The pulse of Oregon’s economy will pick up only slightly in the next year, according to the message Tuesday from economists and Gov. Ted Kulongoski at Economic Forecast 2005, a conference hosted by the College of Arts and Sciences’ Oregon Economic Forum, The Register-Guard newspaper and the Oregon Chamber of Commerce.
Among the themes presented by the governor and economists from the University and statewide was the importance of education and training, particularly at a post-secondary level, for Oregon to find its niche as a “brainpower economy” in a global market.
“Every business will pay the price,” Kulongoski said concerning rising tuition in the face of less state funding. “This is the perfect storm of educational and economic decline. Now is the time for a perfect start.”
It is the start of the governor’s plan to reverse that decline, he said, by increasing K-12 and Oregon University System funding, doubling the amount of statewide Opportunity Grants and not “treating post-secondary education as an ATM” to cover the state budget.
Kulongoski and the panels also cited Oregon growth from businesses such as Molecular Probes, The Home Depot, Lowe’s and Royal Caribbean that will add to Oregon’s workforce; manufacturing industries, particularly in recreational vehicles and the lumber industry; and statewide construction, including the University’s new basketball arena, highway construction and the federal courthouse in downtown Eugene.
Discussions also concerned subjects of the minimum wage as a possible reason for the high unemployment rate and the health of Oregon’s economy in the next year.
The first panel, consisting of three faculty members of the University economics department and moderated by Oregon Economic Forum Director Tim Duy, followed the keynote speech.
University economics professor Larry Singell spoke to the audience about minimum wage and whether it has improved or hindered Oregon’s economy. The answer, he said, is that minimum wage can have an impact but is “complicated and quite different to industries and jobs.” Singell’s research analyzed Oregon and Washington, two states with similar minimum wages, and compared want-ads in the classified sections of The Oregonian and The Seattle Times during a 72-month period.
One industry hit hard by a high minimum wage was eating and drinking, where minimum wage forced restaurants to hire fewer staff members and also have the wait staff bus tables. Part of the reason bussing positions do not exist in many Oregon restaurants, Singell said, is that Oregon handles the issue of tips differently than many states, with a policy that requires restaurants to pay a bus worker the full wage, whereas other states’ policies allow a lower hourly wage with tips to compensate.
“The minimum wage is a blunt instrument and affects industries with entry-level jobs,” Singell said, adding that the largest impact falls on bus drivers.
Oregon business owner Ruben Garcia said minimum wage will keep growing if the Oregon population continues to try to support families on it, citing his company, Environment Control, which hires only “moonlighters” and students for part-time positions. Garcia said Oregonians need to have encouragement to get a degree and use minimum-wage jobs as temporary positions.
Next, University associate professor of economics Ronald Davies discussed international trade and specifically encouraged exports.
Davies said many Oregon business are “de facto exporters,” meaning they manufacture products to businesses that conduct international trade. Davies said Oregon has benefited by a 13-18 percent increase in job wages and told the audience that 96 percent of export is conducted by small- to middle-sized businesses in Oregon.
“It’s where we’re seeing our investments, and it’s where we’re seeing job and wage growth,” Davies said.
The final University panelist, economics professor Bruce Blonigen, presented his findings on tax incentives and whether they can help the economy. His findings found that while tax incentives may cost the government, in the long term they may attract businesses to Oregon.
“If you could attract and give a few businesses a tax break to a few firms, others will come and earn the tax revenue back,” Blonigen said.
Blonigen said one concern that exists is that the state may front-load a tax break for “footloose” companies that may leave the state in a few years before the state can make revenue back.
The next series of panelists were brought statewide, and the moderator was business editor Christian Wihtol of The Register-Guard, who also asked the economists to give their forecast in a question-and-answer format. The five speakers, from government and private sectors, spoke briefly, reiterating much of what the governor said, focusing on an increase in construction and a need for post-secondary education to create high-wage jobs. The consensus for next year is that there will be mild job growth in Lane County to 144,500, or about 1.5 percent, averaged by Wihtol from the five economists.
“It’s a good time to do some contingency planning,” economic consultant Bill Conerly said, who warned of a decline in lumber as a problem in the next year from “overbuilding houses.”
The Economic Forecast, in its 11th year (its second with University participation) has also seen growth, relocated this year to the Hilton Eugene Hotel and Conference Center from its original location at the Downtown Athletic Club.
Ann Jensen, a Yachats resident and the owner of a farm after owning several small businesses, has attended 10 of the 11 forecasts. She said other than the format of the show, the most striking change was the explosion of attendees.
“This is the first time we’ve had a big impact that brings the governor here,” Jensen said. “There is a lot more interest now.”

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