stahl.

Stahl’s nonprofit group opted to take 15 percent across-the-board pay cuts and eliminated matching retirement contributions to avoid layoffs, he said. “Those cuts kept us from closing our doors,” he said.

Well, I have to applaud the dishonestly-named organization for sharing the pain rather than laying off the junior folks.