Jobs and Taxes. It is a rare edition of a local paper that does not contain at least one article or letter to the editor on each of these subjects. However, despite the quantity of space devoted to these issues, little actual factual information about jobs or taxes has been presented. This is somewhat surprising given that local economies are not terrible complex. This article outlines some of the underpinnings of rural economies like Jefferson County’s. While perhaps not the most exciting subject, it is neither obscure nor remote from our lives. Every citizen is capable of understanding these ideas and making informed decisions about the economic well-being of their community.
JOBS
Jobs have joined the ranks of motherhood and apple-pie as universally recognized good things. But where do these good things come from and how can we acquire more of them for our citizens? To answer that question, let us break down jobs into three general categories; Production, Manufacture, and Service. Each of these three jobs has a somewhat different logic but all three are necessary to a healthy local economy. First we will consider production jobs. Production jobs include farming, ranching, dairy, mining, timber, fishing, and basic industry like the paper-mill. Many of the economic ills of rural communities including Jefferson County’s can be traced directly to a marked decline in production jobs over the last half-century. Essentially, any time you buy something that has been produced outside your community that could have been produced locally you are reducing employment in your community. A second general category of employment is in manufacturing. Manufacturing involves taking raw materials and creating various sorts of products. This is often referred to as a “value added” process because cheap resources like raw logs can be manufactured into expensive items like furniture. Manufacturing often involves several steps: Logs are usually milled by one manufacturer and then sold to a furniture maker, for instance. Construction is one engine of local economies because it is, at heart, a diversified manufacturing process that uses relatively inexpensive raw materials to produce an expensive finished product The more steps of manufacturing that take place locally, the better for local employment. Third are service jobs. A catchall phrase for everything else, service jobs include retail, restaurants, tourism, education, and medicine. Service jobs are unfairly maligned as low paying. While many service jobs pay poorly, others, including many in the medical field, pay quite well. As a general rule, the more services that can be provided within a community the better that community will fare. For instance, Port Townsend has a better employment outlook than the rest of Jefferson County in part because of the number of services like the county hospital that are located here. Seattle has a better employment picture than Port Townsend in part because of the concentration of service jobs like the University of Washington that are located there. Without adequate services, local economies fare poorly.
All three job sectors are crucial for a healthy economy and sound employment base. From a jobs perspective, the best possible scenario is for a local product, say locally grown berries, to be processed locally, into jam, and sold at a local store. The production, manufacturing, and retail jobs are all local. If one buys Smuckers Jam at Safeway, the retail job is local but the production and manufacturing jobs are lost. Sometimes, however, it may not be economical to produce some raw material locally and, therefore, the best strategy is to capture the manufacturing and the retail jobs. For example, I am planning to buy a pair of Carhart’s. At $40 these are an expensive manufactured good. While it is unlikely that is would be cost effective to produce canvas locally, it might be economical to import the canvas and make a similar product here, thus keeping most of the jobs in the county. Finally, items like cars cannot be produced locally and the best one can do is try and keep the service jobs local by having local dealerships. Similarly, many service jobs like education and medicine are not tied to physical products and the best one can do is keep the jobs in the community. I do not mean to belabor the obvious with the above points. As mentioned, however, the sheer volume of material on the question of local employment tends to obscure some of the basics. Given these points, however, some clear guidelines for action emerge. First, a clear account of what could be produced locally should be made. While the jam example may seem quaint it is quite serious. Walk through the aisles of QFC, Safeway, or even the COOP and make a mental list of all the items that seem like they are or could be produced in the county. Jam, jelly, cookies, bread, fruits, vegetables, soups, meat, fish, and so on. Any single item would be unlikely to employ more than a few people but the cumulative effect of producing most of these items locally would be profound. So why don’t we? For each item there is a different issue. Jams, jellies and soups must be processed in certified kitchens which adds to expense. But a cooperative canning facility might be feasible. QFC and Safeway have barriers which make it difficult for many locally produced items to be sold through them. On the other hand, encouraging stores like the COOP and Key City Fish that do provide an outlet for local producers can help overcome the retail outlet problem. A review of specific products and their related bottlenecks is straightforward and would provide the City and County with what amounts to a list of jobs-in-waiting. Not surprisingly, groups like the Economic Development Council and individual entrepreneurs are working on these issues already. The recent revitalization of the Quilcene hardware store and the opening of the Mariner Bank are two examples that spring to mind. Unfortunately, their good work is often overlooked, unheralded, and, most importantly, insufficiently supported by local government.
Considering all of the above, let us look at two development scenarios. Perhaps the most commonly heard solution to the problem of local unemployment is to change zoning ordinances to allow for a large chain store like Wal-Mart or Target to locate in or near Port Townsend. Considering the amount of comment this suggestion has received, one would think such a store would either provide full employment for the foreseeable future or destroy the County as we know it. Setting aside the many quality of life arguments raised against this proposal, there remain many strictly employment related questions. While any large chain store would provide service jobs, the questions is would they increase the net jobs in the county. If the store provided only goods which were currently not available locally, then one could be fairly certain the jobs would be all to the good. Really, though, a Wal-Mart is likely to sell many of the same items already available in the local community. This might mean healthy competition, or it might mean jobs being lost in one retail outlet shifting to another retail outlet. More damaging to a local economy would be the loss of an outlet for locally produced goods if the COOP or Key City Fish were put out of business. If sufficient jobs were lost because of service duplication, there could be a net loss of jobs in the county. Indeed, this is a common though not inevitable outcome from the location of large chain stores in rural communities. At best, this scenario would provide service sector employment shifting all production and manufacturing jobs associated with the goods carried outside the county. Any informed decision about locating a large retail outlet in the county would require a careful study of the impact on existing retail outlets and local production and manufacturing jobs. Again, such a study is relatively straight forward. However, without this information one does not know whether jobs are being added, there is no change, or jobs are being lost in the county.
An area of clearer need in the county is the unglamorous slaughterhouse. Without a local slaughterhouse, the economics of ranching and, to a certain extent farming become difficult. Pork, beef, chicken and turkey are all relatively expensive at the retail level but the producers receive very low prices at the wholesale level. A local, licensed, slaughterhouse would provide a livelihood for producers, for the processors, and very likely a better quality product at the retail outlet. We are fortunate that retail outlets that might carry locally processed meat exists. Many communities do not have that luxury. The combination of production, manufacturing, and retail jobs that would likely result from a local slaughterhouse is likely equal to even a large chain store and certainly less controversial. A simple survey of local need, available retail outlets, and possibilities for growth would allow for informed decisions about the possibility of a private slaughterhouse, a cooperative, a government supported operation or a decision that it would not be economically feasible. Unlike a large retail outlet, a slaughterhouse would not duplicate services and would not have a potential negative impact on local employment. Of course, one can add many layers of complexity to this basic outline of employment issues. Still, keeping these basics in mind should help separate some wheat from some chaff. Faced with any proposal ask yourself; does it add jobs at many levels or only one? Does it duplicate existing businesses or does it address a missing need? Would it bring production in to the community or move it elsewhere? While not the last word on local employment, these questions are a good start towards understanding the likely impact of any given business proposal on the community.