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Home / Washington Business - November/December 2003 / Accelerating Out of the Turn |
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Accelerating Out of the Turn |
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Written On: November/December 2003 |
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Written By: By Richard S. Davis, President, Washington Research Council |
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Most employers know that you learn a lot just by listening … to customers, employees, peers, and folks on the street. This year, we did a lot of listening in developing the WashACE 2003 report, “Accelerating Out of the Turn?” We interviewed business leaders, hosted focus groups around the state, and surveyed the AWB membership. No one has a better sense of the business climate than the men and women working everyday to produce and sell a product.
The AWB membership survey confirmed what we were hearing around the state: It’s still a struggle to do business in Washington. A majority of members believe the business climate has worsened in the last year. Nearly two-thirds think things are off on the wrong track.
The negative assessments track the economic news. Washington’s economy seems stuck in a low gear. The Seattle Post-Intelligencer ran a story on the state revenue forecast under the headline, “State’s stagnant economy considered good news by some.” We’re stalled, but we’ve stopped plummeting.
As forecasters have long predicted, this state lags the national recovery, and no one knows when we’ll take off again. The uncertainty is unsettling. Those who think the business climate has worsened buttress their assessment with references to market conditions, high unemployment rates, and business departures.
The surveys and interviews point to another trend, however. Employers believe that policymakers have begun to respond to long-standing business concerns. Even those who do not focus on Olympia and the inside baseball of the Priorities of Government budget process recognize that when the state handled a $2.5 billion budget shortfall without raising taxes, something had changed for the better. They also commented on the way lawmakers pulled together to make a credible bid for the Boeing 7E7. Unemployment insurance reform, transportation investment, tax incentives for semiconductor manufacturing, and action on some of the Competitiveness Council recommendations further make the case.
We have reached a turning point, both for the economy and for public policy. And as we make the turn, employers can see the abundant evidence of a staggering recovery as well as signs that policymakers are responding in ways that will improve business competitiveness.
For a long time, one CEO told us, too many policymakers believed, “jobs are good, but business is bad.” That view seems to have changed.
Policy changes rarely provide instant results. When a promised tax cut takes effect, the benefits accrue over years, as reduced costs allow employers to boost production, increase their capital investment, and add to their workforce. Public investments in transportation, research and development, and education have similarly extended payback periods. Changing the culture of regulatory agencies also requires sustained commitment.
In preparing for the AWB Policy Summit, we looked at the concerns of the different industries in our wonderfully diverse state - from agricultural Eastern Washington to the tech-centric Puget Sound region, from heavy manufacturing firms to small retail and service firms.
The boom in the late 1990s primarily centered in the central Puget Sound region, but all parts of the state experienced the downturn beginning in 2001. Some sectors weathered it better than others. There are, however, few success stories and many shared concerns.
Business leaders exhibit substantial agreement on fundamental business climate concerns. Despite the divisions within the state, Washington’s economy has a high degree of integration and interdependence.
We asked them for their thoughts on the state’s economic plan. Most agree that it will have to balance competing interests. Policymakers will need to minimize tax burdens on job creation and investment, while providing adequate funding for infrastructure and education. Regulators and lawmakers must avoid excessive regulation without sacrificing environmental quality and workplace safety. And the economic developers must nurture and attract advanced and emerging technology firms while recognizing the importance and unrealized potential of agricultural, natural resources and manufacturing industries.
To achieve these objectives, WashACE will work with business, civic, and governmental leaders to develop a business plan for Washington. Initially, the plan includes the following recommendations, which were refined at the Policy Summit and will be developed further in the coming months.
Fiscal Policy: The state must continue to manage within current revenues, using the Priorities of Government budget process. Within the budget, postsecondary institutions should be accorded a high priority, and given the policy and administrative autonomy required for effective management. To retain and attract technology industry, R&D tax incentives should be made permanent.
Regulation: Regulatory barriers to economic vitality must be removed. Lawmakers should reform the workers’ compensation system, establish an executive office of regulatory reform, and regulate to federal standards. The minimum wage law should be amended to minimize adverse effects on agriculture and the restaurant industry.
Education and Workforce Training: Education reform efforts emphasizing accountability and performance must continue. Workforce training programs at the community and technical colleges should be strengthened in partnership with businesses and local schools. Teen work rules should be evaluated to increase opportunities for young people to participate in the workforce and learn essential workplace skills.
Infrastructure: The progress made last session to increase transportation investment represents a good start, but only a start. Plans should begin now for increasing future investment and strengthening accountability. Energy policy should focus on expediting permitting to promote increased generation and transmission, including natural gas pipelines.
After several years of decline and stagnation, Washington may be turning the corner. We cannot stop now. It’s time to accelerate out of the turn.
WashACE is the Washington Alliance for a Competitive Economy. It is a coalition formed four years ago by AWB, Washington Roundtable and Washington Research Council to promote competitiveness.
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