Olympia Business Watch

Happy New (Minimum Wage) Year!

Starting Jan. 1, Washington's minimum wage goes to $8.55 per hour, the highest in the nation and exactly $2 an hour higher than Idaho.  When Washington’s law took effect in 1999, our state minimum wage rose to $5.70. Since that time, our state’s base wage consistently has been the highest in the nation, and it is set to go even higher in January when it jumps from $8.07 to $8.55 per hour.

Washington’sminimum wage applies to workers in both agricultural and non-agricultural jobs. The increase will apply to all workers 16 years and older and is tied to the urban consumer price index, although 14 and 15 year-olds may be paid 85 percent of the minimum wage, or $6.86 an hour.

One problem is the state Department of Labor & Industries recalculates the minimum wage each September according to changes in the federal Consumer Price Index for Urban Wage Earners and Clerical Workers.  That has led AWB to call for a legislative review to look and the impacts of the law and make changes.

Fast food, agriculture and retail businesses employ the majority of the state’s minimum wage earners, said Elaine Fischer, an L&I spokeswoman, in a The Columbian interview. Fischer said about 2.5 percent of Washington’s full-time jobs pay the minimum wage, a figure arrived at by adding up all the part-time hours worked statewide and converting the figure to its full-time equivalent. The total equals about 56,947 jobs that pay minimum wage in Washington; however,the minimum wage increase will affect a much larger group of part-time workers

Nationally, Barack Obama wants to increase the federal minimum wage to $9.50 per hour by 2011 and follow Washington’s lead by linking future yearly hikes to an inflation index. He believes further increases are necessary so that full-time workers can earn a living wage that allows them to raise their families and pay for basic needs.

However, according to Census data, less than one percent of workers over 25 are earning the minimum wage. And rather than family heads or full-time workers, they tend to be young single adults, teenagers living at home or spouses providing a second income. For example, in 1962 when I was a high school sophomore saving for college, I earned a buck an hour busing tables in a restaurant. That minimum wage job was my entry into the job market. 

So, elected officials must decide if the minimum wage is meant to be a living wage, considering those who depend upon it. Because if it is, then it’s a whole new ballgame.

While everyone wants a higher wage, we need to distinguish between a "living wage job" and an entry level or supplemental job which pays minimum wage.  We are rapidly getting to point where we are pricing minimum wage jobs out of the market. In other words, eliminating jobs. Simply, having laws which discourage supplemental or entry level jobs doesn't make sense and hopefully, Congress and the state legislature will recognize that in 2009.

Don C. Brunell, President (DonB@awb.org)

 

My Friend Tony, Like So Many People Today, Needs a Job and Hopefully 2009 Will Bring Many New Opportunities to Work

Over the holidays, I stopped by Starbucks for a coffee and ran into an old friend.  His name is Tony and our kids played sports together as they grew up.  Tony is one of the nicest guys in the world.  He is a good family man and good worker.  He is one of those people you're always glad to see and share some cheer.

After catching up on our families, I asked him how he was doing?  He said fine, but his job was eliminated and he would be out of work at the end of the year.  Over the years Tony had worked for the state and for the last few years, he was employed by a western Washington local government.  Everyone we know who worked with Tony said he was good at what he did and was a reliable and dedicated employee.  He was just caught in the wrong spot during these bad economic times.

Tony is too young to retire and needs to work.  He and his wife spent their life raising their family and even some grandchildren as well.  Tony needs to work because this is the time in their lives when they need to sock some money away for retirement but will probably have to draw on their savings to live during these rough economic times.

Whether people lose their government or private sector jobs, it is a sinking feeling.  My father was a journeyman electrician who worked construction jobs and I remember him coming home with the pink slips when the jobs ended.  The whole mood of our family changed and the longer people are unemployed, the greater the anxiety.

Hopefully, we can find ways to stimulate the economy so more jobs are created, particularly in the private sector.  And, hopefully those jobs will lead to careers for people and their families.  So as we head into 2009, our New Years resolution is to find ways to create new jobs and opportunities for people to work.  We need to catch the next wave of job growth and ride it early.

There really is nothing like a job and the accompanying paycheck which comes with it. And, while those jobs are developing, we all need to lend a hand to our unemployed friends and neighbors because anyone of us could be the next Tony!

Don C. Brunell, President (DonB@awb.org)

Merry Christmas and Happy Holidays Everyone

On this Christmas Eve, I want to wish you Merry Christmas and Happy Holidays.  Despite how dim the economy may look, we still have hope because we live in the greatest country on earth. 

Tonight, as we gather together we have the freedom to worship as we please or we have the freedom to not too.   There is no penalty for exercising our freedoms and too often we forget that.  Freedom is the greatest Christmas Gift given to us in America.

So on the eve of this most Holy Holiday for Christians, we ALL should be thankful we have citizenship in this great nation with its constitutional protections.   These freedoms we enjoy, are not free.  Millions of our forefathers have given their lives to preserve them for us.  

Many of our sons, daughters, brothers and sisters continue to make that sacrifice around the world serving in uniform and they will not be home with their families tonight or tomorrow.  So as you sit around the dinner table this Christmas Eve and Christmas Day, please remember our folks serving in our armed forces and their families struggling back home without them.

Merry Christmas, Happy Holidays and may 2009 be your most fulfilling year ever....and may God continue to bless America. 

Don C. Brunell, President (DonB@awb.org)

Governor Sticks to Her Promise to Not Raise Taxes

Gov. Chris Gregoire (D) unveiled her 2009-11 budget proposal which deals with the $6 billion (roughly 20%) revenue shortfall without raising taxes. 

“Now is not the time to be raising taxes on our residents and businesses,” Gregoire said. “Our families are tightening their belts, and that’s what government needs to do. The state must squeeze every ounce of value from each taxpayer dollar while maintaining our priorities of protecting families and children the best we can."

Dick Davis, who coordinates WashACE, has an excellent blog posting on the budget roll out. The Office of Financial Management details the Governor's budget.  On behalf of AWB , I have released our statement calling for the need to empower the private sector to lead our state back to economic prosperity.

The Governor is looking for new approaches to providing services to taxpayers.  Phil Bussey, Sr. Vice President at Puget Sound Energy (PSE), and I are the private sector members of the business-labor advisory group on state government reform.  It is a very small group which will pore through suggestions about reforming government, saving money and looking for new ways for government to work better for the taxpayers.  Basically, our mission is to look at short and long-term changes in the way state government operates.

Please e-mail us suggestions for ways to restructure government so our state leaders can implement a prioritized set of programs based on delivering services in a way that are easily understood and accessed by taxpayers. 

While the budget is challenging and no doubt will be the subject of considerable debate in the legislature, this serious budget challenge can stimulate a restructuring of government which will position our state to recover faster, keep existing employers and workers employed, and set the stage for new investments and jobs in Washington.

Don C. Brunell, President (DonB@awb.org)

Olympia Business Review - Episode 14: Streamlined Sales Tax Update

In this episode of the Olympia Business Review host Dan Brunell and Amber Carter discuss the Streamlined Sales Tax. They cover how it performing and what changes we would like to see made to the system in the 2009 session.

Issues covered: Streamlined Sales Tax

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To download the podcast, click here.

Good news, bad news for community/technical colleges

The headline in the Bellingham Herald, "Bad economy has been a boon for 2-year colleges," is a little misleading. Yes, the presidents of Whatcom Community College and Bellingham Technical College report growth in enrollments of more than 8 percent. According to the State Board for Community and Technical Colleges; 

Much of the growth has been attributed to the troubled economy.

Historically, during economic downturns, college enrollments go up as students turn to community and technical colleges for training and retraining to compete for limited job openings. The system is hoping the Legislature will find ways to fund CTCs so they can keep serving more students.

However, this growth is nearly unprecedented:

“We haven’t seen enrollment growth like this since the 1970s,” said Loretta Seppanen, director of research and analysis for the State Board for Community and Technical Colleges (SBCTC). “And the growth is in all areas—recent high school graduates, transfer students, worker retraining, basic skills, professional technical, working adults—it really speaks to the diversity of CTCs.”

Here is the part that the Herald's headline did not address: because of the state's $5.8 or $6.2 billion deficit, community colleges are having to find millions of dollars in their budgets to cut in order to fill the hole. I am sure that there are some soft spots in some colleges' budgets and at a time like this, everyone should have to put a little skin in the game. But it is important to remember a key function of community and technical colleges: worker retraining.

Unfortunately, the people who are enrolling in community and technical college classes now are doing so to learn new skills or upgrade their current skills. These are the people that will help make our companies more competitive and help lead us out of the current recession. Sadly, they are also the most at risk for not being able to find slots at these schools due to the budget cuts. Hopefully, lawmakers will make accommodations for this segment of the CTC population during budget discussions.

Even More Reasons to Keep Northwest Dams Generating "Greenhouse Gas Free" Electricity

I just read an article in Industry Week magazine which reinforced the need to keep the Pacific Northwest hydro system in tact and even expand its generation capacity of "greenhouse gas free" electricity.

As background, the United States is one of the world's lowest-cost producers of electricity. In 2007, the average price of electricity to industrial end-users in the U.S. was 6.4 cent per kilowatt-hour -- lower than Japan, Mexico, the United Kingdom, Germany, Brazil or Italy.  According to the Washington Alliance for a Competitive Economy (WashACE) 2009 Redbook, Washington's industrial users pay less for electricity than the national average at 4.78 cents per kilowatt hour.

The implementation of cap-and-trade, as President-elect Barack Obama is likely to propose, will likely result in electricity rate increases in the U.S. of 30% to as much as 100% over the next four to five years effectively wiping out the competitive advantage of relatively low energy prices in the U.S.

Washington, with its extensive hydro network, has an opportunity to increase its competitiveness advantage by making improvements to its hydro system by increasing generating capacity while increasing salmon and steelhead survivability. Chelan PUD is already selling carbon offsets from its increased electrical output from Rocky Reach Dam on the Columbia River near Wenatchee.  Those offsets are listed on the Chicago Climate Exchange.

One of the things our legislature should do to protect that advantage is to change I-937.  Count hydro power as a renewable energy source and expand the area from which utilities can purchase wind, solar and biomass electricity.

That is good for our environment and our economy. 

Don C. Brunell, President (DonB@awb.org)

How about $1.7 trillion to pay down the federal debt while providing jobs?

From the American Petroleum Institute (API):

The development of America's vast domestic oil and natural gas resources that had been kept off-limits by Congress until recently could generate more than $1.7 trillion in government revenue, create thousands of new jobs and enhance the nation’s energy security by significantly boosting domestic production, a new study shows.

The ICF International study, commissioned by the American Petroleum Institute (API), released on Dec. 5, shows that developing the offshore areas that had been subject to Congressional moratoria until recently, as well as the resources in Alaska's Arctic National Wildlife Refuge and a small portion of currently unavailable federal lands in the Rockies, would lift U.S. crude oil production by as much as 2 million barrels per day in 2030, offsetting nearly a fifth of the nation's imports. Natural gas production could increase by 5.34 billion cubic feet per day, or the equivalent of 61 percent of the expected natural gas imports in 2030.

According to the ICF study, U.S. crude oil production would rise by 36% by 2030 if development is permitted in the studied areas of the Outer Continental Shelf, ANWR and the Rockies and domestic natural gas production would rise by 10%. By 2030, this activity would create 160,000 jobs.

Sounds like a way to energy independence and financial security....and development can be done in an environmentally sensitive way.  Why not?

Don C. Brunell, President (DonB@awb.org)

Deficit Spending in Washington (State)? Bad Idea!

We have grown accustom to deficit spending by the federal government, but in Washington State, we've been required to balance our state budgets---revenues equal expenditures---no borrowing.   Our state  bonds, or borrows, to build public buildings, roads and bridges, but not for normal operating expenditures.

States can't print money and are to act like financially responsible families. We often take out a loan to buy a house and car, but borrowing to buy groceries and pay the power bill leads to deep family financial problems. However, the Washington Federation of State Employees(WFSE) has an interesting take on it.

"Passing a balanced budget is not a legal or constitutional requirement. So the governor under the state Budget and Accounting Act must “propose” a balance budget. But neither the Legislature nor the governor must approve one. This fiscal version of “Mythbusters” is leading some to call for borrowing through bonding to help pay off  the projected $5.1 billion deficit.

Committed to balancing the state budget as required by current law, the governor has already ordered state agencies to cut more than $590 million and is proposing to slash another $5 billion to $6 billion in the next budget cycle."

Just as families get in trouble by borrowing for the wrong purposes, the Governor and state legislators should not make the same mistake.

Don C. Brunell, President (DonB@awb.org) 

Some Good News for Boeing in Washington But Some Better News for Alabama

How about some good news?

Last week, a Boeing built interceptor missile launched from Vandenberg Air Force Base in California knocked out a target long-range ballistic missile using several land and sea-based tracking systems. The successful test of the America's Ground-based Midcourse Defense System (GMD) is important to Washington state where 1,000 Boeing workers are involved in the project.   

The U.S. Missile defense system brings about $45 million to the state's economy.  

Boeing is the prime contractor for GMD, the central element of the Missile Defense Agency's overall layered ballistic missile defense architecture. Industry partners include Raytheon, Orbital Sciences Corp., and Northrop Grumman.

 

It is also good news for Alabama. The program has more than 400 industry partners and suppliers in 36 states. Boeing, through its work on GMD, also contributed more than $700 million to Alabama's economy in 2007 and supported nearly 5,600 direct and indirect jobs, according to a recent University of Alabama study.

 

Boeing does have options in other states to build its products.  Boeing Commercial Airplane President Scott Carson reminded us of that in a recent speech to the Prosperity Partnership in Seattle last month.

 

With the Governor and lawmakers staring at a $6 billion or 20% shortfall in revenues necessary to keep state government operating as it is today, they should not raise taxes or fees; or, add costly new programs on to Washington's private sector employers.   Costs matter today and the private sector must be positioned to lead us back to prosperity.  Otherwise, other states like Alabama would welcome more of Boeing's work----and for that matter work from other Washington businesses.

 

Boeing is the canary in the coal mine.  What happens to Boeing, happens to employers on Main Street.

 

Don C. Brunell, President (DonB@awb.org)