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Senator Doug Whitsett
R- Klamath Falls, District 28

Website: http://www.leg.state.or.us/whitsett
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E-Newsletter  8/27/13

Oregon’s workforce and its consumers suffer each time that our governments impose new costs on private businesses.

Unfortunately, our state and municipal governments do not appear to recognize that reality.

Last march, the members of the Portland City Council voted, unanimously, to force Portland private businesses to provide “paid sick leave” to their private sector employees. The Council followed the lead of the Seattle City Council, who in 2012 mandated that private employers located in that city must provide paid sick leave on their private sector employers.

The state of Oregon may not be far behind. Two identical bills were introduced in this year’s Oregon Legislature that would have enacted mandatory paid sick leave on most Oregon businesses. SB 801 and HB 3390 would have required most Oregon employers to provide their employees with seven days of paid sick leave each year.

Fortunate for consumers and workers alike, these bills were not enacted into Oregon law!

However, House Bill 3390 did receive multiple hearings, and significant public testimony. The House Committee on Business and Labor held a work session and passed the bill out on a party line vote. It was referred to the House Rules Committee where it later received a second public hearing with even more public testimony. HB 3390 was still in that committee when the 77th Legislature adjourned.

The provisions of HB 3390 were very similar to Oregon’s mandatory family-leave law. That existing law requires Oregon businesses to allow their employees to take up to twelve weeks of unpaid time-off each year, for illness, injury or a variety of other family situations. The law applies to all Oregon businesses that employ twenty five or more people, for twenty or more weeks per year.

HB 3390 would have required Oregon businesses that employ six or more employees, for twenty or more hours per week, to provide seven days of paid sick leave each year. This legislative measure required employers to provide one hour of sick leave, for each thirty hours worked, starting from the very first day of employment.

The most significant difference between the existing family-leave law, and the proposed new law, was that HB 3390 would have required the employer to pay the employees’ wages and benefits while taking sick leave. The business would have had to pay the covered employee for not working while also paying another worker to perform the work that the employee on sick leave would have been doing.

It would have had virtually the same effect as a government mandated 3.3 percent pay increase for all eligible private employees. Stated another way, it would have effectively increased the cost of Oregon’s minimum wage, from $8.95 per hour, to about $9.30 per hour, increasing the employers’ cost by about $725 per employee per year. The cost for each covered worker would have been significantly more, in the event that the employee was earning more than the minimum wage.

Oregon state government currently provides more than forty different forms of paid leave to its public employees, according to the Department of Administrative Services. The cost of that paid leave is estimated at about fifteen percent of payroll. That calculates to more than one and a quarter billion dollars per two year budget cycle, payable by the taxpayers of Oregon.

In order to stay in business, private sector employers must maintain competitive costs. This is in stark contrast to governments who pay their employees with dollars generated from fees and taxes predominantly levied on the private sector. When governments impose new cost mandates, private businesses must either increase the price for their products and services, or find savings to reduce their costs.

Competitive market forces often prevent businesses from increasing their prices. Therefore, in most cases their employees are necessarily targeted to compensate for the government mandated increases in employee costs.

Those costs can be reduced in several ways. Some private sector employees will simply lose their jobs! Other employees may expect their hours of work to be reduced. In the alternative, they may expect to have other existing benefits reduced or eliminated.

The largest negative effect will be on entry level jobs that are traditionally filled by teenagers, and those with high school educations, or less. That segment of Oregon’s workforce already suffers among the highest rates of unemployment, and underemployment, in the nation.

Oregon is, unfortunately, a national leader in high school drop-outs. At least one third of our high school students are failing to graduate on time, if at all. This struggling segment of our workforce will be hurt the most.

Private sector wages and benefits should be established by economic factors in a free market economy. Consumers and employees are always the ones that pay the price when governments impose cost-mandates, on private sector businesses. For that reason, Oregonians should insist that their governments depend upon the free market to establish private sector employee compensation as well as setting prices for commodities and services.

Please remember, if we do not stand up for rural Oregon no one will.

Best Regards,





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