Olympia Business Watch

The Daily News nails it on need for workers' comp reform

On its Sunday editorial page, the Longview Daily News hit the nail on the head about the need for workers' comp reform in Washington:

Local businesses and their employees are about to get hit with significant tax bill just when they can least afford it. Daily News business writer Erik Olson reported this month that workers’ compensation insurance rates are due to increase 7.6 percent at the first of next year. That’s the biggest increase since the eye-popping 29 percent rate hike in 2003 revived talk of making fundamental changes in this state-run insurance program.

Unfortunately, that talk produced no changes. The cost of workers’ comp continues its upward march in good economic times and bad, burdening Washington employers and employees and giving pause to businesses and industries that may be looking to move into the state.

The editorial considered the distressing effect of the rate hike on two local businesses:

Brunell: What happens in Spokane won't stay in Spokane

The folks behind Spokane's grandiose Proposition 4 appear not to be in touch with reality, AWB President Don Brunell writes in his weekly column.

The proposition seeks to amend the city charter to create an expansive and expensive bundle of vague new rights, Brunell writes, everything from extending prevailing wage requirements to "affordable renewable energy."

Who will enforce these rights, Brunell asks. "Everybody!" says Envision Spokane, the group behind the proposition.

And who is going to pay for it?

The group has not even bothered to tally the cost of their wish list, Brunell says.

"There is no free lunch," Brunell writes. "Rather than saddle employers and taxpayers with a costly and ambiguous wish list, voters should reject Proposition 4 and urge their elected officials to come up with positive, workable alternatives."

Maybe Washington should look at Florida for help on workers' comp

Workers' compensation insurance rates will drop 6.8 percent next year in Florida, the state's insurance commissioner announced this week.

It's the seventh consecutive decrease in Florida's workers' comp rates, and it will save Sunshine State employers an estimated $166 million annually, officials announced.

The cheery news not only lies in stark contrast to Washington's recent announcement of a proposed 7.6 percent rate hike next year, but it also differs sharply from Florida's own not-too-distant experience.

Before a series of legislative reforms in 2003, Florida had the highest workers' comp rates in the country.

Last year, even as the nation struggled in a deep recession, Florida's workers' comp insurance rates dropped to 28th highest. The most recent reductions are expected to place Florida among the 10 lowest states in the country, according to the insurance commissioner's office.

Alaska's Greener Skies Saves Fuel and Cuts Carbon Emissions

In the current issue of Alaska Airlines Magazine, CEO Bill Ayers talks about the fuel savings and greenhouse gas reductions under its Greener Skiesinitiative launched last year with Boeing and the Port of Seattle.

Alaska Airlines has been upgrading its fleet with modern fuel efficient Boeing 737s.  Alaska, a pioneer in developing systems to land aircraft more safely in foggy and stormy weather, now is employing Required Navigation Performance (RNP) measures.  Rather than stair-stepping landings, which burn more fuel as engines accelerate to level off during approaches, Alaska is using satellite-based gliding technology much the same as the Space Shuttle uses on its landings.

Ayers writes:  "Combined fuel savings, if all equipped carriers at SeaTac follow these next generation procedures, could exceed 2 million gallons each year and reducing carbon emissions by 22,000 metric tons. That is equivalent of taking 4,100 cars off the road every year."

Alaska and other airlines are undertaking these initiatives without the prodding of federal or state legislation or mandates.  They are doing it because it was a way to stay in business.  Saving fuel costs and being more environmentally friendly make good business sense. Market-based, free enterprise  works.

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

U.S. Chamber calls on America to add 20 million jobs in 10 years

The U.S. Chamber of Commerce launched an ambitious campaign Wednesday aimed at helping America create 20 million new jobs in the next decade.

The multi-million dollar, multi-media Campaign for Free Enterprise calls on the nation to "dream big" and to rely on the principles of free enterprise to replace the seven million jobs lost during the Great Recession, and add 13 million on top of that.

"Washington [D.C.] may help in times of trouble, but free enterprise is what America is counting on to grow over the long-term," an announcer says in one of the campaign's television spots.

The campaign includes radio, television, print and online advertising, as well as ways for individuals to participate directly by signing a pledge of support and sharing their free enterprise experience.

The U.S. Chamber calls revival of the nation's economy the country's greatest challenge, and Tita Freeman, vice president of communications and strategy, called the campaign the most significant campaign the U.S. Chamber has ever undertaken.

An interactive map shows that Washington state's share in the goal is 414,822 new jobs.

Workers' Comp reform needs to be bipartisan

In old politics, like the old physics, every action seems to result in an equal and opposite reaction. 

So when Republican members of the Senate Labor committee took to the editorial pages of the Seattle Times a few weeks ago pointing out problems with our workers' comp system, decrying the announced 2010 tax hike, and pointing out paths toward reform, this predictably provoked an opposing op-ed yesterday from the chair of that committee, Sen. Jeanne Kohl-Welles, D-Seattle, as well as her House counterpart, Steve Conway, D-Tacoma.  

The gist of the Kohl-Welles/Conway op-ed:  We have a great workers' comp system, the envy of the country, and its recent problems are attributable not to the system but to the recession.  Businesses are just using the rate hike as a pretext to cut injured workers' benefits.  The Chairs framed their message as an "honest discussion" about workers' compensation.

The truth, as usual, is more complex.

Green River Valley business owners fear devastation from flooding

Nearly half of the business owners surveyed about potential flooding in the Green River Valley said they could not survive a closure of more than 24 hours.

The vast majority (82 percent) said they could not afford to be shut down for more than one week, and just about 5 percent said they could survive a closure of more than a month.

Those were among the findings of a survey of 126 businesses in Auburn, Kent, Tukwila, Renton and unincorporated King County.

The survey, prepared by Cocker Fennessy, Inc., was intended to help officials assess awareness of the flood risk posed by the weakened Howard Hanson Dam, and determine how best to communicate with businesses.

Almost all of the respondents (95 percent) were aware of the flood risk associated with the dam, and nearly half (47 percent) said they believe the risk of flooding this winter is "high."

Nearly half of the businesses were currently preparing or had recently begun preparing for flooding. Almost half (46 percent) had flood insurance, and most of those who did not cited expense as the reason. 

More information about Green River Valley flooding, including links to resources, is available through the King County Flood Control District. Be sure to keep tabs on the Washington State Emergency Management Division's business Web site, too, for the latest news on Green River Valley flooding and other emergencies affecting businesses in the state.

In a 'fragile economy,' everyone needs a good Raha-ha

While Adam Smith and John Maynard Keynes probably both loved a good chuckle, you have to wonder how good they were at cracking wise on the economic news of the day.

It's not a leap to say that economists have not generally garnered a reputation for their humor. 

Until now.

You see, we at AWB are frequently treated to talented presentations and speeches by business leaders and policymakers, almost always on deeply serious subjects. Workers' comp. Budget deficits. Unemployment insurance. Back in March, the state's chief economist, Dr. Arun Raha, managed to put a smile on our session-weary faces with several well-timed jokes at an AWB Lobby Lunch.In addition to being a very skilled economist, he apparently could deliver a good punchline.

The News Tribune's Joe Turner also picked up on the Raha effect in a recent post ("The state's chief comedian also a two-handed economist, or vice-versa.") So when Raha had the Policy Summit attendees in stitches, we knew we were onto something.

Behold, the Raha-has: A collection of our favorite witticisms, self-deprecating zingers and bon mots Raha shared with attendees during his presentation at the Policy Summit:

• On his outlook: “You’ve heard Michael [Parks] and how he’s optimistic about the future: So am I. But my optimism is tinged with caution, because my job is to rain on the parade just when it gets going.”
• On economists: "Do you know what George Bernard Shaw said about economists? He said if you laid all economists end to end, there would be no conclusion, and I paraphrase!"
• On the home lending scandals: "And then of course, we had bad underwriting. We gave money to people...who, well, just had a pulse."
• On his pinpointing the exact date of the end of the recession: “If it isn't August 2009, remember — my name is Steve.”
• On determining the rate of increase in the GDP: "In our back room, we have a monkey with a dart board, and he got three [percent], so I had to stick with that. I personally wanted to make it 3.5 or 3.7, but you know personal opinion counts for nothing in that office. The monkeys rule."
• On the release of Microsoft's new Windows 7 operating system later this year: “This is the year to buy a PC with Windows on it. Not only will your computer be better, but we’ll also get some revenue from it.” 
• On the question of whether Americans’ new frugality is here to stay, or just a temporary symptom of the recession: “Don’t underestimate the power of Madison Avenue to take your money away.”
• On the influence of TVW: “When I came before you in may, I said the recession will be over in the third quarter. On the fourth of September, at a public meeting, I said, ‘Well, the recession’s over.’ Then, a week later, Ben Bernanke —you know the guy who runs the Fed —he said, ‘Looks like the recession’s over.’ I didn’t know he watched TVW, but I’m glad he does.”

In all seriousness, watch Dr. Raha's full presentation, along with Michael Parks, at the Policy Summit via TVW below:

Stein and Moore speak out at Washington Policy Center dinner

Ben Stein, the iconic actor who played the economics teacher in Ferris Bueller’s Day Off, is not shy about expressing his opinions. Stein, an author, economist, lawyer and former aide to President Richard Nixon, delivered a wide-ranging keynote address at the Washington Policy Center’s 2009 Annual Dinner Tuesday night in Seattle.

No admirer of the Obama administration's drive to expand the scope of government, Stein declared, "The Obama administration is about social control. People in the White House are control freaks. They want to control you."

On the current business climate: “If you build a new plant to manufacture paint, [the administration is] going to hit you so hard with [taxes] that you won’t know what hit you. If you build any kind of enterprise, they’re going to make your life miserable unless you hold down your head and hide.”

On the economy: “The money supply virtually doubled within a space of less than a year. Nothing like that’s happened before. It still hasn’t worked to restore the economy.”

On health care: “Somewhere between 70 percent and 80 percent of all people are happy with their health care. Take the poorest people in this country and give them money to buy health insurance. Don’t screw up everyone else’s relationship with his doctor and hospital.”

"The end goal is to maintain our freedom," said Stein as he concluded his speech.

Prior to Stein’s address, Stephen Moore, the Wall Street Journal’s senior economic writer and the former president of the Club for Growth, kicked off the evening with a well-received speech of his own.

"I really believe that the next eight weeks are the most crucial weeks in our country at any time that we've seen in 30 years," warned Moore. "We face the health care bill, the cap-and-trade bill, the union card check issue and a huge budget."

Among Moore’s observations: “Everything that we have done in the last year in Washington, [D.C.,] to deal with our economic crisis is exactly the wrong thing. We were promised 3 million jobs, but we’ve lost 3.5 million jobs since the stimulus.”

Moore believes it would have been preferable to have suspended the income tax during the recession, thus creating more jobs, and calls for an 18 percent flat tax with no deductions coupled with an immediate 20 percent cut in every federal agency.

On health care, Moore calls for medical malpractice reform, Health Savings Accounts and allowing individuals to purchase insurance across state lines.

"This generation has a great cause," concluded Moore. "We need to be able to say that we were the generation that saved America from socialism."

For more on the dinner, visit http://www.washingtonpolicy.org/

Gov. Gregoire talks workers' comp reform at aerospace summit

One of the more persistent criticisms (here, here, here, and our own, here) of Governor Gregoire's "business case" for Boeing to build a second 787 assembly line in Washington was the initial failure to address our state's uncompetitive workers' compensation system. 

Boeing, like the business community generally, has made workers' comp reform a top priority -- and that was before word of a $117 million tax increase in 2010 for employers and workers insured by the state that will only partially cover a $270 million increase in system costs next year.  

Anyway, the message apparently got through.  According to Jerry Cornfield of the Everett Herald today, "Gov. Chris Gregoire put workers compensation reform on her 2010 legislative agenda."