Business Climate in Washington State

BACKGROUND -- On March 21, 2001, the Boeing Co. announced it would move its corporate headquarters from Seattle to Chicago. The company said the move was for strategic reasons and had nothing to do with Washington's business climate. But that's not how it was spun.

Meanwhile,
OUTSIDE OUR ECHO CHAMBER

Business-funded public policy groups in Washington bemoan our business climate, but national studies (by groups with no local agenda) rank Washington among the best states to do business.

Washington state jumped from 12th to 5th place in Forbes magazine's "best states to do business" ranking for 2007, and was the only state in the top five in the labor, regulatory environment and growth categories. (www.forbes.com)

Washington ranks 8th best among all states for its pro-business policies, and best among all Western states except for Wyoming, according to Pollina Corporate Real Estate Inc., a Chicago-based business site-selection consulting firm that counts Xerox, Caterpillar and many other Fortune 500 companies among its clients. (www.pollina.com)

Washington is ranked 11th best in the nation in terms of "business-friendliness" by the Tax Foundation, a conservative Washington D.C.-based think tank. Its annual report compares the states’ tax environments by measuring their sales and gross receipts taxes, unemployment insurance taxes, corporate and individual income taxes, and something called the "Fiscal Balance Index." (www.taxfoundation.org/sbtci.html)

Washington ranks 5th best in the nation in the 2006 Small Business Survival Index of the Small Business & Entrepreneur Council, a business lobbying group that advocates for tax relief and regulatory reform that benefits small businesses. Washington’s West Coast competitors, Oregon ranked 39th and California ranked 49th. (www.sbecouncil.org)

Business interests and legislators who had long complained about the costs of doing business in this state immediately blamed (and still blame) our "unfriendly business climate." Gov. Gary Locke responded by creating a Competitiveness Council of corporate executives to develop a wish list of pro-business legislation, and he made those recommendations his priorities.

Amid a national recession, political momentum for this competitiveness agenda grew as unemployment rose, despite the fact that state job loss was caused by events that had nothing to do with state government. The 9/11 attacks decimated the airplane market and Boeing shed tens of thousands of jobs, accelerating its plan to contract out work. The dot-com bust hit our state disproportionately hard. A phony energy crisis on the West Coast delivered a death blow to our aluminum industry. International trade policies continued to harm agriculture, timber and manufacturing sectors.

In fact, until 2005, the entire U.S. economy suffered an extended slump with millions of jobs disappearing at a clip not seen since the Great Depression. Prolonging the downturn were corporate accounting scandals that shook the stock market and harmed investor confidence.

In 2003, the momentum to improve our business climate went into overdrive as the state prepared its "bid" for the Boeing 7E7 (later dubbed the 787 Dreamliner) assembly work. Without so much as a public hearing, in the final hours of the extended 2003 legislative session, new laws written and supported by business interests were approved making it harder for injured workers to receive workers' compensation benefits and overhauling the state unemployment system with drastic benefit cuts. (See the Unemployment Insurance position paper for more information.)

Some, but not all, of the damage suffered by laid-off and injured workers has been mitigated in subsequent legislative sessions, and our state's economy has steadily recovered from the national recession and the effects of 9/11 on the aerospace industry. Although economic forecasts are bright, the calls to improve Washington's business climate continue.

LABOR'S POSITION -- Some of the Competitiveness Council's recommendations, including improving state investment in public education and transportation, were supported by labor and continue to be cited by business leaders as priorities for improving our state's business climate. But many of the group's recommendations were anti-worker ideological leftovers labor opposes: deregulation of business and privatization of public services.

While the WSLC supported the bid to secure the Boeing 787 assembly in Washington, we adamantly opposed the gutting of our unemployment insurance system and workers' compensation benefit cuts that were rammed through as part of the package. The WSLC has fought, with some success, to restore those cuts.

Legislators should be wary of business lobbyists who insist that when it comes to our business climate -- as one former Boeing executive infamously expressed -- "we suck." Many objective national studies rank Washington as a great place to do business on issues ranging from taxes to workers' compensation.

Important safety nets for injured workers and people who lose their jobs through no fault of their own must not be shredded based on the false notion that Washington is a bad place to do business.