After a couple of dark years, Oregon is finally beginning to emerge from the recession. January marked the fourth straight month of job growth and an unemployment rate of 10.4%. While that’s still higher than the national average, it’s much better than where Oregon was two years ago.
As we climb out of the recession, corporate lobbyists and Republicans in the Oregon legislature want Oregon taxpayers to pay businesses to hire people and are calling it a “jobs bill.” This bill would offer $3,000 tax credits for each new job that businesses create in Oregon.
From Oregon Business Magazine: “Rep Tobias Read (D-Beaverton), co-chair of the transportation and economic development committee, says the program would be ripe for abuse. ‘The problem is, you can’t ever tell whether you are unnecessarily subsidizing something that would have happened anyhow.'”
In other words, it’d be a taxpayer handout to corporations without any accountability or assurance that it’s actually working.
In January, three Oregon industries added at least 1,000 more jobs than normally expected for this time of year, including educational and health services, hospitality, and manufacturing (food manufacturing has gained 3,000 jobs in the last 12 months). Overall, Oregon gained 6,300 jobs in the first month of 2011. Oregon is climbing out of the recession — and when businesses create jobs, they’ll do it for that reason, not because we give them a tax break instead of spending money on schools and critical services.
A few critical questions: Would this just be subsidizing something that business owners would be doing anyway? If a business is seeing an increase in demand that justifies new hiring, why does the state need to pay them for it? Conversely, if demand for a business’s services is still too low to justify hiring on their own, is $3,000 going to make any difference?
Some quick math:
A worker at $8.50 an hour (Oregon’s minimum wage), 40 hours a week, 52 weeks a year earns $17,680. $3,000 is 16% of that person’s wages — not including workers’ compensation insurance or any health benefits.
I don’t know about you, but if the state offered me less than one fifth of what I would pay my lowest paid employees to create a job, it wouldn’t be worth it unless I was going to be hiring for that position anyway.
Corporations across the country are making record profits, though they’ve been slow to add new jobs–in the US, at least. Hopefully, Oregon businesses will begin to add new jobs as the economy recovers. But while we’re struggling to keep our schools open, should we be giving away more tax breaks to businesses? If they’re going to hire people, they’ll do it because the economy is growing, not because we give them $3,000.
“Jobs bill gets little support in Salem”—Oregon Business Magazine