THURSDAY, JANUARY 14, 2010
Washington's business climate gets even better
But in-state "echo chamber" of negative agenda-driven rhetoric increases

Last summer, the Washington State Labor Council published a series of reports entitled "Outside the Echo Chamber," that was intended to counter the politically motivated, demonstrably untrue rhetoric within our state suggesting that Washington is a bad place to do business. The reports demonstrated that objective assessments -- from outside the state conducted by public policy, industry and media experts with no agenda -- consistently rank Washington as one of the very best states to do business.

Since those reports were released, the good news about Washington's business climate and about the costs and effectiveness of our state's safety nets for laid-off and injured workers has kept coming. Despite this, the Washington-bashing negative rhetoric from the state's business lobbying groups has increased. 

Why? Cynical opportunism.

In light of Boeing’s decision to expand 787 production in South Carolina instead of Washington, business lobbying groups are again blaming our state's business climate. They claim that the costs of workers' compensation and unemployment insurance, among other things, are driving employers away from the state. (For its part, Boeing said its decision was based on "workforce stability" and its desire to have a second, competing workforce in South Carolina -- one that will discourage work stoppages and costly wage/contract improvements among Boeing employees here in Washington.)

In addition, the national recession has created high unemployment, a state budget crisis and, as described in the latest WSLC Legislative Update newsletter, an opportunity for the business community:

They know that the best time to increase private profits by cutting wages, benefits and regulatory costs is when unemployment is high, working people are desperate and the government is broke.

They know that blood is in the water in Olympia and there's never been a better time to eliminate government regulation of their businesses. They know it's open season on the unemployment and workers' compensation systems and anything else they declare to be "uncompetitive" or a "job-killer."

It has gotten so bad that some of our state's elected officials, including Democrats like Snohomish County Executive Aaron Reardon, have begun repeating these false anti-Washington business-climate talking points. These leaders are the very people who are supposed to be the champions of economic development in our state, touting Washington as a great state to start and grow a business, but instead some of them still insist -- as one Boeing executive infamously said in 2003 -- "we suck."

The Washington State Labor Council has revisited the annual state business-climate rankings and other data comparing our unemployment and workers' compensation systems to those of other states. If it is true that Washington is slipping from its lofty rankings because of rising business costs or other factors, perhaps that would be a cause for concern.

What did we find? 

National experts are saying that the Washington's business climate has gotten even better in the past year as compared with other states. They continue to point out that our state suffered the negative economic impacts of the recession later than most, and we are projected to be one of the first states to have its economy emerge from the national downturn.

But don't trust our word. The WSLC, admittedly, has an agenda of its own -- which is, among other things, to protect the safety nets for laid-off and injured workers from the legislative assaults of business lobbying groups. Read the revised and updated "Outside the Echo Chamber" reports and follow their links to outside-the-state sources of information for yourself:

Part 1 -- Washington: A business-friendly state -- This report is a collection of rankings from national publications, universities and public policy organizations that analyze state business climates. They say we have comparatively low business taxes, a lighter regulatory burden, a highly skilled and highly trained workforce, excellent higher education, and for those reasons and many others, our state economy consistently outperforms those of other states.

In fact, since this report was originally published in July 2009, our state has risen even further on those rankings. For example, Forbes magazine lifted Washington from 3rd to 2nd best place to do business in 2009, and the conservative Tax Foundation moved our state from 12th to 9th best state in terms of its business tax climate. Read Part 1.

Part 2 -- Our state's workers' compensation advantage -- With the Department of Labor and Industries' 2010 rate increase, business lobbying groups have mounted an aggressive campaign to criticize our state-run workers' compensation system, and to undermine public confidence in it. They claim its costs are too high. They are asking the Legislature to allow compromise-and-release (or as advocates for injured workers call it, "starve-and-settle"), where employers can negotiate lump-sum settlements with injured workers who've lost their income and are often desperate circumstances after the lengthy claims-and-appeal process. Meanwhile, some business groups appear poised to support a potential ballot initiative this fall sponsored by the insurance industry that would privatize our state-run system.

But as this report points out, independent objective analyses from outside the state tell a very different story. In fact, the gap between the truth and the negative rhetoric about Washington's workers' compensation costs is shocking.  Not only do we have comparatively low premiums, by the national measure most often cited, the workers' compensation costs to employers here are the fifth lowest of any state in the nation. Read Part 2.

Part 3 -- Unemployment Insurance is saving Washington business, jobs -- Washington has one of the healthiest U.I. systems in the nation. In contrast, at least 26 states have systems that are broke in 2010. Those states are borrowing billions from the federal government that will have to be repaid by raising employers’ taxes amid the recession.

This report has been updated with new figures, released Wednesday by the state Employment Security Department, indicating that $4 billion in U.I. benefits was pumped into our state economy in 2009. This system is designed not only as a temporary safety net for families who’ve lost sources of income through no fault of their own, but also as a safety net for businesses. It provides economic stability in times of recession, like the current one. In 2009, our U.I. system created more than $6.5 billion in purchasing power on Main Street in Washington. This money is saving jobs and businesses. That’s what it’s designed to do, and that’s what it’s doing every day.

In addition, new figures from the U.S. Department of Labor indicate the average U.I. tax rates for Washington employers have dropped significantly, dropping our state out of the top ten for high costs. That trend is sure to continue given the state's U.I. tax rate cuts enacted effective Jan. 1, 2010, given that most other states are being forced to increase their rates (and slash benefits) to rescue their bankrupt systems. Read Part 3. 

If you have any questions about the "Outside the Echo Chamber" reports, contact David Groves at dgroves@wslc.org or 206-281-8901. 

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