Stuck: running in place in Oregon

I work in Hillsboro, OR where evidence of a strong economy is everywhere. It’s tempting to assume that family income must be growing by leaps and bounds in Washington County, too, and to extrapolate and assume all is well statewide.

Not so much.

In fact, even Washington County isn’t doing that great, despite the presence of Intel, which has been growing like kudzu, feverishly sprouting buildings and good jobs.

Way back, growth in the U.S. economy was accompanied by income increases across the board, improving the lot of the poor and expanding the middle class. Everybody shared in the rising tide.

middle_class_family

But that hasn’t been happening for a long time. Now a lot of people find themselves working harder, but just treading water.

“Over the past 25 years, the (U.S.) economy has grown 83 percent, after adjusting for inflation — and the typical family’s income hasn’t budged,” according to a recent analysis by the Washington Post. “In that time, corporate profits doubled as a share of the economy. Workers today produce nearly twice as many goods and services per hour on the job as they did in 1989, but as a group, they get less of the nation’s economic pie.”

The result? In 81 percent of America’s counties, median family income is lower today than it was 15 years ago, the Post analysis revealed.

What about in Oregon? I decided to look deeper. The data shows that in 25 Oregon counties, the inflation-adjusted median family income is lower today than it was 15 years ago.

That’s true even in Washington County where median household income, adjusted for inflation, actually peaked in 1999 at $72,787. That year was also the peak for such wildly dispersed counties as Clackamas, Deschutes and Malheur.

The situation is even worse in counties such as Baker and Lake where median family income, adjusted for inflation, hit its peak 35 years ago.

If you really want to hit bottom, there are six counties, including Curry, Lane and Wheeler, where medium family income, adjusted for inflation, peaked 45 years ago. That’s right, almost half a century ago, when Richard Nixon was inaugurated President and the Apollo 11 astronauts, Neil Armstrong and Edwin E. Aldrin, Jr., took their first walk on the moon.

So what we have in Oregon is an economy in which few of us are really better off economically then we were years ago.

Here’s the county-by-county breakdown of when median household income, adjusted for inflation, peaked in each of Oregon’s 36 counties and the level at which it peaked.

Oregon-county-map

County Peak Year Amount
Hood River 2013 $56,725
Sherman 2009 $52,664
Washington 1999 $72,787
Clackamas 1999 $72,264
Columbia 1999 $63,555
Yamhill 1999 $62,070
Polk 1999 $59,218
Benton 1999 $58,558
Deschutes 1999 $58,159
Multnomah 1999 $57,733
Marian 1999 $56,673
Linn 1999 $52,326
Crook 1999 $50,759
Jackson 1999 $50,734
Clatsop 1999 $50,289
Jefferson 1999 $49,678
Tillamook 1999 $48,026
Wallowa 1999 $44,726
Josephine 1999 $43,406
Malheur 1999 $42,525
Morrow 1979 $57,126
Wasco 1979 $54,645
Harney 1979 $54,318
Umatilla 1979 $50,513
Lake 1979 $49,714
Grant 1979 $48,786
Union 1979 $48,006
Lincoln 1979 $47,053
Baker 1979 $42,760
Lane 1969 $52,736
Coos 1969 $52,171
Gilliam 1969 $49,892
Klamath 1969 $49,511
Curry 1969 $49,042
Wheeler 1969 $40,675

SOURCES: U.S. Census and American Community Survey. Amounts in 2013 dollars.

American businesses: meet your future job applicants

When Ellis Island opened in 1892, it welcomed immigrants escaping war, drought, famine and religious persecution and hoping America would offer them a new start.

Today, the Hillsboro School District is welcoming an increasingly diverse group of students, many of whom left their homes around the world because of brutal wars, punishing poverty, religious and political conflict, violence and/or a simple desire for a better life.

Tobias Elementary School, for example, is filling with children from Central America, Mexico, Ukraine, Thailand, Cambodia, Somalia, Egypt, Iraq and other countries speaking up to 30 languages. The mix depends, to some degree, on where the greatest turmoil and unrest is occurring, according to Steve Callaway, Tobias’ principal.

somalistudents

Many of these students are from low-income and, in many cases, low-educated, families where English is not the first language at home, behaviors and value systems vary widely and the American culture is not deeply embedded.

The shift has been dramatic. In the 1999-2000 school year, Tobias was largely white and culturally homogenous, with just 6.3 percent of the student body from principally mobile Hispanic migrant families and more from a smattering of other ethnicities, including Asian children whose parents worked in high-tech.

By the 2013-2014 school year, minority students from diverse cultures outnumbered white students at Tobias for the first time:

White: 47.8 percent.

Black: 3.5 percent.

Hispanic: 24.7 percent.

Asian/Pacific Islander: 12.2 percent.

American Indian/Alaskan Native: 0.6 percent.

Multiethnic: 11.3 percent.

The trend at Tobias is being replicated at the rest of Hillsboro’s schools, which were 49.5 percent white in the 2013-2014 school year.

Hillsboro School District demographics
Ethnicity No. of students Pct. of students
American Indian 174 0.83
Black 439 2.10
Hispanic 7,475 35.67
Asian 1,341 6.40
Pacific Islander 163 0.78
Multiethnic 965 4.74
White 10,368 48.48
TOTAL 20,955 100.00

Concentrations of children from particular ethnic groups are occurring in certain Hillsboro schools because their families want to live in close proximity. This has led, for example, to 19 Somali students attending Hillsboro’s Imlay Elementary School in the 2013-2014 school year and 15 this school year.

The U.S. Department of Education projects that minorities will outnumber whites among the nation’s public school students for the first time this fall. In other words, the minorities will become the majority.

What this means in the longer term is that Hillsboro’s workforce of the future is going to look quite different from today. Hillsboro’s economic viability and America’s greatness will be diminished if we don’t do all we can to educate these ethnically and culturally diverse children.

It’s critical that we prepare them for success as creative problem solvers and engaged community members in work and life. It’s also essential that we inculcate in them a belief in the American Dream and a commitment to the kind of effort that will bring them social and economic mobility.

“Kids don’t care how much you know until they know how much you care,” says Callaway. There are so many ways local businesses can show much they care about preparing children for work.

Companies can open their facilities to students who want to learn more about the world of work and career options by offering job shadows and paid internships. “All students need to be more aware of what job opportunities are out there,” says Leslie Smith Mayfield, a 3rd grade teacher and STEM Coordinator at Tobias. “We need help from business to expose kids, even in the elementary grades, to what options there are in the real world. Some bright kids are going to go to waste if they don’t realize the options they can work towards.”

Awareness also needs to expand to the skilled trades, which can offer well-paid, stable careers. For example, Callaway says he’d welcome having IBEW workers come in to teach kids about basic electrical circuitry.

Elaine Philippi, manager of student programs at the Business Education Compact, talks up the BEC STEM Connect TM Initiative. Volunteers from a business visit a school at least four times in an academic year, educating the students about their company, engaging students in activities that promote STEM concepts and collaborative processes and helping out at a science night or other community event.

Employees at local businesses can also get involved by helping with field trips, providing reading assistance, giving technical demonstrations, and even presenting on their hobbies. Astronomy and geology hobbyists, for example, have visited Tobias classrooms.

Businesses can give grants of all sizes to enable schools to offer innovative programs. For example, a Tobias teacher secured a grant to support an engineering math program for 6th grade girls.

Equipment can be donated to enhance the learning experience.

Companies can form partnerships with local schools, as FEI, Intel and Vernier have already done with Tobias.

All of this could help boost achievement levels and increase completion rates at Hillsboro’s increasingly diverse schools. That will benefit the local business community down the road when these youngsters enter the job market.

Watch video about Tobias Elementary School

This blog also appeared as a column in the Hillsboro Argus, October 1, 2014

Availability of affordable, quality child care can clear a path out of poverty

This week the U.S. Census Bureau released comprehensive reports on nationwide and state poverty in 2013. There are a lot of almost mind-numbing numbers in the reports, but behind those numbers are millions of Americans struggling with poverty that infects their lives 24 hours a day and shapes their future.

The Census Bureau reports reveal that the poverty rate for Oregon improved somewhat from 17.2 percent in 2012 to 16.7 percent in 2013, but remains stubbornly high. One way to reduce it further is to ensure that quality, affordable child care is available to low-income families.

Holding tight, a child grins as she enjoys being pushed on a swing by Jan McIntosh at Good Apple Child Care Preschool in Hillsboro. What a treat.

childcarefot

But for this child’s low-income parents, and many other low-income Washington County residents who want to work and want the best for their children, it can be tough to access affordable, quality child care.

But child care is essential to help low-income people climb out of poverty and children who don’t get a good start often enter kindergarten behind and stay behind throughout their schooling.

It’s in the community’s best interest to provide a strong foundation for all children to develop into well-educated adults ready to participate in the work force and keep our economy strong. It’s also in the community’s interest to facilitate work by adults because work builds self-esteem and creates self-sufficiency.

One Oregon program that helps make work possible is the Employment Related Day Care program run by the state’s Department of Human Services (DHS). It provides financial assistance to help eligible low-income working families pay for child care, enabling parents to stay employed and children to be well cared for in stable child care arrangements.

The program helps approximately 20,000 Oregon families every year pay for child care for about 35,000 children.

About half the children who attended Good Apple Child Care Preschool in Hillsboro this summer were being helped by the program.

The preschool’s owners, Jan and James McIntosh, operate out of their 1,200 square foot home with its half-acre backyard playground.

If a child wants to enjoy arts and crafts, hike through Jackson Bottom Wetlands, take a field trip to the Enchanted Forest, get introduced to reading and music, or dunk her feet in poster paint and make footprints on poster paper, Good Apple’s the place to be.

The 16 boisterous children there this summer ranged from 6 months to 9 years of age; that switches to children 6 months to 5 years of age when school starts. The children are overseen by between three to six staff members, depending on the activities under way.

The nonprofit Community Action organization, which works to eliminate conditions of poverty and create opportunities for people and communities to thrive, helped Good Apple succeed.

“We were hooked up early on with Jan Alvarez, a child care specialist at Community Action of Washington County, and she has been awesome,” said Jan McIntosh. “She’s encouraged us to take the steps to get our certification, get nationally accredited and then participate in Oregon’s Quality Rating Improvement System (QRIS), which aims to raise the bar on quality child care and prepare children for kindergarten.”

Community Action also educates low-income working families about child care options, such as home-based programs and child care centers, and offers a broad range of face to face and online training classes in English and Spanish to child care operators and staff, such as first aid and CPR and child abuse and neglect training.

Karen Henkemeyer, who manages the child care program at Community Action, said some low-income families also find that providing child care can help lift them out of poverty while allowing them to stay close to their own children.

Child care providers throughout Washington County are striving to make a difference for low-income children and their parents. It’s critical that we support efforts to provide a full range of affordable, high quality child care if the county and all of its residents are to prosper.

For more information about child care-related programs in Washington County, call Community Action at 971-223-6100 or visit its website, caowash.org/ccrr.

Washington County or Casino County?

By Bill MacKenzie

You know the typical casino ad. The gorgeous blonde’s crystal blue eyes gaze adoringly at the urbane, fashionably dressed man as he places a bet. The couple is surrounded by smiling, equally fashionable friends enjoying the gaiety.

You almost expect Jay Gatsby to stroll into the scene from West Egg and enjoy the fun.

Dede’s Café, hiding off to the side in the Hillsboro Promenade at the corner of Southwest Baseline Road and Southwest Cornelius Pass Road in Hillsboro, is the raw reality of the casino Washington County has become.

At Dede’s, six video lottery machines with brightly lit screens are crammed into a space not much more expansive than a large walk-in closet. On a recent mid-afternoon visit, I found all the machines being used by solitary, slightly disheveled men and women in jeans and sweatshirts.

All of them looked hypnotized by the glow of the screen in front of them. Almost motionless, except for the rapid movement of their hands to push the play buttons, they sat mute in the dim light.

A man with a black hat pulled down over his gray hair slipped a $10 bill in one machine and started briskly tapping the play buttons. He got up to $46.45 on Game of Dragons II, but didn’t take his winnings and celebrate. Instead, in a few minutes he fell back to $5.19.

Switching to a Zeus game, he bounced up to $23.49. When he went to $6, he shifted to another game. After 20 minutes of play, when he was down to 35 cents, he slipped in another $20 bill and resumed play.

MIT anthropologist Natasha Dow Schüll knows such people well. In her book, “Addiction by Design,” she shows how the rhythm of gambling at electronic terminals puts people into a trancelike state in which gamblers keep playing not to win, but so they can stay “in the game” and maximize their “time on device.”

Oregon voters overwhelmingly approved the lottery in 1984. It launched in 1985 at a Portland event featuring an 84-foot-tall inflatable King Kong, perhaps symbolizing the behemoth the lottery would become.

Dede’s Café is now part of a rising river of lottery money flooding Oregon. The money has turned the county and the state into unwitting addicts as Oregon’s lottery take has gone from $87.8 million in 1986 to $1.1 billion in 2013. It’s a very big business.

The lure of raking in lottery dollars without having to raise taxes has long been appealing to politicians anxious to satiate government’s insatiable thirst for revenue. In fact, the lottery is often referred to as a “voluntary tax,” though Schüll’s research calls the “voluntary” part into question.

In fiscal year 2013, 204 lottery retailers in Washington County generated net receipts of $87.7 million from 1,035 video terminals, almost equal to the number of video slot machines at the Wildhorse Casino in Pendleton.

The numbers are even more impressive when you combine net receipts from video terminals with sales of traditional games, such as scratch-its and Megabucks. Together, these totaled $125.7 million in all of Washington County.

Washington County sees a return from all this gambling activity in the form of direct and indirect jobs and money the state devotes to parks, natural resources, education and various economic development efforts.

The county also receives direct payments equal to 2.5 percent of lottery proceeds. This money must be applied to economic development/job creation programs, liberating county revenue for other priorities.

But the lottery bounty also means the county and state are increasingly relying on the generous flow of lottery dollars, which are not a dependable or sustainable source of revenue. If lottery revenue declines, or even fails to grow, a lot of established programs could face tough adjustments.

Washington County residents are getting decidedly mixed messages. On the one hand, business and government leaders are aggressively delivering messages about the importance of education and hard work in achieving success.

At the same time, the lottery undermines the messages by constantly suggesting in tantalizing ads and much ballyhooed winner announcements that riches are just one lucky ticket or one play away.

So go ahead. Make your wager. Just remember that in the end, the house always wins.

Bill MacKenzie is a former congressional staff member, newspaper reporter and communications manager for a Hillsboro company.

Originally published in the Hillsboro Tribune,  Nov. 11, 2013

Hillsboro’s data centers: Big tax breaks, little disclosure

By Bill MacKenzie 

Computer data centers built in Hillsboro’s Enterprise Zone are enjoying generous tax breaks with almost no public accountability.

Companies with data centers already open or on their way include T5 Data Centers, Umpqua Holding Cos., Via West Inc., Fortune Data Centers, Digital Realty Trust Inc., which houses NetApp in its building, and Adobe Systems Inc.

Oregon’s 63 Enterprise Zones are designed to attract investments by exempting businesses from 100 percent of local property taxes on new investments for up to two years while construction is in process and up to five years after that if they are growing employment in the zone.  Because IT equipment in a data center must usually be refreshed within 5 years, the net effect is that there is no tax, neither sales nor property, on such equipment in Enterprise Zones. Fortune says these “…are enormous financial incentives”.

Are the tax breaks Hillsboro’s giving out to data centers paying off for the city?

Since the Enterprise Zone program is ballyhooed as a job creator, you’d expect stringent and substantial hiring requirements to be tied to the valuable property tax exemptions. You’d also expect the city and the data center companies getting the tax breaks would gleefully share their job creation achievements with the public to demonstrate their impact, openness and corporate responsibility.

Forget about it.

Enterprise Zone contracts require that if a data center already operates inside the Zone and applies for benefits or renewal, it is required to increase employment by just ten percent. If a firm locates a new data center in the Zone it only needs to add one employee to be in compliance. That’s right, just one.

As for job creation, the City of Hillsboro said it didn’t have employment numbers on the data centers in the Enterprise Zone. Mark Clemons, Hillsboro’s Economic Development Director, has, however, said publicly that all the Enterprise Zone companies have added a total of 1,420 jobs since joining the program. How he arrived at that number without knowing the number of employees at each company, including the data centers, is a puzzlement.

Just one data center company disclosed its Hillsboro employment numbers to me. NetApp said it has 12 full time employees plus one contractor and expects to hire one or two more people over the next couple years. It’s likely that the other data centers have similarly small workforces.

As a general rule, if incentives cost more than the resulting jobs contribute to the economy, they are misplaced. Given the significant tax abatements enjoyed by the data centers in Hillsboro’s Enterprise Zone, the wisdom of those abatements is questionable.

Still, the public can be assured that the employees earn good wages, right? When I asked all the data centers for the average wage of their employees, not a single one provided the figure.

But, thankfully, Hillsboro taxpayers can easily find out the value of the tax abatement each of the multi-million dollar data centers is getting from the city. That way the public can judge whether the foregone taxes are worth it in terms of investments made and jobs created.

Nope.

I asked the Washington County tax assessor’s office how much the Enterprise Zone property tax exemptions save each data center annually. “…it has been determined that this information is confidential and exempt from disclosure,” replied Julie McCloud with the Washington County Administrative Office.

Quite simply, there is little transparency to the entire data center process. Without a requirement that data centers make their the employment numbers, average wages, investment numbers and the value of the tax abatements public, it is impossible to judge how much each new job is costing the city and whether the job gains are worth the tax losses.

Without that, the public can’t know whether the data center Enterprise Zone     deals being cut by the city make sense.

It’s time to change that.

 

Bill MacKenzie is a former congressional staff member, newspaper reporter and communications manager for a Hillsboro company.

Originally published in the Hillsboro Tribune,  Oct 25, 2013

 

Sometimes it pays to go with the crowd

By Bill MacKenzie

It seems like nearly everybody is trying to raise money for their personal use through online “crowdfunding.” It’s clearly not just for start-up businesses.

Crowdfunding — funding a project by raising many small amounts of money from a large number of people — is exploding in Hillsboro, throughout Oregon and across the United States.

Even Caroline Channing, the tall blonde in the TV show “2 Broke Girls,” is a believer. In a recent episode, she went on a crowdfunding website, gofundyourself.com, in an attempt to raise $1,500 for a new pair of pants.

If you believe in the wisdom of the crowd, the Internet is bursting with opportunities to join others investing in people.

Keith Merrow of Hillsboro recently sought to raise $15,000 on a crowdfunding website, Indiegogo.com. His band, Conquering Dystopia, wanted to use the money to record an album.

In just 45 days, his campaign raised $35,320, more than double his goal, from 792 contributors, some as far away as Australia.

Typical of arrangements on Indiegogo, contributors got no financial return on their investment, but could pick a gift based on the amount of their donation. A $10 donation spurred a digital download of the album; a $500 donation earned a VIP dinner with band members at the Hard Rock Cafe in Seattle.

Matt Peterson of Hillsboro tried to raise $3,000 on another crowdfunding website, GoFundMe.com, so he could go to a 28-day intensive wrestling camp. He reached $1,750 from 16 people in six months, then secured the rest from family.

At GoFundMe, participants usually raise money for themselves, a friend or a loved one for purposes such as medical expenses, education costs, volunteer programs and youth sports. Fundraisers can keep every donation they get or get the donations only if they reach a pre-set goal.

A different approach is offered by the crowdfunding website pave.com, an online funding platform that allows individuals to support promising high achievers. Pave claims it’s “a new investment option, not a donation.” If the investees achieve financial success, they agree to share that with their investors.

Oren Bass, who co-founded Pave in 2012, said his motivation was basic: “To provide people with what I consider a better financing option than debt — one that allows risk-taking plus the collaboration and support of the community; and to build something with both social and macro-economic impact.”

At Pave, the percentage of income an investee commits to sharing with investors varies depending on the amount of funding raised, along with how much the recipient is expected to earn.

Stephanie Walker, an engineering student at Oregon State University, recently launched a campaign on Pave. She hopes to raise $50,000 to pay off her student loans so she can pursue a career in sustainable engineering and product design with a focus on creating sustainable materials.

Close to 30 prospects have already raised over $400,000 through Pave, and a few have started making payments to their backers.

Though crowdfunding is gaining wide acceptance, there is reason to be cautious.

To guard against fraud, Pave does extensive checks to verify identities, review credit histories and check any “structured data” a prospect supplies, such as college attendance, GPA, and work employment history.

GoFundMe is much looser in its oversight.

“With hundreds of thousands of campaigns, it’s not feasible for GoFundMe to investigate the claims stated by each campaign organizer,” reads an excerpt from the GoFundMe website.

I’m not sure what motivates people to give money online to complete strangers. Maybe a lot of people who have had good fortune want to pay it forward. Maybe it’s just a charitable impulse.

But you can’t check the veracity of a lot of crowdfunding proposals. Some are the equivalent of the infamous Nigerian email scams where mass emails promise great riches to potential victims. The entire personal crowdfunding platform relies largely on trust, something scammers have always known how to exploit. So prudence should be the watchword.

 

Bill MacKenzie is a former congressional staff member, newspaper reporter and communications manager for a Hillsboro company.

Originally published in the Hillsboro Tribune,  Nov. 15, 2013

 

American dream in a Mexican restaurant

By Bill MacKenzie

Carolina Tapia and Maria Calderon had a dream: to own a thriving, authentic Mexican restaurant. With the recent opening of A Taste of Mexico in Hillsboro, their dream is on its way to being fulfilled, but the journey has not been easy.

by: HILLSBORO TRIBUNE PHOTO: CHASE ALLGOOD - A Taste of Mexico is now open on Southwest Cornelius Pass Road in Hillsboro. Owner-operators are Carolina Tapia and Maria Calderon. PHOTO: CHASE ALLGOOD – A Taste of Mexico is now open on Southwest Cornelius Pass Road in Hillsboro. Owner-operators are Carolina Tapia and Maria Calderon.

Carolina was born in the United States, but grew up in the barely-there town of San Jose del Vergel in central Mexico. She left school after the sixth grade to help at her father’s grocery store. At 17, she embarked on a pilgrimage to a better life in Oregon, where two of her brothers lived. Because her mother had been born in Colorado, her American citizenship was secure, but her future was not.

Determined to flourish in her new home, Carolina learned fluent English through immersion in the American culture, and at 19 she earned her GED. Over the next 12 years she worked for several Hillsboro manufacturing companies, including Intel and White Electronics, where, 10 years ago, she met Maria.

Maria was born in Morelia, Michoacan in southern Mexico and grew up as one of 10 children in an impoverished family. Finishing school in the ninth grade and married at 15, she became the mother of three children in the next four years. At 19, she and her family slipped across the U.S. border at Tijuana and headed to Oregon.

Maria spent her first five years in the U.S. toiling under the sun in Oregon’s fields, before shifting to a cabinet-making company and several manufacturers in the Hillsboro area, including White Electronics. In the meantime, she became a proud U.S. citizen in 1988, following the passage of federal immigration reform legislation in 1986.

“After 30 years here, I feel like this is my house, my home,” she said.

About a year ago, Maria took a trip to Mexico where she saw a number of small restaurants that seemed to be doing well. When she came home, she pitched to Carolina the idea of starting a little eatery featuring all fresh authentic Mexican food.

They leased space at 3002 S.W. Cornelius Pass Road, just off TV Highway in Hillsboro, and figured all would go smoothly.

It didn’t.

They weren’t prepared when bills came in to upgrade the plumbing or re-do the walls and floors of the leased space. They weren’t prepared for all the government requirements, each with its own fee. They weren’t prepared for the multiple government inspections and dealing with the city bureaucracy.

“It took a lot more effort, time, money and everything,” Carolina said. “We almost gave up because everything was taking too long. We had thought we could be done in three months so we could open in April. It was eight months. It was harder than we expected.”

It also took $20,000.

A Taste of Mexico finally opened on Aug. 5 with a cramped kitchen, six tables and three booths squeezed into 960 square feet.

“The first week was terrible, to be honest,” Carolina said. “We were like, oh my gosh, what did we get ourselves into?”

After about two months in business, Carolina and Maria are still struggling, but more customers are coming in with each passing week and they’re increasingly hopeful.

“Our families are behind both of us,” said Carolina. “They trust us and know we’re going to make it, and we don’t want to give up the dream.”

Bill MacKenzie is a former congressional staff member, newspaper reporter and communications manager for a Hillsboro company.

Originally published in the Hillsboro Tribune,  Oct 18, 2013

 

Turning unemployment into self-employment

By Bill MacKenzie

Ronald Reagan once wisecracked, “The nine most terrifying words in the English language are, ‘I’m from the government and I’m here to help.’”

But sometimes, the government gets it right.

Julie Thomas knows that. Thomas recalls with sadness when her beloved black lab, Barney, had cancer. Wanting desperately to ease Barney’s pain, Thomas, an employee at Intel’s Hillsboro site, studied small animal massage and began treating her pet. When Thomas learned she was going to be let go by Intel, she decided to take a risk and change careers to work in canine water therapy.

But how could she get the business off the ground while unemployed? Oregon’s Self Employment Assistance Program (SEAP) came to her rescue.

The regular Unemployment Compensation program requires unemployed workers to be actively seeking work to get benefits. SEAP allows unemployed people to collect allowances equal to their benefits while devoting all their time to starting a business, rather than looking for another job.

The program was created in 1993 after passage of federal legislation championed by then-U.S. Rep. Ron Wyden. SEAP is now active in seven states, including Oregon. In 2012, legislation sponsored by Wyden — now Oregon’s senior U.S. Senator — provided for $35 million in grants to states to improve administration and promotion of the program.

With the economy still struggling, SEAP offers a lifeline to some entrepreneurs.

“It seemed a perfect fit for me,” Thomas said.

Thomas opened her business, Doggie Paddle, in Portland in October 2010.

“I’m not making the money I made working in a corporation,” she said, “but I’m doing something with animals, something of service, something for which I have a passion.”

Thomas is just one of several thousand Oregonians who have taken advantage of SEAP, including 55 now enrolled from Washington County, with seven of those from Hillsboro.

With SEAP support, Dave Crosswhite of Tigard started Oregon Backflow Testing, which tests backflow prevention devices that help to prevent hazardous materials from entering drinking water. He said SEAP was a huge factor.

“It took the pressure off of needing to produce an income right away and allowed me to focus on building the business and not having to job search in order to receive benefits,” he explained.

Glen Wagner and Steve Bauer signed up after they both lost their technology jobs. They decided to start a company called Open Lore in Beaverton that would deliver assisting technology to people having difficulty reading English, primarily those with dyslexia.

“Unfortunately, with multiple kids in college and still relatively young, at least at heart, we did not have the complete means to meet our family obligations and the capital expenses of starting a new technology business,” Wagner said. “With SEAP, we could put our heart and soul into the business.”

But SEAP is not without its weaknesses.

Key SEAP performance data is based only on surveys returned by program participants, but a lot of participants don’t return the surveys. For example, a recent Oregon survey sent out to 356 SEAP participants got only 78 replies — a 22 percent return.

So the state doesn’t know how many people sign up for SEAP, exhaust their benefits and end up with no business and no job. Some of those missing may be in worse shape than when they started.

Another glaring weakness is, success in Oregon hasn’t been determined on the basis of how many SEAP participants start and maintain a successful business. Rather, success has been judged by how well the state promotes SEAP and how much money is distributed to participants. Only government could think that way.

In addition, although SEAP requires that potential participants fill out an application scored to determine the feasibility of their proposed business, there’s no real follow-up. That means no assurance participants will take advantage of the array of support programs available to help grow and sustain a business. Failure may too often be the consequence.

Only about half of all new businesses survive five years or more, and only about one-third survive 10 years or more. To improve their odds, SEAP-related businesses need continuing guidance. After all, although new businesses create new jobs, it’s only when they succeed and expand that real job growth occurs.

Bill MacKenzie is a former congressional staff member, newspaper reporter and communications manager for a Hillsboro company.

Originally published in the Hillsboro Tribune,  Sept. 13, 2013

Interns ought to be paid

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By Bill MacKenzie

Ahhh, it’s summertime in the city, with baseball, concerts in the park, day camps, outdoor festivals … and unpaid interns.

Eager young interns are plugging away this summer at businesses across Hillsboro, learning about the world of work. Some are being paid, but others are working for free.

The Hillsboro Hops baseball team, for example, has five interns working for them. On game and non-game days they do such things as promotional work, helping with preparations for entertainment during the games, assisting front-office employees and taking ticket orders. Some of the interns are getting college credit for their work.

But none of them are being paid. Not one thin dime. Not one red cent.

Come on now. Legal issues aside, do you really think the Hops, operating in a $15.6 million ballpark subsidized by the city, can’t afford it?

It’s a good thing the Hops and other local businesses are offering internship opportunities to young people, but they are treading on thin ice by not paying them.

Federal law is clear that most interns should be paid at least the minimum wage plus overtime after 40 hours a week. Under the Fair Labor Standards Act(FLSA), covered and non-exempt individuals who are “suffered or permitted” to work must be compensated for the services they perform for an employer. According to the U.S. Department of Labor, internships in the “for-profit” private sector will most often be viewed as employment.

In June, federal District Court Judge William H. Pauley III of New York ruled that Fox Searchlight Pictures broke the law when it didn’t pay production interns working on the movie “Black Swan” because they were essentially regular employees. “Searchlight received the benefits of their unpaid work, which otherwise would have required paid employees,” the judge said.

Pauley said unpaid internships should be permitted only in very limited circumstances. He added that whether an intern is receiving college credit for the work matters little in determining whether an intern should be paid.

Pauley’s ruling isn’t a departure from precedent. There’ve been other cases, too, in which courts have ruled that interns must be paid.

You’d think companies would have learned by now and stopped trying to get free labor from interns, but many persist.

“In some industries, especially media, the unpaid internship is the risk many companies are willing to take,” Ed Reeves, a labor and employment attorney atStoel Rives LLP, told me. “Less so in other businesses. We counsel against that risk, but not every company asks.”

Some businesses that bring on interns without paying them may think it’s enough that they get experience, do some networking and get to hang around the fascinating people who do the “real work.”

But aside from the legal issues, that means students from well-off families can afford to take a career-building unpaid internship, but not the kid from an average family struggling to deal with potentially crippling college loan debt. That perpetuates inequality.

Fortunately, there are local models to copy. All the 259 interns placed so far this year by Beaverton-based Business Education Compact (BEC), are paid, according to Darrin Marks, BEC’s director of student services. There are varying rates based on their education level as well as what the company that places them would like to start them out at. Typical rates are $10 an hour for high school students and $12 to $14 an hour for college students.

Paid internships tend to pay off more for students too. According to the National Association of Colleges & Employers, class of 2013 graduates who had done paid internships outpaced their unpaid peers in job offers and salaries.

Among 2013 graduates who had applied for a job, those who took part in paid internships enjoyed a distinct advantage over their peers who undertook an unpaid experience or who didn’t do an internship.

An association survey showed that 63.1 percent of paid interns received at least one job offer. In comparison, only 37 percent of unpaid interns got an offer; that’s not much better than results for those with no internship — 35.2 percent received at least one job offer.

In terms of starting salary, too, paid interns did significantly better than other job applicants: The median starting salary for new grads with paid internship experience was $51,930 — far outdistancing their counterparts with an unpaid internship ($35,721) or no internship experience ($37,087).

So what should local businesses offering internships do? First, check with an attorney and/or the Oregon Bureau of Labor & Industries for guidance. Then do the right thing: Pay your interns. You’ll both be the better for it.

Bill MacKenzie is a former congressional staff member, newspaper reporter and communications manager for a Hillsboro company.

Originally published in the Hillsboro Tribune,  Aug. 12, 2013

 

Hillsboro reaches too far with investments

By Bill MacKenzie

When others are playing with bright and shiny things, it can be tempting to bend the rules to join the game.

A case in point — the city of Hillsboro’s decision to succumb to the allure of venture capital investment.

In 2009, some local investors began advocating a city of Portland fund that would make venture capital investments in local startups.

Portland Mayor Sam Adams and the Portland Development Commission(PDC) were enthused by the idea, but the Oregon constitution prohibits cities

and counties from investing directly in for-profit companies. As the saying goes, however, “where there’s a will there’s a way.”

The PDC came up with an end-run — have Portland’s contribution go to a fund created by the non-profit Oregon Entrepreneurs Network (OEN). Then pick a firm to manage the money as the Portland Seed Fund and make OEN a limited partner in the fund. That way, any return on investment in startups would go back to OEN, not the city of Portland. In 2010, Portland announced it would make an initial contribution of $500,000 — later expanded to $700,000 — and a search began for additional donations and investments. One target — the city of Hillsboro.

In January 2011, officials with the Hillsboro’s Economic Development Department brought the concept to the Hillsboro City Council. The fund would provide seed capital to entrepreneurs, they said, helping to fill early funding gaps for new companies and increasing the job creation prospects for startups.

The officials said their department had already budgeted $250,000 for the seed fund, with the money to come from fees generated by the city’s Enterprise Zone program.

Because Hillsboro was subject to the same prohibition on investing in for-profit companies as Portland, Hillsboro would follow the same circuitous route. Its money would go to the Portland Seed Fund and investment decisions would be left to the fund managers.

“The city of Hillsboro is interested in supporting entrepreneurship and business growth in the Portland region and in Hillsboro specifically,” the officials told the city council. “We anticipate that the proposed seed fund will ultimately generate considerable business investment and job creation in Hillsboro.”

The city council approved the seed fund donation without public discussion.

Venture capital has played a major positive role in innovation, but if its intent in this case was the fertilization of some startups in Hillsboro, the results have been dismal. Of the 36 startups receiving money from the seed fund so far, only one was located in Hillsboro.

That company, Good Works Now, Inc., was developing Cloud-based tools for non-profits to modernize how they manage fundraising, boards and online reputation. In late 2012, the company collapsed, and the seed fund wrote off its investment.

Looking forward, there are no guarantees Hillsboro will see any direct benefits from the seed fund. That’s because no investment recipient is obligated to invest in Hillsboro, and there is no guarantee that any startup supported by the fund in the future will do so.

Hillsboro also won’t get a payoff if a startup becomes wildly successful.

A venture capital fund stands to make money by owning equity in the companies it invests in when the companies are sold or go public. But Hillsboro’s $250,000 was a donation, not an investment in the fund.

Other American cities, including New York and Philadelphia, are heading down the same venture capital route, but not to universal acclaim. Critics assert that private venture capital firms will find promising startups without government interference.

“The question is whether it’s justifiable for government to be involved,” Gary Kunkle, founder and CEO of Outlier, a research firm focusing on innovative approaches to nurturing and retaining high-growth companies, told Inc. Magazine recently. “Markets take care of themselves much more efficiently than governments want to give them credit for.”

Portland economist Bill Conerly agrees.

“Portland would do best creating a good business environment for all companies, big or small, startup or established …” he recently told me. “The idea of city money for seed capital is simply corporate welfare done in small pieces.”

In 2009, Brad Jones, an executive of the Redpoint Ventures investment firm, wrote to President Barack Obama’s economic adviser, Lawrence H. Summers, questioning the wisdom of the government’s $535 million loan guarantee to Solyndra, a solar cell manufacturer.

“I can’t imagine it’s a good way for the government to use taxpayer money.” Jones said.

“I relate well to your view that gov. is a crappy v.c.” (venture capital investor),” Summers wrote back.

In 2011, Solyndra went bankrupt.

The Portland Seed Fund is now raising money for a second round of startup investments. The city of Hillsboro should sit this one out.

Bill MacKenzie is a former congressional staff member, newspaper reporter and communications manager for a Hillsboro company.

Originally published in the Hillsboro Tribune,  May 3, 2013