BusinessJanuary 4, 2004

How hospitable is Washington to business interests? That would depend on who you ask

Paul Queary

OLYMPIA -- For Mark Barrett, the snow-covered soil and leafless trees of his Yakima-area orchard mirror a wintry outlook on Washington state's business climate. For Greg Sessler, who sweats the numbers at Redmond-based biotech firm Spiration Inc., it's more like a Puget Sound spring day -- sunny, but threatening rain.

For decades -- but especially during the recent economic downturn -- the business climate has been a leading preoccupation for businessmen, workers and policy-makers alike. In a world where jobs can be shipped to India or China, where competition can come from neighboring Oregon or far-off New Zealand, making the state hospitable for commerce has become more and more pressing.

Just this year, after a session of the Legislature largely devoted to issues surrounding the business climate, lawmakers enacted massive tax breaks for Boeing and rolled back unemployment benefits for workers in a bid to persuade the aerospace giant to keep building jetliners here. And in November, voters overturned a sweeping set of workplace safety rules that had been widely condemned as bad for business. A powerful push for more changes is expected next year.

But in the business climate -- like the real weather -- one person's lush rain forest is another's soggy mess and one person's barren desert is another's sun-soaked paradise.

Just what is the business climate? Its components can be as straightforward as the hourly wage of a farm laborer or as subtle as a trout stream that helps lure a gifted scientist from thousands of miles away. They can be as specific as the cheap hydroelectric power that once fueled Washington's now-struggling aluminum industry or as intangible as the entrepreneurial energy that drove the tech boom in the late 1990s.

For Barrett, the last two decades have been a nightmarish confluence of ugly storms. Apple growers sprang up in foreign countries with cheap labor and loose regulations. The new players muscled their way into the export markets long dominated by Washington fruit.

Meanwhile, Washington voters mandated an automatic yearly increase in the minimum wage that drives up the cost of farm labor, even as other government-mandated costs such as unemployment insurance and workers compensation increased. The cost of producing a box of apples doubled. The sales price didn't.

"We have the minimum wage law, then we have the increases for workers comp that have just been skyrocketing," Barrett says. "Every time there is a raise, then it makes it better for somebody who is growing fruit in Chile or in China."

Caught in a vise between world trade and local costs, Barrett sidestepped and downshifted. Where he once grew only apples on 260 acres and sold to big packing houses, he now grows a variety of softer, more perishable fruit on just 65 and tries to sell directly to the public. He says he's working harder, doesn't make as much money and doesn't employ as many people, but at least he's turning a profit.

"I'm growing as tree-ripe as I can," Barrett said. "That's my niche in order to get direct to the consumer. Then I can get the profits."

Daily headlines, straight to your inboxRead it online first and stay up-to-date, delivered daily at 7 AM

For Sessler's company, which is developing sophisticated medical appliances for use in treating lung disease, the climate is measured with a different barometer. Biotech companies, like software firms and other high-tech enterprises that thrived during the 1990s, want a favorable tax climate, a ready supply of brainy scientists to hire, plentiful investment capital and a free flow of research ideas from the state's universities into the private sector.

"From a people standpoint it's good," Sessler said of the climate. "There's always the challenge of getting qualified, educated people to grow the company."

For the most part, companies like Spiration aren't worried about land-use law, environmental restrictions, unemployment insurance costs, and workers compensation rates -- issues that gall many traditional businesses.

"They don't rise to the level of visibility that something like taxation does," Sessler said of many of those traditional business concerns. "Minimum wage laws -- we're a highly compensated work force -- they don't come into play at all."

For Spiration and other high-tech firms, the biggest cloud in the business sky is the potential loss of two tax breaks designed to stimulate research and development and protect young companies that aren't making a profit yet.

Most business falls between these two extremes, neither as squeezed by outside forces as Barrett nor as apart from them as Spiration.

When the Legislature convenes Jan. 12, expect an acrimonious election-year debate on just what would help make the state more business friendly in general.

Conservatives will argue that reining in government regulation -- from land-use restrictions to the automatic minimum-wage increase -- will stimulate an economic recovery that lags behind the rest of the country.

Environmentalists, labor unions and others will contend that state laws mandating clean air, clean water and safe workplaces create a fertile climate of their own, the kind that brings in clean industries and high-dollar jobs.

Expect some business sectors -- high-tech in particular -- to get favorable treatment as Boeing did.

Story Tags
Daily headlines, straight to your inboxRead it online first and stay up-to-date, delivered daily at 7 AM