A little less than a year ago, Michigan became the 24th state to enact right-to-work legislation, a development that has been closely associated with the temperature of Hades dropping. Since then, right-to-work supporters have sought to enact similar legislation throughout the United States. Even here in the Northwest.
In Oregon, the Public Employee Choice Act would provide right-to-work protections to public employees. With the Boeing’s machinists recent rejection of a new contract and the company’s drift toward more business-friendly states, there has been some speculation that the state of Washington may consider right-to-work legislation in order to hang on to key employers.
What is right-to-work?
Right-to-work policies liberalize labor market conditions by loosening some of the most restrictive features of labor legislation enacted during the Great Depression. In 1935, at the depths of the Great Depression job losses, Congress passed the National Labor Relations Act (also known as the Wagner Act). This act permitted closed union shops which require employees to join a union and/or pay union dues as a condition of employment.
The widespread impact of coal miner strikes through the late 1940s led some to conclude that the Wagner Act had conferred too much power on organized labor. The Taft-Hartley Act — enacted in 1947 over President Truman’s veto — modified the impact of the Wagner Act by affirming the right of states to prohibit certain union shop restrictions enabled by the Wagner Act. Specifically, Taft-Hartley indicates that states can pass laws that prohibit unions and employers from making union membership or the payment of union dues a condition of employment. These state statutes are referred to as “right-to-work” laws because they give employees the right to work without the being forced to join a union or handover a portion of their paychecks to unions in the form of dues or fees.
A boost to employment
Right-to-work has gained attention in the wake of the past recession because such laws can be a key component of a pro-investment and pro-employment package that encourages firms to locate and expand in a state. Indeed, a large body of research has found that as a group, right-to-work states have enjoyed more rapid employment growth, better job preservation, and faster recoveries from recession than states without right-to-work laws in place.
For example, the figure below shows that since 1950, states with right-to-work laws have seen their employment grow at roughly double the rate of non-right-to-work states.
While right-to-work laws can be a key component of a pro-investment and pro-employment package that encourages firms to locate and expand in a state, it would not be fair to conclude that all the employment gains can be assigned to right-to-work.
Indeed, there are many factors that contribute to employment growth. For example, some have argued that one of the biggest predictors of employment/population growth is climate: People tend to migrate toward nicer weather. Harvard economist Edward Glaeser, explains:
But the connection between January temperature and growth reflects more than just the weather. Sixty years ago, income and productivity in the South lagged significantly below that in Northern states. There has been a remarkable convergence of incomes since then, as manufacturing firms moved to lower wage areas that gradually became higher wage. Right-to-work laws in Southern states seem to have significantly attracted new industry (Holmes, 1998). Indeed, one can quite plausibly argue that the South had far worse institutions for economic growth before the Civil Rights Era, but that today, fewer regulations and lower taxes makes the Sunbelt more pro-growth
Statistical analysis can account for these other factors and separate out the relationship between right-to-work laws and employment growth. My research finds that, if Oregon were to enact right-to-work legislation, the state’s employment would grow one-half of one percent faster than it is currently projected to grow.
Now, one-half of one percent does not sound like a lot. But, over time, even tiny changes in the growth rate can have large long-run impacts.
For example, the figure below shows that if Oregon adopted right-to-work legislation that went into effect in 2015, then five years later the state would have 56,000 more people working than without right-to-work.
A boost to pay
Opponents of right-to-work argue that enacting a right-to-work law would gut Oregon incomes, calling it “right-to-work for less.” In fact, however, research that controls for other factors that affect wages, finds that right-to-work states have average wages that are “significantly higher” (more than six percent higher) than in non-right-to-work states.
The statistical analysis I conducted shows that wage and salary growth under right-to-work would keep pace or outpace employment growth. In other words, wages would grow as fast or faster than employment. That means that, based on the experience across multiple states over many years, right-to-work laws do not lead to lower wages and are likely to improve pay over time.
A fiscal free lunch
Right-to-work legislation may be the only economic development policy that comes at zero cost to state government. Enacting right-to-work does not require any new taxes and does not demand any new spending and would provide the state a permanent structural advantage in attracting employers and employment to the state.
You may not have ever heard of Bill McDonald, but you have probably heard his jokes. A profile of McDonald explains that, from his Southeast Portland home, McDonald writes jokes for “Tonight Show” host Jay Leno and for about 140 radio stations around the world that feed McDonald’s quips to their on-air staffs—jokes like these from a few years ago:
I’m a little suspicious of these electronic voting machines. They even showed President Bush ahead in Fallujah.
Ricky Williams was asked if he preferred playing on grass or AstroTurf, and he replied, “I don’t know. I never smoked AstroTurf.’”
McDonald also has a keen eye for economic absurdities. His latest target: “Business” and “employment” taxes. In a recent comment he highlights the Portland region’s peculiar payroll tax used to fund its public transit system, a situation that many taxpayers in many regions face:
Let’s say I wrote jokes that were sent out of state, examined, and then bought outside the state. There is a form called TSE-AP with “Sales Factor Only” on it and “Total within district” where you compute the percentage of sales here versus outside the district.
Stay with me. I assumed that sales within the district would mean….wait for it…the sales within the district. If nobody bought any of my jokes in the state of Oregon and the district was in Oregon that would be zero…..
But what it really means is if you wrote the joke in the district and sold it anywhere in the world, you were to be taxed here so that a train or light rail or bus could be funded, because OF COURSE, I need a bus or train to sit in my basement and write jokes.
Ironically, if I had taken a car out of the district, wrote the joke there, and then sold the jokes to the Mayor of Portland sitting in the heart of the district, that would not be a sale within the district because…oh never mind….
I’ve been around long enough to know why our transit district taxes payrolls the way it does, but McDonald shows that, many times, the difference between what can be taxed and what should be taxed is much like the difference between grass and AstroTurf.
The following commentary was published in the Oregonian. Additional commentary on the special session is available from the Oregonian’s website.
Gov. John Kitzhaber’s call for a rush-rush emergency session of the Legislature has succeeded in getting Oregonians to think again about their tax system. More important, it’s gotten us to think about how we tax our businesses and which ones we tax.
To most people, the purpose of corporate taxes seems obvious: to raise money to fund government. But that role is disappearing. Over time, businesses have become nimble at finding the right place and right time to make money to minimize their tax bills. As a result, states have seen corporate taxes make up a smaller share of their total tax revenues. In 2011, across the U.S. — and Oregon — corporate taxes accounted for less than 6 percent of state total tax revenues.
Today, corporate taxes allow politicians to play a version of Santa Claus. Businesses on the “nice” list get tax breaks paid for by everyone else. It’s not uncommon to see regular mom-and-pop businesses paying their full share of taxes while favored businesses shrink their tax bills through various tax credit schemes.
In 2010, the corporate tax increase known as Measure 67 destroyed a part of Oregon. It destroyed the part in which businesses, their owners and their employees are viewed as members of the community. The campaign cast businesses as “big” or “out of state,” and they don’t pay their “fair share.” The measure sent a loud message to businesses: We only want you for your tax dollars.
The message of Measure 67 hangs over businesses thinking about moving or expanding in Oregon. Every legislative session sends a shiver through boardrooms as business owners worry about what’s next. Some legislators are already drafting a sales tax proposal. A follow-up to Measure 67 cannot be far behind.
It should come as no surprise that Nike — and just about every other business in the state — would want to have some certainty about what its upcoming tax bill will be. At the same time, it is deeply troubling that only the biggest of Oregon’s businesses can get the governor to act.
It’s time Oregon revisit its tax policies and get rid of the state corporate income tax altogether. Even with the Measure 67 increases, corporate taxes continue their long-run decline as a share of total tax collections. The carve-outs and credits for favored businesses corrupt the system and allow politicians to play favorites. With the corporate income tax out of the picture, Oregon can say it’s open for all businesses.
We’ve noted the moving target better known as the Portland Public Schools earmark in the mayor’s proposed “Education” Urban Renewal Area. The original earmark of $14.5 million was dropped to $10 million, with much of the money shifted to support the city’s “Cluster Development Strategy.” Lost in the money shuffle, however, has been any description of exactly what the $10 million is going to be used on.
Peyton Chapman, Lincoln’s principal, said the URA could benefit the school’s long-term plan to build a new facility, 1,682 workforce housing units and a large parking garage. Chapman recognizes that a number of bonds would have to be passed for the plan that could cost $130 million; however, she said the URA is necessary to establish essential partnerships.
A parking garage?
Who need’s a parking garage in a multi-modal Mecca served by TWO light rail stops?
Only soccer fans and members of the ultra-posh Multnomah Athletic Club (initiation fee $10,200):
Chapman said the structures proposed in the plan could be used by other schools and area businesses. For example, the proposed two-story parking structure could be used by PGE Park and the Multnomah Athletic Club.
Now you know why we use the quotation marks around education in the “Education” Urban Renewal Area.
In an earlier post, we asked why Portland’s toniest high school was jumping to the head of the line to get rebuilt out of urban renewal dollars.
Now it seems that in less than two weeks, about one-third of that money has been taken away from the Portland Public Schools earmark. The money appears to have been transferred to Portland State University and added to the porkbarrel better known as the city’s (somewhat silly) “Cluster Development Strategy.”
Where is the urban renewal at Lincoln High School?
This is one of the bigger mysteries of the “Education” Urban Renewal Area. It’s no secret that PPS, Lincoln parents, and the construction industry are eager to rebuild Lincoln High School.
Even so, no one seems to know what the city plans to do with the $14.5 million $10 million earmarked for PPS. In particular, no one wants to admit that the money would go toward rebuilding the city’s public ivy. Here’s a tweet I got from PPS government relations:
Edu URA doesn’t guarantee a rebuild of LHS, inclusion of site merely allows for leverage & flexibility, if needed.
Portland’s League of Women Voters believe the blank check aspect the PPS earmark runs afoul of state law:
According to the Plan, $10 million will be spent on Lincoln High School redevelopment. There is no explanation of what is envisioned for the redeveloped site. We understand there are proposals for reconfiguring the school facilities to allow for possible condominium and commercial development. As noted above, ORS 457 requires that the Plan include descriptions of the projects, timing, costs and source of moneys. Council should insist that Portland Public Schools provides that information for inclusion in the Plan before adoption.
What’s taken away with one hand is given with the other
Even more curious is that Portland’s mayor has announced that he is “looking under every rock” to come up with $5 million to hand over to Portland Public Schools to stave off massive teacher layoffs in the beleaguered school district at the same time he’s taken $4.5 million away from the districts urban renewal earmark.
The editors of a blog at the New York Times are planning to read every word of an entire issue of another magazine over the next two weeks to report what they’ve learned. Here, an editor lists eight things he learned from reading every last word of the April 21st – 27th print edition of The Economist on “The third industrial revolution.”
The 1,000 shillings note exchanged for roughly $0.13 when Gen. Muhammad Aideed employed a printing firm to reproduce the note in 1996. As the number of notes in circulation grew, the exchange value fell to just $0.03, which is the cost of producing an additional note. Since the exchange value equals the cost of production, forgers can no longer profit by increasing the supply. Today, the Somali shilling is a commodity money. Its supply is governed by the cost of ink and paper required to produce a note.
One of the curious pieces of the proposed “Education” Urban Renewal Area is a chunk of money flowing to Lincoln High School. The ins-and-outs of how that money will flow to the school district have not been made public and there is some concern that any giveaways to the district may run afoul of state property tax limits.
The biggest question of all remains: Why rebuild Lincoln High School?
While the district get’s $14.5 million from the urban renewal area, it will be on the hook for another $100 million (give or take) to rebuild a school that does not need to be rebuilt.
Take a look at the figure below. Sure, Lincoln is crowded. It is one of the most crowded schools in district’s portfolio. But, the condition of the Lincoln building is one of the best in the district’s portfolio.
Crowding is not a building problem, it’s a school assignment problem. Many Lincoln students actually live closer to Roosevelt High School. A simple transfer will relieve the crowding and save about $100 million.
The Portland Development Commission has unveiled its spending plan for the proposed “Education” Urban Renewal Area discussed earlier.
Notice that about 20 percent is used to buy off opposition from Portland Public Schools and Multnomah County. More than one quarter of the budget is to buy the support of Nick Fish, the housing commissioner on the Portland city council.
Here’s another breakdown. Notice that the Portland Development Commission skims a whopping 15 percent off the top of all the money raised. That’s quite a commission for the Commission.
The Portland Development Commission meets Wednesday, April 11, 2012 from 3:00 PM – 5:00 PM to discuss the proposed urban renewal area. It will be one of the very few times the public can provide comment.
The complete packet of information currently available is below:
In his last State of the City address in March, Portland Mayor Sam Adams announced a deal between the city of Portland and Multnomah County to create what he call the “Education District” urban renewal area. The proposed area would snake from Lincoln High School, across I-405, down the South Park Blocks, and end at the edge of the urban renewal area known to many as South Waterfront.
We can debate endlessly whether Oregon’s largest university is sitting in a sea of blight. And we can speculate wildly about how a public high school that auctions student parking passes for upwards of a $1,000 can now count a Superfund site among its peers in the world of blight.
But, what is really curious is that, as shown in the map above, more than half of the proposed new urban renewal area overlaps an existing urban renewal area. The South Park Block urban renewal area was formed in 1985. While its bonding authority expired in 2008, the Portland Development Commission points out, “South Park Blocks URA won’t officially close until all bonds have been paid off,” or sometime in the 2020s.
Since more that half of the proposed urban renewal area would sit on top of another urban renewal area that “won’t officially close” for another decade or two, let’s take a look at what the city’s been doing for the past 20 years there.
Half of the projects that the Portland Development Commission identifies as being funded by the South Park Blocks urban renewal area have occurred within the area the mayor hopes will form the “Education District” urban renewal area. This includes more than 1,400 housing units, a flagship Safeway store, a Gold LEED certified recreation facility for Portland State University students and staff, and a carpool lot serving PSU.
On top of that the proposed area would contain approximately one mile of street car track and about 3/4 mile of light rail tracks. Both of these rail projects are identified as being funded in part by the South Park Blocks urban renewal area. TriMet and the city often tout rail projects as an economic development tool. Yet, it seems that with the addition of some the greatest rail density in the region, the South Park Block/Education District urban renewal area remains blighted.
In 2008, the Portland Development Commission passed a resolution declaring that the South Park Blocks urban renewal area had been a success. Successful, but still blighted?
It seems odd that an urban renewal can spend so much money on so many things over 20 years, but remained blighted enough to justify another 20 plus years.
This post continues our series on the Portland Bureau of Transportation’s budgeting choices. The last post looked at the biggest line items in PBOT’s budget. This post examines the programs facing the biggest cuts.
As shown in the table below, the biggest cuts are to roadway maintenance and cleaning and roadway safety. Some of these cuts include the following:
Reduce the Portland’s “2-inch grind and pave maintenance blanket program” from 42 miles of maintenance to 10 to 20 miles.
Reduce maintenance and repair of crash barriers.
Reduce retaining wall maintenance from 10 walls per year to 7 walls in critical condition, per year.
Reduced staff response to emergency safety concerns regarding street lights and signals where damages occur during the night.
Reduce pace of modernizing street lights and street signals.
Some Portlanders may be ready to jump for joy over item #7 which gives the impression that the city has given up on its red light cameras.
Not so fast … PBOT just shift that program over to the Police Bureau. So we still get the red light cameras and PBOT gets to say they’re cutting costs.