Oregon economy on rough ride 011305 Capital Press

When business leaders get together, they usually talk about all sorts of things: the economy, taxes and regulations.

When Oregon’s top business leaders got together in Portland on Jan. 9, though, the conversation was a bit different. Sure, the Oregon Business Plan was debated. This game plan for growing the state’s economy is the product of the Oregon Business Council, whose vast membership believes that the rising tide of a growing state economy floats all boats.

That much is true, but two other subjects seemed to be come up time and again: the state’s spiraling minimum wage and the sad circumstance of the state’s educational system.

Oregon is emerging from a punishing economic recession in which it had the nation’s highest or second-highest jobless rate for 41 straight months. Many of the people thrown out of work were not minimum-wage earners. Rather, many were well-paid specialists who were laid off from high-tech jobs.

Several factors are to blame for Oregon’s weak economy, but when the natural-resource industries were being dismantled around the state, few statewide leaders appeared to be ready, willing or able to help. As a result, that portion of Oregon’s economy was already in trouble when the high-tech bubble popped.

We’re talking about farming, ranching and timber. Once the state’s leaders determined that those industries could be sacrificed at the altar of protecting fish, birds and butterflies, and that the state could prosper by hitching its future to the so-called Silicon Forest, Oregon placed itself in the precarious position of depending on industries and factors over which it had little or no control.

Thus, when Hewlett-Packard or Intel or any of the other occupants of the Silicon Forest sneezed, Oregon’s economy got pneumonia.

If, however, Oregon had continued to nurture natural resource industries, working with farmers, ranchers and timber operators to maintain a balanced and broad economic base, it could be logically argued the state and its citizens would have been much better off.

Be not mistaken. We need the Intels and other non-resource industries, but we need farms, ranches and logging just as much. Oregon’s leaders need to work to make sure all sectors of the economy are unfettered by extraneous and damaging laws.

Which brings us to Oregon’s minimum-wage law. Here is a message to Oregon’s legislature: Fix it, please, before it does more damage to the state’s economy.

Oregonians in 2002 passed an initiative increasing the minimum wage. This was fine. On occasion, the minimum wage should go up, at the direction of the state’s Legislature and after a full debate among those who would be most affected by it.

The mistake we made in passing that initiative was to include an annual increase based on the rate of inflation. This is nonsense. Other than government employees — and that’s a whole different story — no one gets an automatic cost-of-living increase. By increasing the minimum wage annually, Oregon each year chips away at the profitability of farmers, ranchers and processors, who are already in a fight for their economic lives.

The well-meaning folks who promote indexing need only look at the federal Social Security system to see the damage automatic indexing can do. When President Richard Nixon agreed to index Social Security benefits, the fund was healthy. Now, 30-plus years of indexing later, it is a disaster waiting to happen, its income unable to keep up with the outflow.

Indexing is an even worse idea for the minimum wage. Farmers cannot just raise the prices of their crops, because they will see their customers go to Idaho, which has a minimum wage $2.35 an hour lower than Oregon’s. Or they will go overseas, where workers receive pennies an hour.

Then there’s the state’s education system. From the time a child enters kindergarten to the time he or she graduates from high school, the state poor-mouths schools and parents. Kids are sent into the streets hawking gift-wrapping paper, candy bars and beef jerky to pay for an education that the state is required to fund.

Not only is Oregon cheating its youth, it’s cheating itself by not adequately managing its money so we get the biggest educational bang for our tax dollar and by not providing enough money so kids in John Day, Klamath Falls or anywhere else in Oregon get an education that will propel them through life.

The state’s university and community college systems have suffered from the same sort of benign neglect.

Much is made of the fact that Oregon has universities and community colleges, yet nearly every program in nearly every school is constantly short-changed. That is especially true for agricultural programs, where the extension and research functions are a shadow of what they need to be.

It doesn’t take a Harvard economist to determine that the quality of Oregon’s educational system is directly tied to the state’s economy. If one falters, so does the other.

What we’ve been seeing is what happens when both falter.