Southern Oregon Business Journal - May 2020 Issue

Proudly Serving Benton, Coos, Curry, Deschutes, Douglas, Jackson, Josephine, Klamath, Lane, Lincoln & Linn Counties and Crook, Lake, Harney and Malheur Counties as well. Since 2015

May 2020

Staff Meeting - 1000Museums.com

Southern Oregon Entrepreneur to Entrepreneur Network (SOE2E.com) meeting about PPP loans. ↓

Medford Chamber Business Forum by Hunter Communications ↑

Business by Zoom The Journal for Business in Southern Oregon

SouthernOregonBusiness.com

A Few Words from Greg Let’s make a promise to ourselves, you and me.

From the next time we receive any kind of payment in cash, check, or by electronic deposit, put some of it away for a rainy day that we will not touch for any reason other than a crisis. Even a couple of thousand dollars in savings has an amazing effect on our dispositions and mindsets. If it takes a year or two to build a balance in your savings, that’s okay. Just get something going.

It may not have an impact on our economy to put small amounts away because we Americans have made an economy based on consumerism. That is, we earn, we spend, and everything keeps on turning as long as that cycle doesn’t stop. There is also the favored mention of the multiplier effect of our spending. One dollar in the system turns into two dollars or three or four dollars depending on where it is spent. A saved dollar is just a saved dollar, no multiplier. So, consumerism does work.

The sudden end of spending through quarantines and lockdowns brings our consumer economy to a screeching halt.

Business suffers, layoffs happen, our enthusiasm and confidence take a serious hit.

So, that’s where we are.

Next in line for us is to regain a positive attitude about our future. Short and long term.

Read for yourself as much as you can from many points of view and angles of scientific study. Be open minded enough to allow for otherwise missed learning opportunities.

There could be some exciting, attitude changing discoveries.

Things will get better sooner or later; I hope sooner. Be positive, supportive and patient.

Greg Greg@SouthernOregonBusiness.com 2 | Southern Oregon Business Journal May 2020

The Southern Oregon Business Journal extends sincere thanks to the following companies for their continued presence as important cogs in the wheels of industry in southern Oregon.

A Few Words from Jim I feel like I spent every hour of every day last month, online in Zoom meetings.

No travel. No in-person face-toface meetings. No boundaries.

Working from home now means working 7 days a week, 24 hours a day.

I'm in one-on-one meetings with prospective clients and full staff meetings and I attended the Medford Chamber’s first-ever monthly forum online with over 250 in attendance.

Congressman Greg Walden was the speaker giving 15 minutes of prepared remarks and answering questions for over 45.

Because there is no travel time between meetings, many of my meetings were back to back, instantly.

It can be exhausting. I average 6 Zoom meetings a day.

I even took a couple of yoga classes from TulaMovementArts.com in Bend using Zoom from Ashland.

Zoom was also used by my family to stay in touch, in a wild Saturday morning gathering ritual of siblings, parents, uncles, aunts, cousins, nieces and nephews. We have been meeting every Saturday to just goof off, find out how we're doing and to let each other know we are loved.

We have even had virtual dinner parties and happy hours with family and friends. I put a big screen TV on the dining table and it feels like they are at the table with us.

I can't imagine going through this pandemic without high-speed internet and Zoom.

When this is over and we all get back to “normal", I wonder how much we will continue to meet online both professionally and with families.

The photos on the cover are mine. I took screenshots during zoom meetings. The large one is the Medford Chamber Forum with Guest Congressman Greg Walden. The one on the bottom is of an E2E meeting that was held to discuss PPP loans and the small inset is a staff meeting of 1000Museums.com.

Jim Jim@SouthernOregonBusiness.com

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May 2020 - Table of Contents

Inside This Issue Beginner Entrepreneurship: Tips and Advice to Help You Get Started - Page 4 Factors for Success in Cooperative Operations* Page 6 How sustainability in corporate behavior will evolve during and after the COVID-19 pandemic - Page 8

Oregon Regional Economic Indexes - Page 24 The Gordian Knot of Leadership - Page 26 In Cod (And Crab!) We Trust – Oregon’s Seafood Processing Industry - Page 34 Ten Steps All Workplaces Can Take to Reduce Risk of Exposure to Coronavirus - Back Cover

Yes, We Brought this on Ourselves - Page 10 OLCC Liquor Stores Generate Record Level of Revenue for State - Page 13 Defusing an Economy "Rigged to Blow" - Page 14 A letter from Springfield’s New City Manager, Nancy Newton - Page 18 Rising Unemployment Insurance Claims Portent to Economy-Wide Job Losses - Page 19 A Dozen Asks for Your Governor - Page 20

Cover photo compiled by Jim Teece. Screenshots taken during Zoom meetings. Read a Few Words by Jim on page 2 for the explaination.

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ENTREPRENEURSHIP

BY DEREK GOODMAN INBIZABILITY.COM

Beginner Entrepreneurship: Tips and Advice to Help You Get Started

Photo: Image via Pexels

A

ccording to a report published by PRNewswire, approximately 14 percent of U.S. adults are starting or running a new business of their own— accounting for around 27 million Americans nationally. However, fear of failure and a lack of qualifications keep many first-time entrepreneurs from pursuing their dreams of starting a business—especially younger individuals with fewer skills and less professional experience.

If the benefits of entrepreneurship appeal to you but you’re not sure

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whether you’re ready to devote your entire life to owning a business, it’s best to start with something small and manageable—such as freelance writing, website development, graphic design, photography, or hairdressing. Other small business ideas for first-time entrepreneurs include dog sitting, personal training, and interior designing. For some tips and advice that will help you to dip your toes into the world of owning a business—without taking on more than you’re ready for— read on.

Explore Beginner-Friendly Business Ideas Even if you dream of owning a large company or managing a team of employees, it’s best to start small when you’re new to entrepreneurship and unsure whether this will be the right career move for you. If you enjoy animals, for instance, dog sitting can be a great business opportunity for firsttimers—especially if you have plenty of indoor and outdoor space for your furry guests. When starting a dog-sitting business of your own, prepare your

home by removing poisonous plants and choking hazards, securing lids to garbage bins, locking up cabinets that may be accessible to animals, and blocking off hazardous areas in your home or lawn.

Then build a list of references to show potential clients that you’re credible.

In addition to dog sitting, other beginnerfriendly entrepreneurship opportunities range from social media management and data entry to offering daycare services for kids. However, the type of business you choose should align with your lifestyle, skills, experience, and local job market.

Create a Business Plan After selecting a business idea, you’ll need to create a plan and conduct plenty of research—as this will help you to identify your goals and the steps you’ll need to take to achieve them. You’ll also need to decide whether you’ll structure your business as a sole proprietorship or limited liability company (LLC). Unless you’ll be operating as a sole proprietor, you’ll need to register your business with the Secretary of State (SOS).

As you start your small business, it’s also important to decide how you’ll track your finances—including your budget, taxes, expenses, and rates. You can either hire an accountant to assist you in tracking your finances, or accounting software may be a better option.

Several accounting systems include: • QuickBooks Self-Employed.

• FreshBooks.

• Sage Business Cloud Accounting.

• Xero.

According to experts at Business.org, QuickBooks Self-Employed and FreshBooks are best for sole proprietors and freelancers—while Xero is ideal for paying bills, managing inventory, tracking purchase orders, and sending invoices.

Typically, the type of accounting software you choose will depend on the nature of your small business.

Start Building Your Client Base Once you’re ready to get your small business up and running, it’s time to build your client base. Online job boards like Upwork can be a great place to pitch your skills to prospective clients, especially if you’re still working a day job and don’t have a lot of extra time to market yourself and your offerings. For instance, if you’re a web developer, you can create an online profile through Upwork that highlights your skills and links to your business website or portfolio.

Social media marketing can be another great strategy for expanding your customer base.

First-time entrepreneurship may seem daunting, but these tips will help you to select a small business idea that matches your skills, experience, interests, and lifestyle. By starting small and pursuing an idea that you’re passionate about, the thought of failing won’t seem so scary— and it’ll prevent you from taking on more than you’re ready for.

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Southern Oregon Business Journal May 2020 | 5

COOPERATIVISM

BY JO B. BITONIO PRESENTER ARD, CDA DAGUPAN EXTENSION OFFICE

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he history of cooperatives in the Philippines is replete with tragic stories for the downfall of many co-ops. It is vital that part of the training deals with the causes of co-op failures, “as an eye opener” for all sectors involved in strengthening cooperatives countryside development. Learning from past mistakes, can pave the way for stronger foundation for successful cooperativism.

Cooperative Values and Way of Life Members of rural communities have common, socioeconomic needs of: Obtaining marketing and purchasing services at lower cost; Accessing credit at a reasonable rate of interest; and Securing financial assistance for provident purpose.

There should be a continuing effort to cultivate appropriate cooperative values even before these needs could be answered. These are: At the co-op management level Avoiding misrepresentations in any form, e.g., weight, quality, cost and others; Transparent with complete disclosure at all times; Serving as a role model to its members, especially in honoring pledges, contracts, and appointments and in accepting responsibilities/ commitments. Financially prudent; Giving what is due to others and overcome destructive competition; Encouraging and promoting viable livelihood projects and self- help activities among its membership; and Being forwardlooking, innovative and dynamic.

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Factors for Success in Cooperative Operations*

Photo by Guille Álvarez on Unsplash

Dedicated Leadership and Effective Management An important factor in the success of a cooperative is the presence of capable and dedicated leaders. These are the people expected to provide guidance and support to the cooperative. Co-op leaders promote more activities membership participation. In many cases, the absence of qualified leaders turns cooperatives into political instruments of opportunists. The associations will lack proper guidance and be susceptible to outside control and manipulation without competent leaders.

Board of Directors: Many cooperatives have failed mainly because its funds were used by their treasurers for personal interest or borrowed by the members of the board of directors and never paid. There is always the danger related to handling co-op money. Therefore, it is the task of the members to elect the people whom they can trust to lead and manage the cooperative’s business.• Cooperative leaders, especially the Board of Directors, must be chosen on the basis of good business judgment and proven ability, and not on friendship, neighborliness or favorable financial standing in the community.

The members of the Board should: • Assume the role models for capital build-up, savings, transparency, and honoring promises, pledges and contracts; • Represent the common interest and genuine welfare of the members of the coop; • Consistently patronize their co-op’s services and refrain from engaging in competing businesses;

The members of the Board should: Help disseminate information on membership rights, duties and responsibilities in order to gain strong membership support and cooperation; Spend cooperative money as carefully as they would spend their own; Manage financial operations with a well studied/rewarded and approved operating budget; The members of the Board should:• Select cooperative employees based on appropriate qualifications such as education, training, experience and character; and• Be able to analyze and consider problems/audit reports as inputs planning, problem-solving, conflict – resolution, and policy review and modification.

Management Officers & Staff Management should focus its operation on efficient service for the members and the co-operative as a whole.Coop managers, in particular, should: have an open mind, willing to adopt new ideas and be knowledgeable in his/her field of operation; act as the leader. He/she should train understudies to take his/her place in his/her absence or when called upon to take higher and maintain good record keeping. Well-maintained records are very important in any cooperative. This means that all minutes of meetings, records of membership, and similar documents must be properly filed and maintained.

Management Officers & Staff: This also means that all financial transactions should be properly recorded. Receipts should be issued for all contributions and other collections of members.

These receipts must be properly recorded in the books of the cooperative. All expenditures incurred by the cooperative must be supported with invoices or vouchers and properly recorded.

Records must be accurately recorded to prevent numerous problems to occur.

Management Officers & Staff practice sound financial management. No one person should be responsible for the release of funds while at the same time maintaining the books and be on top of co-op operations. submit to frequent audits. The financial records of the cooperative should be checked and audited regularly be competent auditors. They may either be co-op member or external auditors to uncover errors in recording and detect irregularities. The audit process should be welcomed to assure the members that their interests (funds and property) in the cooperative are properly spent and adequate protected.

Committed Enlightened and responsible membership who recognize a common need and direction • The cooperative is of, for, and by the people. The hallmark of a successful cooperative is an enlightened and responsible membership that:• Have definite financial stake in the cooperative;• Take active interest in voting and in other important matters presented during meetings;• Demonstrate unswerving loyalty to the cooperative; Specialized Training for Officers and Management Staff, Offcers and committee members have specific functions in the cooperative requiring certain knowledge and skills. For example, members of the audit and inventory committee, should learn how to audit the association’s book of accounts. Similarly, the Board of Directors should be able to develop coop plans and programs and formulate sound policies appropriate for their implementation and the efficient operation of the co-op.

Specialized Training for Officers and Management Staff. The efficiency and effectiveness of cooperative leaders, officers and staff performing their duties will undoubtedly build and strengthen members’ trust, confidence, patronage and loyalty to their cooperative.

Leadership Training Officers, committee • Values Orientation members and • Project Management and Monitoring employees, therefore, • Credit and Collection Management should be well-trained • Members Saving Operation Orientation for their jobs. Such • Coop Financial Intermediation trainings may comprise Development any of the following, • Co-op Marketing and Business Alliance-among others: Building • Tellering and Cashiering • Forgery Detection • Conflict Management • Membership Training Cooperative Business Concerns include:• Sufficient volume and adequate variety of goods on sale to effectively reduce operating cost;• Availability of quality goods for sale to members at reasonable prices;• Sale of commodities at the proper time and place to maintain low inventory carrying costs;• Sustainable networking relationship with viable markets; and• Active membership in co-op federations and business alliances Encouraging the internal generation of funds through capital build-up and member savings operation (MSO) to ensure availability of funds for financing co-op and members’ livelihood projects. Every member should have enough investment to feel a definite responsibility and loyalty to his co-op. membership stakeholders and savings deposits can serve as co-op equity for loan financing or the means of gaining the confidence of financial institutions. These funds can also spur co-op business diversification and enhance its on-lending performance: To be successful, a cooperative must have: Workable and practical financing program for members’ provident needs; A program for promptly liquidating all its current borrowings; A fair policy on lending and collection; A vigorous members savings program; An effective program for building up co-op capitalization; An increasing volume of business; An established systems and procedures; and An honest and competent leadership and management staff.

ops: Subject themselves to periodic, unannounced audit; Have sound and update bookkeeping and accounting systems; Maintain clean, orderly, and updated files; Are open to members’ scrutiny of all co-op records and documents at all times during office hours; Have responsible and competent officers and staff holding accountable positions; Welcome all recommendations, comments and observation to improve their systems and business operations; and Are dynamic, flexible and willing to adopt new/improved systems and project; Benefits of capital formation and savings mobilization When co-ops rely on external funding for their business operations, they lack the flexibility to undertake business ventures that would require additional capital, especially when such projects are not consistent with the lending programs of their assisting financial institutions. In business alliance, may opportunities for market networking could crop up. The co-ops would be in a position to grab such opportunities and earn additional income if they had managed to raise funds, through capital build-up and member-savings campaigns that will give them more investible resources.

Jo Balucanag - Bitonio Professor/Program Coordinator at Private and State Universities https://www.slideshare.net/jobitonio/factors-forsuccess-in-cooperative-operations *The information provided here is a summary list of items from the original document. It has many helpful points of consideration that may be useful references for business journal readers. Be aware the presentation should be used only as a starting point when comparing Co-operative structure and operation in specific situations. The Southern Oregon Business Journal will have more thorough studies in future issues. - Editor

Practicing transparency and self-discipline Successful cooperatives practice transparency and self-discipline. This implies that these co-

Southern Oregon Business Journal May 2020 | 7

SUSTAINABILITY By by Peter Jones, CFA Vice President, Equity Research and Analysis Ferguson Wellman Capital Management

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ednesday, April 22, is the 50th anniversary of Earth Day. In 1970, U.S. Senator Gaylord Nelson and activist Denis Hayes launched a nationwide environmental “teach-in” that later became Earth Day. Although the pandemic may have disrupted plans for this milestone anniversary, if Senator Nelson were alive today, he would find emerging business practices of interest.

That is, companies are having to change their business models to adapt to the new normal, and in most cases, are using the downturn as an opportunity to address inefficiencies across corporate

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How sustainability in corporate behavior will evolve during and after the COVID-19 pandemic

Photo by Master Wen on Unsplash

functions when the economy begins to recover.

As investors sift through data regarding the impact of the global economic shutdown, corporate updates are likely to include strategies for survival in the near term and plans for positioning themselves in the future, including permanent changes in business practices.

Socially responsible investing (SRI) originally came onto the scene with a goal of using ethical and moral criteria to screen “bad actors” out of client portfolios. From SRI evolved the notion that environmental, social and

governance factors (ESG) could have financial relevance. The thesis is that better corporate behavior enables companies to position themselves to face long-term opportunities and threats instead of a myopic focus on near-term profits. By and large, the “E”, or environmental pillar of this discipline gets the most airtime. Nonetheless, the “S” and “G” pillars of social and governance are taking a critical role as we navigate the current pandemic.

As we ponder how sustainability in corporate behavior will evolve during and after the COVID-19 pandemic, several areas stand out, including:

1. Corporate travel and events Stay-at-home mandates have shut off all corporate travel, events and entertainment. Yet, employees and their customers still manage to stay connected through programs like Microsoft Teams, WebEx and of course, Zoom. Many companies are finding that these tools are effective in carrying out the tasks typically assigned to in-person meetings or larger events. Of course, in many cases, face-to-face meetings, events and travel are invaluable. But at the very least, the required shutdown is forcing companies to reconsider the cost-benefit of excessive travel and events that can be replicated at a lower cost in terms of time, money and in the use of fossil fuels. It is a reasonable to expect that corporate travel and events will not revert to the old norms any time soon.

2. Stakeholders beyond shareholders The primary objective for publicly traded companies is to provide value for its shareholders. However, the nature of the current downturn is requiring companies to consider stakeholders aside from the owners of the company, most importantly their employees. Instead of laying off as many employees as possible in order to protect near-term profits, we are witnessing many companies taking alternative actions, such as eliminating CEO and other C-suite pay. Companies are also using government-assisted furloughs and committing to pay for health benefits for employees who no longer have working hours. In addition, several firms, including Ferguson

Wellman, have all but guaranteed that every employee will keep their job.

Again, the nature of this crisis has changed the playbook for typical corporate behavior in a recession.

3. Collapse in oil prices One of the major side effects of the pandemic has been a dramatic decline in human and industrial mobility. This has caused demand for oil, gasoline and other fossil fuels to collapse. At the same time, “OPEC+” members Russia and Saudi Arabia failed in their negotiations to curtail the supply of oil.

The combination of these factors has caused a drop in oil prices to levels not seen in 20 years. The structural movement toward renewables is in large part dependent on economics. In other words, the incentive to switch to renewables or forego the use of fossil fuels is much stronger when the cost of gasoline is higher. This crisis has eliminated that incentive in some industries, as substitution is no longer a wise economic decision.

4. Mortality rates and pollution While there is still a great deal of uncertainty, early studies are beginning to show that communities with high levels of pollution display higher COVID-19 mortality rates. While highly speculative, this discovery could make corporations and voting constituencies more open to behavior, cultural norms and even regulations enacted to reduce the levels of pollution.

5. Flexible business models Large corporations only known to operate in one product type, service

offering or customer set are shifting their capabilities to benefit society in these challenged times. Companies such as General Motors have rapidly shifted automotive production facilities to produce key components for ventilators. Nike has shifted some of their facilities that make footwear to produce face shields that are critical for the healthcare workers on the front lines. And of course, healthcare companies, such as Abbott Labs, are rapidly scaling-up production for diagnostics to test antibodies in order to determine COVID immunity. In many cases, there is natural overlap between acting for the benefit of society and adding to profitability, but this crisis has displayed the tremendous ability of large corporations to do their part.

As always, the past can provide perspective for things to come. After 9/11, we did go back to feeling comfortable with flying, but we continue to take off our shoes when entering airport security. This simple analogy reinforces that as investors and consumers, we most certainly will one day go back to normal, but some practices from recent months will endure. As we evolve into our new normal … we will also find new opportunities to analyze and invest in companies.

Peter Jones, CFA, is vice president of equity research and analysis for Ferguson Wellman Capital Management and lead portfolio manager for our Global Sustainable Investing (GSI) strategy.

Launched in 2018 as an ESG solution for individuals and nonprofits that overlays MSCI data on our investment principles, GSI has become the fastest growing investment strategy in the history of our firm. Ferguson Wellman and its division, West Bearing Investments, manage $5.18 billion for 863 clients. (as of 3/31/2020)

Southern Oregon Business Journal May 2020 | 9

STRONG TOWNS

By Charles Marohn

Yes, We Brought this on Ourselves

Air Force Capt. Stacey Morgan dons protective gloves during infection prevention and control training at the San Antonio Military Medical Center - media.defense.gov

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’m a numbers guy, so my inclination months ago when the so-called smart people were telling us we had more to fear from traffic deaths than coronavirus was to run the numbers. The potential for catastrophe from pandemic was very real; too high for my sensibilities.

Now that the so-called smart people have shifted to telling us to stay indoors and social distance and shaming (or worse) those who would suggest otherwise, I’m inclined to review the

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math once again, this time in light of new knowledge.

If you are suggesting that COVID-19 is no more lethal than the flu, you are likely wrong (most data suggests 10x to 50x times more lethal), but there are some data points to suggest that you could be right. Let’s go with it for the sake of discussion.

Since the coronavirus is “novel” (never experienced before) there is no immunity among humans. That means everyone who is infected will have to fight it off. Apparently most do and experience no symptoms while some experience complications of different degrees and some ultimately die. If we’re going with flu lethality rates, that means 1 out of every 1,000 people infected will die.

With 320 million Americans, if we have flu rates of lethality, that’s a pool of 320,000 people who have the unfortunate combination of factors (yet unknown) that we should expect to die from this. And now is a good time to point out that every study I’ve seen that indicates some correlation with flu also assumes a very slow rate of transmission so that everyone infected gets the very best treatment. In places like Italy, when that didn’t happen, lethality rates were reportedly as high as 17%, not 0.1%, as triage forced many who might have survived to die unassisted by medical care.

What I’ve done here is basic math. It’s not a model—I’m not trying to project an outcome based on transmission rates, lethality, mutations, etc.—but merely as assessment of the size of the pool. My own opinion is that the size of the pool is best estimated with a lethality rate of 1%, which would be 3.2 million dead, but let’s stick with the flu rates for now.

Here’s the question for those of you arguing to open things up because COVID-19 is basically the flu: How quickly do we burn through those 320,000 people with viral death sentences? Are you arguing this attrition rate is a foregone conclusion (it might be) and that we should just get it over with for the good of all?

That might seem cold, but let’s give the argument its fairest hearing. If 320,000 people will die regardless of what we do, and if it won’t be any higher than that, then why not have that happen over the next few months and get it over with so that we don’t also destroy

our economy, further empower a police state, wreck institutions and maybe threaten our elections and even America’s system of governance?

There are two groups I experience that are making this argument. The first are my libertarian friends and, as much as I find common ground with them on the federal level, this episode points out the fatal flaw of theirs as a universal philosophy. If 320,000 Americans die from coronavirus in the next few months, nobody is going to support continuing the “open it up” approach. Nobody.

And even if the state and local government did not feel compelled to act, America would shut itself down.

Coronavirus outbreaks, especially in suburban and rural areas, remind me of fatalities in World War I. Many English towns would encourage friends to enlist together. You would get entire classes of young men from a single town enlisting and serving together in the same unit. That meant death did not come in the drip, drip, drip variety but all at once in community-wide tragedies, like when an artillery shell lands in the middle of a unit. This magnifies both the threat and the suffering. It makes it vivid and real in a way that never numbs.

As COVID-19 infections and deaths mount, they have tended to come in similar clusters. This church of people.

That elder care facility. This meat packaging plant. That office complex.

Someone asymptomatic infects a lot of people at once and, boom, just like an artillery shell.

It denies everything we know about human behavior to suggest that people watching this kind of thing happen around them, with millions falling ill and hundreds of thousands dying (in the best-case flu scenario), are going to keep going to restaurants and movie theaters and job sites and clothing stores. Even if the majority of people believed your theory (and to be clear: I don’t), humans don’t live by theory but by emotion. (If they didn’t, nobody would be afraid to fly but we’d all be terrified to drive. Again, it’s the difference between a cluster of death versus drip, drip, drip.)

This brings me to the other group of people who want to “liberate” the economy. I put the word “liberate” in quotes there because there is a perceived correlation between this group and the subset of Americans that are Trump supporters. I’m not going to push back on this caricature even though it is imperfect (just this past weekend, I spoke with some we could call “liberators” who would never vote for Trump). In our politicized, centralized, cultural narrative, President Trump makes a great villain (or hero, depending on your viewpoint). In a binary world where everyone is, without any nuance, either for or against, we seem to have settled that people wanting to end stay at home orders and get the country back to work are Trump supporters. I’m going to call them “liberators” for the rest of this piece.

What everyone needs to know about liberators is what I suggested libertarians need to know about

Southern Oregon Business Journal May 2020 | 11

Yes, We Brought this on Ourselves, Continued

everyone: humans don’t live by theory but by emotion.

diagnosis. Our emotions create our reality.

The primary emotion driving liberators is fear. Fear of losing their job. Fear of losing their business. Fear of losing all they have worked for. Fear of their very fragile existence—one kept afloat by debt and often lots of side hustles— being radically altered. Fear of being impoverished. Fear of needing to ask for help.

Here’s why this is all important: We did bring this on ourselves. If we could go back, the answer for the liberators is not better education to get their mind right or to be disempowered politically so they can be safely ignored.

If we could go back, we would want an economic system that didn’t leave them so fragile. We would want all those liberators to actually feel secure so their fear could be directed at the abstract notion of public health, not at the very real notion of their own family’s future.

To the extent that we can correlate the liberators with Trump supporters, we can correlate the non-liberators with those who are anti-Trump (again, not a perfect correlation). The latter groups tends to be (by their own volition) more educated, more professional, and thus in the case of the economic impacts from an economic shutdown, somewhat more shielded from economic impact.

Right or wrong, the affluent, nonliberators have the luxury of being able to fear the virus, fear becoming infected themselves or having someone they love become infected. It is easier for them to hear the math, hear the numbers, and understand what it means. Their emotions are reinforced by reality, not challenged by it.

For the liberators, their emotion is driving their reality. So, if 20 studies suggest a lethality rate for COVID-19 of 2.5% but one sampling from one group suggests it might be closer to flu, it is easy to want to believe in that one study. That doesn’t make them dumb or irrational. It just makes them human. If you doubt me, just ask anyone with a loved one that has a serious cancer 12 | Southern Oregon Business Journal May 2020

Let me give you an example of how we’ve messed this up: If you are an American and I told you that State A was far poorer than State B, what would you assume about the savings in State A? You would assume that, because they are poor, they have less savings. That’s how it works in America, but America is the anomaly.

The U.S. savings rate is around 7.5%, which is heavily weighted by savings of the wealthiest Americans. China is a far poorer country per capita than the United States, but the savings rate there is 46%. In India, it is 32%. In a country like Italy, the savings rate is 23%.

We’ve all been amazed at how Italians responded to quarantine orders, and we’ve heard the good and bad about how the Chinese government has forced people into lockdown to contain the spread of the virus. For families that save 20%, 30%, 40% or more of their income, how much less fearful is such a lockdown than it is for a family with no savings, huge debts, and an insecure job? How much more assistance could a

destitute family be offered by a community where most of their neighbors had access to many years’ worth of savings?

And by extension, how ludicrous was it for the United States to address the 2008 debt problem by engineering a recovery predicated on everyone taking on higher levels of debt?

This is just one of the many ways our top-down, centralized economic approach has cost us our stability. I point it out because we can’t go back and make ourselves less fragile. We’ve created this monstrous stack of dry kindling and now it’s going to burn.

We’re getting protests after four or five weeks of shutdown, but wait until— government mandated or not—we’re at four or five months. We will be there soon.

Everything is about to change. For years we have pointed to the things that are fragile, the essential support structures in our communities that are most prone to break. They are now likely to break. Beyond understanding where the fragile parts are, it is not at all clear what is going to happen next. I have no clue how this ends.

One of the only things I do know right now is that, when I look at those people out protesting, I see fear. That is overwhelmingly what I see. And they are right to feel fear because their entire world is about to be upended.

For them, everything is about to change.

At this point in the game, there is only one way to calm fear and that is with empathy. Whether it pains us or not, whether you think it is morally right or

not, we must find a way to express empathy to those experiencing fear.

Fear is a powerful emotion easily weaponized by tyrants. We all need to work to diffuse it, starting with those around us. (And if you haven’t already, it will help you a lot to shut off the media outlets that are working to weaponize you.)

I wrote this in Chapter 10 in my book in a section titled “Talking to Each Other”.

I’m going to emphasize that we’ve reached the time of urgency: It’s my contention that cities need both mind-sets to solve problems and thrive.

Hierarchy without compassion for individual suffering quickly becomes tyranny. The liberal framework is critical to helping us understand where existing social structures create harm, and pushing society to update, sometimes even completely reimagine, those structures.

Yet, a society without a certain level of structure becomes chaotic, the destabilization creating deep psychological anxiety and tension.

When conservatives advocate for certain institutions and traditions, they are—as [Jonathan] Haidt has suggested—rightly pointing out that “you don’t help the bees by destroying the hive.”

The deep irony of the post-war development experiment is that it was largely a liberal-initiated destruction of the hive, wrapped in the language of both nationalism and justice, that has now grown to be sacred to conservatives. Untangling that Gordian knot of culture is going to require deep intention, and huge doses of empathy,

by those who grasp the urgency of the situation.

As a final thought, it needs to be noted that there is another group outside the binary liberators and non-liberators, and that is the very poor. For somewhat different reasons, this group largely aligns with the liberators in their support of opening the economy to work, regardless of the health consequences. As a sad irony, there is a lot we can learn from the poor about living with fear and instability. There is even more we can learn from them about empathy.

Charles Marohn - known as "Chuck" to friends and colleagues - is the Founder and President of Strong Towns and the author of Strong Towns: A BottomUp Revolution to Rebuild American Prosperity. He is a Professional Engineer (PE) licensed in the State of Minnesota and a land use planner with two decades of experience. He holds a bachelor's degree in Civil Engineering and a Master of Urban and Regional Planning, both from the University of Minnesota.

OLCC Liquor Stores Generate Record Level of Revenue for State Increase in March Sales Reflect Transition from Restaurant & Bars to Home Consumption PORTLAND, OR. – Oregon Liquor Control Commission liquor stores sold close to $66 million in distilled spirits in March, an almost 20 percent increase in sales compared to March 2019, and a new March sales record. December 2019 is the all-time monthly sales record for liquor at $75.85 million.

The upsurge in sales from agentoperated liquor stores is attributed to changes in consumer behavior due to Covid-19 pandemic. Specifically, liquor consumption has shifted from sit-down bars and restaurants to consumers purchasing distilled spirits by-the-bottle for at home consumption.

March liquor sales figures show the shift from bar and restaurant licensees to consumers. Licensee sales were $6.4 million in 2020 compared to more than $13.7 million in March 2019, a drop of 53 percent.

In comparison, consumer liquor sales increased from $41.2 million in March 2019 to $59.5 million last month, a 44 percent increase.

OLCC liquor stores have issued more than $500,000 in refunds to 94 licensees (bars and restaurants) for returned liquor. The value of store inventory – unsold product – at liquor stores increased from $67.5 million to $78.6 million.

Continues on Page 38 Southern Oregon Business Journal May 2020 | 13

STRONG TOWNS

By Tony Dutzik

T

he emergence of the novel coronavirus has been a shock to our health care system, our economic system, our communities, our relationships and our psyches. What makes some of those systems more able to absorb, respond and rebuild from shocks than others?

14 | Southern Oregon Business Journal May 2020

Defusing an Economy "Rigged to Blow"

Image credit: Erik Mclean. Sun Sushi on Facebook.

Two incidents last week got me thinking about that question.

The first was a chance encounter with a friend on the street. He does residential construction work and, like many Americans, he is facing a sudden loss of income coupled with a looming rent payment on April 1.

He told me about a conversation he’d had with his

landlord—the kind of potentially uncomfortable conversation that will be replicated by the millions in the days ahead. Expecting payment soon for a construction job, he told his landlord he’d be willing to pay for three months’ rent in advance, just to not have to worry about it. His landlord’s reply: Keep the money. The

mortgage on the apartment had already been paid off and there would be time to settle up once the outbreak was over. Crisis averted.

The second incident was the debate over and passage of the coronavirus relief/rescue/ bailout/stimulus bill. On paper, the bill would seem to alleviate crises like the ones facing my friend—offering extra time for certain student loan and mortgage borrowers. And it is just one of many efforts by local, state and federal governments, as well as private businesses, to give Americans a break on their financial obligations during the coronavirus crisis.

Not every borrower, however, is in a position to put up three months rent in advance—and not every lender is able to go without three months of rent payments. Moreover, when most of us deal with lenders we are dealing not with a person with whom we have a relationship but with an impersonal institution.

Those institutions have financial obligations of their own. For example, while individual homeowners have relief on their loans, mortgage servicers—the middle-people who collect payments and pass them on to the ultimate holders of the loans—do not.

Without extraordinary action,

observers warn, the entire mortgage finance system could implode, sparking a new mortgage crisis just 12 years after the last.

The Federal Reserve is working to address that issue, along with the myriad other challenges now facing the economy. But there are concerns that its interventions in the mortgage market might have other unintended consequences that could lead to crises elsewhere.

It’s a mess.

How is it possible that one of the most productive economies in the world, governed by some of the smartest people our country can muster, can lurch from seeming prosperity to fullbore crisis in just a couple of weeks? And for the second time in just over a decade?

The answer—and the pathway to a solution—might come from an understanding of technological disasters.

Multiplying threats; cascading failures Imagine the Federal Reserve’s attempts to steer the economy through the COVID crisis as taking place in a giant control room, one with every single light flashing a dangerous red. Problems that emerge in one sector quickly

bleed over to others.

Seemingly sensible steps taken to address problems in one part of the system unexpectedly cause problems elsewhere. The operating manual—written to handle every imaginable malfunction —suddenly becomes useless.

There are terms to describe this kind of situation. Black swan. Cascading failure. And one that was popular during the financial crisis, and which takes on an eerie ring now: contagion.

Another less-well-known term, however, might give us useful insights into the crisis: normal accident.

I’ve written about normal accidents on this blog twice before: In 2010 during the Deepwater Horizon oil spill and again in 2011 following the Fukushima nuclear disaster. Both disasters shared certain characteristics with one another—and with America’s current and recent financial crises.

In both the Deepwater Horizon disaster and the Fukushima meltdown, a single failure or precipitating event— a failure of cement at the base of the well in the case of Deepwater Horizon and a devastating earthquake/ tsunami in the case of Fukushima—set off a chain of Southern Oregon Business Journal May 2020 | 15

Defusing an Economy "Rigged to Blow", Continued

unexpected cascading failures that overwhelmed engineered safety systems and quickly blew through the system’s ability to adapt, leading to catastrophe.

Charles Perrow, in his book Normal Accidents: Living with High Risk Technologies, theorizes that in complex, tightly coupled technological systems—like a nuclear power plant or a deepwater offshore oil platform—such accidents are inevitable, or “normal.”

Complex, interactive systems, Perrow argues, create vast numbers of potential pathways by which a single event can lead to systemic failure—so many that it is impossible to anticipate and plan for them all in advance.

Moreover, the failsafes and other systems designed to prevent the failures we can anticipate have the potential to actually make things worse by adding even more complexity to the system.

When systems are “tightly coupled”—that is, when a change to one part of the system rapidly and inevitably causes changes in another— the potential for problems to spin out of control is magnified.

Let’s go back to my construction worker friend. His 16 | Southern Oregon Business Journal May 2020

relationship with his landlord is loosely coupled. Because both he (a bachelor with few debts) and his landlord (who had already paid off his mortgage on the apartment) had financial slack, they had the space and flexibility to negotiate a mutually agreeable solution. Ruin for one did not necessarily and immediately translate into ruin for the other.

Image credit: Wikipedia.

Our modern financial system, however, is tightly coupled, as evidenced by the numerous temporary shocks to the financial system over the last couple of decades—known by names such as “Flash Crash” and “Flash Freeze”—in which glitches in individual systems operated by Wall Street firms quickly spiraled into cascading failures that affected global financial markets.

Tight coupling has advantages. It can be incredibly efficient. In good times, “slack” can look like waste (and sometimes is). But when it comes to adapting to challenges like coronavirus, tight coupling can be a big problem. Perrow writes: “Loosely coupled systems, whether for good or ill, can incorporate shocks and failures and pressures for change without

destabilization. Tightly coupled systems will respond more quickly to these perturbations, but the response may be disastrous.” (emphasis added) Rigged to blow: From viral to financial contagion The effects of coronavirus are rapidly rippling through our tightly coupled, incomprehensibly complex financial and economic system—with potentially devastating effects to all of us.

Charles Marohn@clmarohn It's not the Main Street economy that is cratering. It is the financialized economy, which needs continuous growth and transactions to remain stable.

Main Street is hurting, no doubt, but we can pull together and get through.

Everything with securitized debt is rigged to blow. https:// twitter.com/Eater/status/ 1242926479228485632 …

The Cheesecake Factory tells landlords it will not be paying rents on April 1 https://trib.al/ vSgSdam One of the people who has been calling attention for years to the fragility of our current economic system is Chuck Marohn, founder of Strong Towns. In a tweet last week, Chuck wrote:

It's not the Main Street economy that is cratering. It is the financialized economy, which needs continuous growth and transactions to remain stable. Main Street is hurting, no doubt, but we can pull together and get through.

Everything with securitized debt is rigged to blow.

I will take issue with Chuck on one thing: The Main Street economy and the finances of many American households are “rigged to blow”—in large part because of our exposure to debt. We have written about the growing exposure of American households to skyrocketing auto debt, but the same thing applies to student loan debt, commercial debt and credit card debt, not to mention mortgages.

Many Americans find themselves at this perilous moment piled high with debt and with precious little financial slack—while others who might have felt secure a couple of weeks are watching the flexibility they thought they had wash away in a tide of pink slips and vanishing 401(k)s. The ability that my friend and his landlord have to simply wait it out is not likely to be there for others— making the need for extraordinary measures of support from all aspects of society and all levels of

government that much more acute.

Rebuilding resilience So, what is to be done?

In the case of the current crisis, your guess is as good as mine. We are in truly uncharted territory. We can only hope that those in positions of policy-making are quick, imaginative and deft in their response—and that they avoid making errors that trigger unforeseen secondary disasters or that further entrench relationships that create more risk in the future.

It won’t be easy.

In the long run, though, the current crisis calls upon us to build more resilience into our economy and our society; to build new structures so that even if a tightly coupled, highly complex global financial system does blow up, it doesn't take all of us with it.

This requires things like: Rebuilding local economies; Creating diverse, local supplies of goods and services; Building and entrenching networks of mutual aid and care; Ensuring that when essential tools or systems break, we have the knowledge and capacity to fix them;

Developing and deploying technologies and tools of selfreliance; and Replacing a culture of immediate gratification and acquisitiveness with one of patience, gratitude and the ability to be satisfied with less.

Leading, perhaps, to a reexamination of our relationship with debt.

All of these steps could be criticized as inefficient, or even “bad for the economy”— if your measure is one of goosing aggregate GDP growth for the next quarter.

But if they enable us to ward off the kind of catastrophe that destroys lives and institutions and leaves massive and lasting scars, they will be worth it.

When it comes to a virus of either the medical or financial variety, the potential for damage is far reduced when the hosts—our bodies, our communities, our economies— are strong, resilient and flexible.

We have a lot of work to do.

Tony Dutzik is associate director and senior policy analyst with Frontier Group. His research and ideas on climate, energy and transportation policy have helped shape public policy debates across the U.S. and have earned coverage in outlets from National Public Radio to the Financial Times.

He is the lead author of A New Way Forward and 50 Steps Toward Carbon-Free Transportation, which together lay out a vision and policy roadmap for decarbonizing America’s transportation system, as well as numerous other reports and white papers.

Southern Oregon Business Journal May 2020 | 17

PEOPLE

By Nancy Newton

Hello, I'm your new City Manager and I'm proud to serve Springfield. It is wonderful to be back in Oregon. I spent my childhood on a farm in Corbett, Oregon and each summer I would go to the Oregon State Fair with my family to show cattle. Our farm also had cows, chickens, horses, and some ornery geese.

As the youngest of five children, I learned the value of hard work early both on and off the farm. My first professional job was working for my father’s optometry office as a receptionist. Working for a small family business helped shape my career in public service as I learned about working with the community to provide them good value with great customer service.

18 | Southern Oregon Business Journal May 2020

A letter from Springfield’s New City Manager, Nancy Newton

While working full time, I attended George Fox University where I earned a bachelor’s degree in management and organizational leadership. I later earned my master’s degree in public administration from Portland State University.

I worked in the non-profit sector before transitioning this experience to work for Clackamas County, Oregon in 2000 as staff to the local Commission on Children and Families where I worked to help keep youth out of the juvenile justice system. I spent 17 years with Clackamas County including serving as Deputy County Administrator from 2004-2016 and Interim County Administrator from July to September 2013 before going to Sacramento County in 2016 to expand my career in public service.

While I enjoyed working in California, it does feel good to be back home in Oregon.

I’m grateful to serve as Springfield’s City Manager and I want to thank Mayor Lundberg and the Springfield City Council for selecting me for this role. It is an honor and I look forward to what we will accomplish together.

Nancy Newton City Manager Springfield, Oregon

ECONOMY

by Guy Tauer

April 13, 2020 Oregon workers who have lost their jobs, been temporarily laid off, or had hours drastically reduced filed 269,900 initial unemployment insurance claims in the three-week period ending on April 4, 2020. This is a truly staggering and unprecedented increase in demand for unemployment insurance benefits and a taxing toll on the systems and processes in place to handle claims activity.

Know that the Oregon Employment Department is marshalling resources as quickly as possible to rise to this level of need.

After bolstering our workforce and realigning resources to meet this demand, we processed 10,000 unemployment insurance claims in one day recently. Our hearts are with all of those who have lost their jobs or are on temporary layoff, and especially those who have been touched by the coronavirus pandemic directly.

The nation also saw record

Rising Unemployment Insurance Claims Portent to Economy-Wide Job Losses unemployment insurance claims activity during the past couple of weeks, with about 6.6 million initial claims recorded in the country during the past week ending April 4, 2020. While the national March payroll employment figures were just released showing a decline of 700,000 payroll jobs, the true toll of the

recent spike in unemployment claims and job reductions won’t show up in earnest until the April monthly employment and labor force data are released. For Oregon’s counties, that will be in late May. An early look at what industries are likely to see job losses reported in next

month’s employment data might be seen in unemployment insurance claims filed by industry and county. This is far from a perfect yardstick to measure overall economic or employment impact for a number of reasons. We have industry and county detail for 117,100 claims that were processed in the three weeks ending April 4, 2020. Of course, many workers that were impacted may not file for unemployment or be eligible. Or they could have had difficulty accessing overwhelmed phone lines if they were not able to complete their application online. This is administrative information, and while not perfect way to calculate the impact, some general inferences can be drawn. This event has no precedent or roadmap from which to draw conclusions about medium- or long-term effects. The scale and breadth of industries that are showing this rapid rise in unemployment insurance claims is also unsettling.

Continued on page 23 Southern Oregon Business Journal May 2020 | 19

ECONOMY

By Michael H. Shuman

A Dozen Asks for Your Governor

Photo by Dan Meyers on Unsplash

Everyone knows that the three, multitrillion-dollar stimulus bills passed by Congress fall way short. For most local businesses—the lifeblood of our economy—these bills offer too little relief, too late. I’m hopeful though that the states (and maybe, in some places, counties and cities) can rise to the challenge of saving these businesses.

Now is the time for your governor and state legislators to think big.

I’ve consequently prepared this long discussion essay of twelve legislative measures for you to e-mail or hand out to your favorite politicians. Please share broadly today.

Let me say at the top what’s not on my list: Your state should not just push more money out the door. There are dumb ways of jump-starting economies, which are expensive and create long-

20 | Southern Oregon Business Journal May 2020

term problems of debt and inflation, and there are smart ways. My list below is made up exclusively of no-cost or lowcost items that state politicians of any ideological stripe should have no problem embracing.

(1) Dismantle All Traditional Economic Development Incentives —Let’s start with a money saver, because your state will need all the funds it can get. Incentives are almost entirely about the attraction and retention of nonlocal businesses that are irrelevant to your economic future. Nonlocal businesses are the ones least likely to have any positive impact on your local economy.

My review of the relevant studies in Local Dollars, Local Sense shows that when you compare two similarly sized businesses or industries, one locally owned and the other not, the former generate two to four times the jobs,

income, and wealth. The federal bailout programs foolishly fail to focus on local businesses, and your state should not make the same mistake.

(2) One Year Income Tax Holiday – Give every locally owned business a one-year holiday on state and local income taxes. This is administratively simpler than doling out grants. It will give every local business a shot at recovery post-COVID. Honestly, I would like to see these taxes removed permanently, and replaced with taxes on carbon, pollution, and other nonrenewable materials—but that’s a fight for another day. The fiscal impact of this recommendation is modest.

According to the Tax Policy Center, corporate income taxes now make up only 2.4% of state revenues.

(3) Allow Local Currency Experiments – During the last Great Depression, communities around the United States jump-started their economies through their own currencies. Local scrip is essentially a local stimulus, because it will only be accepted by local businesses sufficiently plugged into the local economy to re-spend it. Every dollar of local currency spent has a higher multiplier effect than a normal dollar.

For a good model of local currency in action, see the BerkShares program in Western Massachusetts. These models are legal everywhere, but to have the strongest possible impact, they also need the participation of local government. In the 1930s, Philadelphia partially paid municipal workers in home-grown scrip and allowed citizens to partially pay their local taxes in it. Ask your state to give permission to local governments to implement a program like this.

(4) Create a Public Bank – For more than a century, North Dakota has run its own bank and since 1945 has generated more than a billion dollars of income for the state. Many activists have focused on its banking services, hoping to put private banks out of business. Far more important, I would argue, is the way the Bank of North Dakota boosts locally owned private banks and credit unions. Money any state collects from taxpayers and from the federal government, before being spent, has to be parked somewhere.

North Dakota deposits it at local banks and credit unions, expanding lending opportunities for local businesses. Tell your governor to ignore the lobbyists

from big banks, who detest the idea, and set up a public bank immediately.

(5) Overhaul Public Procurement – Your state’s agencies are among the most important “anchor institutions” in your economy. The way procurement works now—ignoring the local multiplier effects of various bidders—is guaranteed to lead to economically detrimental decisions. Local bidders should be fairly credited with their extra contributions to state jobs and taxes.

Insist that every contract bidder specify the minimum percentage of the contract that it pledges to re-spend instate. Those that promise higher instate spending would be credited with the additional benefits they generate for the state. This administrative change will help stimulate your state’s economy.

Recommendations number 6-12 are all about moving trillions of dollars from Wall Street (which has once again become radioactive) into the revival of your local businesses. Household financial assets are north of $50 trillion.

Moving even 5-10% of the pension savings of your state’s residents into local businesses will provide the best stimulus imaginable.

(6) State Investment Tax Credit — Tax credits exist in many states for many purposes, but none are designed to facilitate local investing by unaccredited investors. A great example can be found just above the US border.

The province of New Brunswick, which abuts the state of Maine, recently passed a tax credit to promote local investment. For every dollar they invest locally, residents get fifty cents off their

provincial tax bill. There’s no reason US states couldn’t pass a tax credit like New Brunswick’s. In fact, several state legislators are already drafting pieces of legislation to do this. How about yours?

(7) Neighborhood Investment Funds – Twenty years ago another Canadian province, Nova Scotia, gave its communities permission to create local pension funds. Today there about 70 of these funds operating. Your state should do this as well. Pass a bill and then formally ask the Securities and Exchange Commission for a “no action letter” that provides an exemption from the onerous Investment Company Act of 1940. Brian Beckon of Cutting Edge Capitalalso has formally asked the SEC for several rule changes that would permit community investment funds.

Once that permission is granted, help every community in the state can set up a fund. (I recently co-wrote a handbook with Brian, Amy Cortese, and Janice Shade on these funds that might be helpful, which you can downloadhere.)

(8) Investment Information Clearinghouse – Create a new state agency that evaluates local business securities and makes that information available to investors. Sooner or later, this will probably be done privately—as Moody’s or Standard & Poor’s do for big companies—but we need some early models to get things moving now.

(9) Expand Investment Crowdfunding – Check what your state has done with crowdfunding. Is your state one of the dozen, like California or New York, that hasn’t legalized it yet? Even in states that do allow local crowdfunding, much more is Southern Oregon Business Journal May 2020 | 21

A Dozen Asks for Your Governor, Continued

possible. Raise the limits on the amount a company can raise ($10–20 million seems right) and the amount unaccredited investors presumptively can give (some states allow up to $10,000 per year). Sound the rams’ horns to break down the Jericho-like walls that keep grassroots money away from local businesses.

(10) Liberalize States Crowdfunding Portals – States have impeded intrastate crowdfunding through their rules governing “community portals,” where local investors and businesses do transactions in legally compliant ways.

The SEC now allows portals licensed under federal crowdfunding law to be run by anyone, and these portals can charge a success fee, which pays the bills and allows them to be viable businesses. Oddly, most states don’t allow their portals to collect success fees right now, clinging to an old rule that only broker-dealers can do that.

This is, frankly, little more than a protection racket for the broker-dealer profession that needs to be broken up.

Until that happens, state crowdfunding platforms—unlike their national counterparts—are left with unworkable business models.

(11) Allow Local Investors and Businesses to Speak Freely – Securities law is filled with absurd limits on what companies can and cannot say to establish relationships with potential investors. For example, I cannot put up a website identifying local businesses that I personally believe might be good investments.

These laws were conceived in an era

22 | Southern Oregon Business Journal May 2020

when long-distance communication was mostly transacted by telegraphs and mail. The Internet has democratized the flow of information, and the time when little gnomes in securities departments can control that flow by issuing “permission slips” for sharing information, company by company, is over. Allow local companies and people to talk with one another about anything, any time. We’re all adults now. Fraudulent claims and misrepresentations would still be prohibited and actionable. But if you’re sharing truthful information about your business with potential investors, this is a wonderful relationship to be celebrated—not a problem to be squelched. Once you change these regulations, intrastate investing will flourish.

(12) Education – Your state should provide grants to grassroots organizations that are prepared to teach residents how to become prudent, successful local investors. And how they can use Solo 401ks and Self-Directed IRAs to reinvest their pension funds locally right away (which is the subject of my forthcoming book, Put Your Money Where Your Life Is). It’s stunning how few businesses and people actually know about emerging local investment options. The many tools that states have used to discourage smoking or drunk driving—billboards, bus-stop signs, conferences, curricula, social media—should be deployed to encourage local investing. We all need to spread the word, and your state’s support can speed things up.

Please note again that almost all the items on my list cost little or nothing. Changing the rules of the game for local investors and public procurement, for example, is free—and will generate huge long-term payoffs in your state. Dumping dumb incentive programs saves public money immediately. A well-designed public bank should generate income. Most of the other cost items, like public education, are small potatoes.

If ever there were a time for out-of-thebox thinking, now is it. Too many of our critically important local businesses will emerge from COVID-19 as corpses. We need to act quickly to install these economic paddles to get their hearts beating before they perish forever.

I’ve posted this list on my web site, www.michaelhshuman.com. Let me know what you think, and please add other policy ideas you think belong on the list.

Michael H. Shuman is an economist, attorney, author, and entrepreneur, and a globally recognized expert on community economics. He is one of the architects of the crowdfunding reforms that became the “JOBS Act,” signed into law by President Obama in April 2012 http://michaelhshuman.com/? page_id=6

Wide Job Losses, Continued From Page 19

Rogue Valley Initial Claims for Unemployment Insurance The Rogue Valley accounted for about 7 percent of the roughly 117,100 initial unemployment claims filed in the three-week period ending April 4, 2020. In other words, we have industry detail regarding almost 8,200 initial claims filed in the Rogue Valley, but these are just a portion of ALL claims filed during that time.

In Jackson County during the three week period ending on April 4, 2020, there were 6,257 claims processed. Compare that to the prior three-week period ending March 14, when 588 initial unemployment insurance claims were processed. Josephine County saw a similar spike, with claims over the same time periods rising from 229 to 1,937.

Looking at the change in initial claims filed from the most recent three-week period compared with the prior threeweek period in Jackson County, the largest jump in the area was, as you would expect, in the accommodation and food services industry, rising by more than 1,600.

The second largest jump in initial claims processed was in the health care

and social assistance industry, with more than 1,000 additional claims processed in the most recent threeweek period than the one before. In past swings in the business cycle, the

health care and social assistance industry has been touted for being recession resistant. During the Great Recession, the longer-term growth trend in that industry just slowed slightly before continuing to expand.

But in this sudden economic contraction, we have seen even that industry impacted by reduced activity, as non-urgent medical and dental procedures as well as other elective medical care have been postponed.

Retail trade, with many stores and retail complexes curtailing operations, saw nearly 750 more claims processed. A couple industries you might presume wouldn’t be impacted so quickly have already seen an uptick in claims –

manufacturing (+426) and construction (+288).

In Josephine County, the largest change was also in the accommodation and food services industry, up by 543 claims from the prior three-week period. Health care and social assistance saw the second-highest increase, with 276 more claims filed in the three-week period ending on April 4 than the previous period.

Retail trade (+160), manufacturing (+144), and construction (+91) were others among a wide range of industries seeing an uptick in initial claims for unemployment insurance. Not only have the swiftness and sheer numbers of claims filed been a seismic event in our employment history, but the early impacts across such a wide swath of industries is another trend to pay attention to.

For the time being, we will be issuing the latest data regarding weekly new unemployment insurance claims every Thursday at 10:00 a.m. and you can visit our website for more details about this information at https:// www.QualityInfo.org/covid-19.

Southern Oregon Business Journal May 2020 | 23

Oregon Regional Economic Indexes

TM

February 2020

Review

sponsored by

This is the last release of the regional indicators prior to the shutdown of activity necessitated by the Covid-19. Although the National Bureau of Economic Research has yet to officially determine that a recession began in March, the sharp downturn is activity makes such a declaration inevitable.

Is this approach used elsewhere?

Yes, the Chicago Federal Reserve Bank uses the same basic approach to measure both national and regional economic activity.

Contact Timothy A. Duy Director, Oregon Economic Forum Department of Economics University of Oregon 541-346-4660 · duy@uoregon.edu econforum.uoregon.edu

oregon

economic forum

24 | Southern Oregon Business Journal May 2020

New Private Housing Units Authorized by Permits Educational and Health Services Employment Financial Activities Employment Government Employment Information Employment Leisure and Hospitality Employment Manufacturing Employment Construction Employment Professional and Business Services Employment Other Services Employment Trade, Transportation, and Utilities Employment Civilian Labor Force Unemployment Rate Lodging Revenue, Inflation Adjusted Airport Passengers Initial Unemployment Claims Residential Units Sold Municipal Waste Home Price Index

-0.01 -0.12 -0.04 0.00 -0.17 -0.04 0.26 0.31 -0.13 0.21 -0.20 0.00 0.19 0.01 0.00 0.19 0.15 0.20 0.03

0.12 -0.03 0.05 -0.01 0.01 -0.03 0.00 -0.01 -0.04 0.00 0.08 -0.06 0.34 0.02 0.00 0.31 0.24 0.26

0.09 -0.02 0.00 0.00 -0.01 0.32 0.01 -0.05 -0.08 0.00 0.16 -0.01 0.28 0.05 0.00 0.30 0.15 0.38

-0.20 -0.11 0.02 -0.01 -0.02 -0.05 0.20 -0.02 0.20 0.04 0.04 0.20 0.40

Total Moving Average of Recent Observations

0.83 1.06

1.24 1.35

1.58 1.34

0.71 -0.12

Salem

Contrib utions to Regional Indexes – Feb ruary 2020

Rogue Valley

The monthly measures can be very volatile, and volatility will increase for smaller regions or those with less data included in the estimation process. To reduce the noise, it is helpful to focus on the average of the most recent data. For the larger areas, Portland, Eugene–Springfield, and Bend, a three-month moving average is sufficient to remove the noise. For Rogue Valley and Salem, a six-month moving average is required.

Central Oregon

What is the significance of the moving-average measures?

Eugene-Springfield

A reading of “zero” corresponds to the average growth rate for that particular region. In other words, the measures identify periods of fast or slow growth relative to trend.

There were essentially no leading indicators to help forecast this recession. As of February, regional measures of economic activity continued to indicate above average economic growth across almost all of Oregon’s major metropolitan regions.

The measures were supported by healthy labor market conditions of solid job growth, low unemployment rates, and low levels of initial jobless claims. These factors were radically reversed in recent weeks as large portions of the economy were shuttered.

Upcoming data releases will reveal the extent of the economic damage triggered by this “Great Suppression” of activity to control the spread of the virus. Forecasting the timing of an economic recovery is challenged by the lack of historical precedent; ultimately, the economic outcomes will depend on the evolution of the pandemic.

Portland-VancouverBeaverton

How can I interpret the measures?

-0.05 -0.11 0.02 0.01 0.02 -0.01 -0.03 -0.08 0.11 0.00 -0.03 -0.05 0.49 -0.02

0.02 0.48

0.75 1.24

Southern Oregon Business Journal May 2020 | 25

LEADERSHIP

By Greg Henderson Founder and Co-Publisher Southern Oregon business Journal

Qualified and Timely Leadership

The Gordian Knot of Leadership D

ictators and Tyrants dot the timeline of human history in their self-serving unwillingness to listen to their constituents’ needs and opinions. Misery and physical harm, including the threat of death, were the tools these rulers used to build their empires and have their way.

Today, on Oregon’s central coast there is a need for leadership not at all unlike those of the distant past. Fortunately,

26 | Southern Oregon Business Journal May 2020 26 | Southern Oregon Business Journal May 2020

Image credit?

today’s leaders have softened the means of getting their way.

A leader asks “why” rather than “what”.

The leader also tells you why a decision is correct rather than what he/she wants to do. Dick Anderson reminded me of that. He’s been using the why method for quite a long time. Melissa Cribbins will tell you that the Elliot State Forest has burned before and it will probably burn again. We should treat rule making with that in mind.

There is the knowing through experience, conversation, and study that adds to a leader’s value, as well.

"A true leader has the confidence to stand alone, the courage to make tough decisions, and the compassion to listen to the needs of others. He does not set out to be a leader, but becomes one by the equality of his actions and the integrity of his intent." --Douglas MacArthur

In Greek and Roman mythology, the Gordian knot was an extremely complicated knot tied by Gordius, the king of Phrygia in Asia Minor*. Located in the city of Gordium, the knot came to symbolize a difficult problem that was almost impossible to solve.

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Do you begin with “Why”?

Are you willing to place the instruction on agenda items with the expectation of an answer for each letter of the acronym?

S.W.O.T. : Strengths – Weaknesses – Opportunities - Threats Confidence, competence, patience, experience, and wisdom are five elements of leadership desired of, but sometimes absent the best leaders.

“In liberal democracies, leadership is complex. Leaders must first grasp the needs of the country. They must govern through a bureaucracy that they, for the most part, don’t appoint, don’t know and aren’t feared by.

Unlike in tyrannies, there is no pretense that much of private life is controlled by the state, and where the state attempts control, its efforts are undermined by resistance, indifference and incompetence.”

George Friedman https://geopoliticalfutures.com/author/gfriedman/

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Central Oregon Coast from Lincoln City to Coos Bay Seeks a New Leader

Melissa Cribbins

Dick Anderson

Dick Anderson and Melissa Cribbins have served in leadership roles for a combined time exceeding four decades. They sat in meetings for untold hundreds of hours, reviewing agenda items from the most trivial and mundane to the detailed and complicated. Their roles at times required patient listening and empathy for the subject in discussion. At other times solutions came slowly with deliberation and study, in solitude under the glow of lamplight. Sometimes, oftentimes, they needed to become the captain of the team.

Leaders with the acumen to reach correct decisions time after time are rare.

It takes active participation, experience and opportunity to reach higher levels of leadership talent. At times even the best leaders will feel inadequate for the position. That’s when they rely on their team.

As a multi-term mayor of Lincoln City Dick Anderson has been involved in housing and funding discussions from the Oregon Coast to Washington D.C. At the same time there is a cry for decent jobs and a place to live he has answered questions about a local dog park and artwork in public buildings.

Intellectual acuity is an acrobat’s exercise.

Melissa Cribbins has served on numerous boards and committees over the years. As a County Commissioner serving with two others she has been faced with challenges of county financing, disease in the public and private forests of Curry County, outside her jurisdiction, because the threat to Coos County is very real. How do you come to a quick and responsible decision when the public and your peers can’t reach a consensus?

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Leadership takes time, study, opportunity and knowledge from various halls of learning and the school of hard knocks. A leader needs to understand the role of the present responsibility before him/ her. Job descriptions, they find, are nearly always incomplete. “Other duties as assigned� is usually a collection of undefined hurdles requiring exceptional talent and experience.

Tracking progress is the teacher. What was the goal? Why was that goal listed? How does it rank in importance to others? How will we measure our progress toward reaching that goal? Are those measures accurate or meaningful?

Being busy is not necessarily the same as being productive.

They say that a goal is a dream with a deadline. The best leaders understand this.

How urgent is it? What will it cost? Who will be responsible for each step in the process? When will it be completed?

Abraham Maslow introduced the Hierarchy of Human Needs in 1943.

They still apply. Needs lower down in the hierarchy must be satisfied before individuals can attend to needs higher up. A hungry child finds it difficult to do well in school because a growling stomach demands attention before learning can be accomplished.

Without basic understanding of budgets, financial statements and why the order of priorities is set in a particular way, the person with the seat at the head of the table will likely fail. The same can be said for positions of responsibility in manufacturing, education, healthcare, construction and the military.

Those who choose their leaders should not take that responsibility lightly. A school, community, county, state, or nation may be depending on it.

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I

s someone watching? … leadership.

Scarcity in cooperative management.

Vague, indecisive and without concern for consequences.

Trauma, and its impact on leadership, is more common than one might think. Many executives of today are second-, third- or fourthgeneration descendants of victims of calamities of the 20th century. The atrocities of World War Two were unquestionably horrific, but China’s Cultural Revolution, the wars in Korea and Vietnam, genocides in Armenia, Cambodia, Rwanda and Bosnia, South Africa’s apartheid and segregation in the United States each exact their own toll on millions of people.

Resilient leaders are adept at dealing with change and innovation challenges due to their adaptability and ability to rebound from adversity.

International, national, regional and local events expose leadership inadequacy of 2020; positioned people sans adaptability.

Leadership is more easily recognized than defined. “I can’t explain it, but I know it when I see it.”

This is a time for crisis leadership. Selecting those leaders is of extreme importance.

Crisis leadership involves more than simply saying the right message(s) to the right audience(s) to uphold the reputation of an institution in the face of crisis (Gigliotti & Fortunato, 2017). By knowing one’s indispensable values and responding to challenging situations in a way that is driven by these values, the response to the crisis extends beyond public relations. Rather, when handled appropriately, values-driven crisis leadership can help a group, organization, town, or government agency learn from the situation, remind internal and external stakeholders of one's core values, and move forward better equipped to lead through the inevitable challenges of tomorrow.

The Corona Virus pandemic and accompanying Economic Crisis as a result of Quarantines and Lock Downs is a test of leadership that was not expected nor ever experienced until 2020. The urgent result is to ensure capable leadership is at the helm to guide management and teams in an effective effort to shorten the attack and resolve the potential for economic disaster.

Leading during a crisis demands skills that eclipses crisis management in ways that can stress your team’s capabilities to deliver sustainable and enterprise-wide contingency solutions.

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Critical Components to Effective Crisis Leadership 1.Adaptable 2.Empathetic 3.Prepared 4.Resilient 5.Transparent 6.Trustworthy 32 | Southern Oregon Business Journal May 2020 32 | Southern Oregon Business Journal April 2020

Earth Exposed: A Leadership Challenge As the above diagram shows, the four pillars overlap, thus they are not separate processes.

This blending gives the organization the ability to focus on opportunities and deal with threats (Department of the Army, 1987, 1996):

Leadership drives the interpersonal aspects of the organization, such as moral and team spirit.

Management deals with the conceptual issues of the organization, such as planning, budgeting, and organizing.

Command guides the organization with well thought-out visions that make it eective.

Control provides structure to the organization in order to make it more eďŹƒcient.

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EMPLOYMENT

By Erik Knoder State of Oregon Employment Department

In Cod (And Crab!) We Trust – Oregon’s Seafood Processing Industry

Image credit:OREGON DEPARTMENT OF FISH AND WILDLIFE: Economic Contributions of Oregon’s Marine Fisheries, 2019 Update

I

n 2018, Oregon had 34 employers and 1,245 employees turning slimy fish and armored crustaceans into succulent seafood ready for cooking and eating. The addition of more businesses is partially reversing a trend of consolidation in the industry.

Commercial fishers landed about 313 million pounds of

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fish and shellfish in Oregon in 2018, about 75 pounds per Oregonian. About 60 percent of this volume consisted of whiting, mostly used to make surimi. Total harvests had a dockside value of $173 million, an increase of 17 percent from the year before. Fishermen sold a small portion of the harvest off their vessels or at markets directly to consumers.

Most, however, was sold to processors and buyers then exported or sold to wholesalers, retailers, restaurants and consumers.

The seafood processing industry – part of the manufacturing sector – includes businesses that clean, freeze, can, smoke, salt and dry seafood. It also includes firms

that shuck and pack shellfish.

Although Oregon currently doesn’t have any, it also would include processor ships that do these operations at sea.

Except for certain fishermen

$53.8 million worth of fish, crustaceans, other marine products, and related prepared products in 2019, according to the U.S. Census Bureau. Canada was by far the

About half of seafood exports are as whole frozen fish, presumably with further processing done in the destination country.

licensed to sell fresh fish from their boats, the Oregon Department of Fish and Wildlife requires commercial fishers to sell their harvest to licensed wholesale fish dealers or licensed fish buyers. Many of these dealers and buyers are also processors.

leading foreign destination, taking 38 percent of all exports. Europe, South Korea, and Japan were other major destinations. Exports to China fell by two-thirds in 2019 from 2018. Canada took a lot of Dungeness crab and whole and filleted fish. Japan took a mix of fish fillets and mollusks while South Korea imported live fish almost exclusively.

The number of seafood processing businesses had been slowly declining since 2007, but that trend reversed in 2015. Oregon’s processing industry gained five businesses that year. Since then Oregon has added two businesses each year. But the trend toward more consolidation may continue.

Pacific Seafood has moved to

Oregon exported roughly

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Cod and Crab, Continued

operate a Trident Seafood plant in Newport, leaving just two main seafood processors in the busy port town.

Consolidation has also occurred in the Oregon fishing fleet. Three ports:

industry fared relatively well during the Great Recession.

The jury is still out on the effects of the COVID-19 pandemic, but some processors have apparently laid off some staff.

Astoria, Newport and Charleston, had about 82 percent of all commercial fish landings by value in Oregon in 2019. Smaller ports like Garibaldi, Depoe Bay, and Florence struggle to find money for infrastructure, dredging, and jetty maintenance that can attract vessel owners and seafood processors.

Employment dipped significantly in one year (2009) of the Great Recession, but otherwise mostly grew through 2013. Employment in 2013 was about 150 more than in 2001. This may not sound like much of an accomplishment, but Oregon lost more than 40,000 jobs from all manufacturing businesses during the same period. From 2013 to 2015 employment fell, but the industry gained jobs from 2016 to 2018 and ended up with the highest annual

Employment Trends in Seafood Processing The seafood processing

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average employment since 2001.

Employment in seafood processing tends to be fairly seasonal. It peaks in midsummer and hits its low point in March. Much of the industry’s employment depends directly on when fish are landed. This in turn depends on weather, ocean conditions, fish life cycles, and regulations, especially those established by the Pacific Fishery Management Council.

This council has the authority to open and close many fisheries important to Oregon.

The summer employment peak coincides not only with better fishing weather, but increased availability of fish.

Tuna, salmon, and especially Pacific whiting, are all available in the summer.

Pacific whiting, also called hake, is typically Oregon’s largest fishery by volume. A little more than 222 million pounds were landed in 2019.

(On the other hand, because it was plentiful it fetched only ten cents per pound when landed.) Whiting is used to make surimi, which in turn is used to make imitation “crab” or “lobster” meat.

Manufacturing surimi requires a good deal of very controlled processing and rapid cleaning and handling of the fish. This means that surimi processors must hire many seasonal

employees.

Another, smaller, peak in seafood processing employment typically occurs in December and January.

Although the weather is often dangerously bad at this time, December is usually the beginning of the Dungeness crab harvest. Crab is often Oregon’s most valuable single fishery. About 19 million pounds were landed in 2019 with a value of $67.8 million.

In contrast to inexpensive whiting, Dungeness crab fetched about $3.56 per pound. The crab harvest is a derby fishery; it’s first come, first served as boats and crews race to scoop up as much as they can before someone else does. The result is a glut of crab landing on processors’ docks that must be cleaned, cooked, picked, and frozen in short order. Seasonal employees allow processors to get through the short-lived crab bonanza.

The skill requirements are modest for many seafood processing jobs. Line jobs are generally entry level.

Applicants often must pass a drug screening test and a criminal background check.

The work is often 12-hour shifts, seven days per week during the busy seasons. The demand for workers in tight

labor and housing markets recently led one Astoria processor to purchase an apartment complex to help provide housing for its workers. Overtime is a part of the job and the base pay is usually minimum wage. Other jobs, such as truck drivers and quality inspectors, require more skill and pay more.

Garibaldi an active fishing port. Small firms are more common for salmon and albacore tuna. The websites for the Oregon Albacore Commission and the Oregon Salmon Commission each list several dozen firms that handle these seafood products and provide canned, frozen, and fresh fish.

Other Processors

Out-of-State Opportunities

Oregon has a number of businesses that handle and process seafood aside from the major processors. If seafood processing is a sideline for a business, it may be counted in another industry because businesses are categorized according to their main operation. There are a handful of oyster farms along the coast that shuck and package oysters, although their main business is farming the oysters. Oregon Oyster Farms in Newport and Clausen Oysters in North Bend grow oysters and ship them worldwide.

Some seafood processors recruit Oregonians to work in out-of-state plants, primarily in Alaska during the summer months. Companies such as Trident Seafoods, Signature Seafoods, and Ocean Beauty routinely recruit employees for their Alaska operations.

Although the jobs may be listed in Oregon, out-of-state jobs don’t count as official Oregon employment and are not included in this analysis.

Other firms that distribute seafood or sell wholesale or retail may also do some processing. The Garibaldi Cannery on Tillamook Bay is one such multi-purpose firm.

The company does processing, buying, and retail and helps keep the port at

The Alaska processing work is similar to that in Oregon: few skill or experience requirements, working on a processing line, 12- to 16hour days, seven days per week. The difference is the geographic isolation. Many Alaska facilities are in remote locations and employees live in dormitory style housing in company towns.

Southern Oregon Business Journal May 2020 | 37

OLCC Record Revenue from Page 13

SouthernOregonBusiness.com

“These numbers may be alarming to those concerned about alcohol dependency, but it reflects the shift in consumption, not an increase in consumption,” said Steve Marks, OLCC Executive Director.

The rise in liquor sales mirror the shipping volume increase from the OLCC’s Milwaukee warehouse to retailers across the state during March. The OLCC shipped 367,563 cases of distilled spirts in March 2020 compared to 278,407 in March 2019, a 32 percent increase.

The OLCC had two record-shipping days in March with 26,685 cases shipped on March 19, the largest shipping day in OLCC history and a 117% increase over the same day in 2019; the second-largest shipping day in agency history was recorded March 18 when 22,547 cases were shipped. Shipments have now dipped below normal levels.

“We appreciate our warehouse employees and liquor store agents across the state for being nimble enough to adapt to the new business model imposed by the Covid-19 pandemic,” said Marks.

“Despite operating with less staff, and being open shorter hours, the combined efforts of liquor store agents are continuing to provide service while also generating an important source of revenue for the state during a time of limited economic activity.”

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Ten Steps All Workplaces Can Take to Reduce Risk of Exposure to Coronavirus

1.

Encourage workers to

8.

7.

Regularly clean and disinfect surfaces, equipment, and other elements of the work environment.

All workplaces can take the following infection prevention measures to protect workers:

2.

Encourage respiratory etiquette, including covering coughs and sneezes.

3.

Provide a place to wash hands or alcohol-based hand rubs containing at least 60% alcohol.

Use Environmental Protection Agency (EPA)-approved cleaning chemicals with label claims against the coronavirus.

Limit worksite access

9.

4.

(e.g., telecommuting) (e.g., staggered shifts),

1-800-321-OSHA (6742) TTY 1-877-889-5627

For more information, visit www.osha.gov/coronavirus or call 1-800-321-OSHA (6742).

10. Encourage workers to report any safety and health concerns.

Follow the manufacturer’s instructions for use of all cleaning and disinfection products.

5.

6.

Discourage workers from using other workers’ phones, desks, or other work tools and equipment.

www.osha.gov

OSHA 3994-04 2020