Timber Changes Reflect Inequality: Wood products companies have busted labor unions and pay less in taxes, all to the benefit of the 1%

The following opinion piece is from Ernie Niemi, president of Natural Resource Economics Inc. based in Eugene, Oregon.

From leaders as diverse as Barack Obama and Newt Gingrich, we’re hearing a desire to rein in the nation’s extreme inequality — inequality in incomes, wealth and political power. It’s about time. The forces underlying inequality have harmed Oregon’s workers, families and communities for several decades, and they undermine our children’s economic future.

Today’s economic inequality is staggering. The top 1 percent — 1.6 million families with incomes more than $394,000 in 2012 — currently captures about 20 percent of the nation’s total income. In contrast, from the end of World War II until 1980, that group collected only about 10 percent of total income.

In recent decades, as the nation’s total income has grown, the top 1 percent has captured an increasing share of the aggregate growth: more than two-thirds since 1993, and 95 percent of all increased income since 2009.

Inequality in Oregon shows similar characteristics. Between 1990 and 2012, the median income (half have more, half have less) of year-round workers remained essentially unchanged, at about $35,000 in 2012 dollars. Not so the richest Oregonians. Over the same period, the top 1 percent saw their incomes increase by about 40 percent, to almost $240,000.

The growth in inequality likely stems from several factors, but two stand out: the decline in labor unions and reductions in taxes. The changes in Oregon’s timber industry illustrates the importance of those trends.

Before the mid-1980s, most timber workers belonged to strong unions and the industry employed about 70,000 to 80,000 workers. Then the industry busted the unions and began cutting labor costs. It did so largely by eliminating jobs, so that it now employs only about 25,000 workers statewide.

Contrary to common belief, most of the job losses have not resulted from environmental restrictions that reduced logging on federal lands. In the 1990s, when most logging reductions occurred, for example, the Forest Service estimates that those restrictions caused only about one-third of the industry’s job losses.

Most job losses stem, instead, from management’s efforts to get rid of workers, replace workers with technology, and avoid hiring workers by shipping logs overseas.

Management also has reduced wages for the industry’s remaining workers. Before the unions were busted, the industry’s average wage was about 40 percent higher than the statewide average for all workers. Now, it has fallen to near or slightly below the statewide average.

If unions had remained in place and kept timber-industry wages 40 percent above the current statewide average, wages in the industry would be about $17,000 more per worker. Do the math.

Statewide, 25,000 loggers and mill workers lose about $425 million in wages per year. For the 3,300 wood-products timber-industry workers in Lane County, the loss is about $56 million per year.

Where does all that money go? Nobody knows for sure. It seems safe to say, though, that much of the money that otherwise would be going to middle class workers now goes, instead, to upper-income owners and managers of timber companies.

The shift has real, negative economic impacts on Oregon’s workers, families and communities. It also negatively affects our children’s future: The greater the degree of income inequality in our society, the greater the consequences if they become stuck on rungs of the economic ladder where incomes remain stagnant or decline.

The timber industry has accentuated these negative effects by obtaining tax reductions. In the early 1990s, the industry paid a severance tax of about $50 million per year on the volume of timber harvested in Western Oregon, with the proceeds going to support various types of public services. In 1993, though, it used the spotted owl’s impacts on federal logging and other arguments to persuade the state Legislature to begin phasing out this tax.

That arrangement contrasts with timber harvest taxes that timber companies — often the same companies that are doing business in Oregon — pay in Washington and California.

In Washington, for example, the industry pays a timber harvest tax dedicated to county governments. If Oregon had a similar tax, it would have provided Lane and other counties in Western Oregon with about $40 million in 2011. That amount would have filled much of the funding gap that has caused counties to lay off workers in their transportation, public safety, health and other departments.

The timber industry’s experience is not unique. The crippling of labor unions in other industries and changes in taxes at all levels of government have shifted income away from workers and middle-class families and to the very rich.

The extreme inequality we see today is not an unavoidable result of natural forces, however. It results, instead, from political decisions our parents and we made in the past.

We can reverse the effects of these decisions. We must do so if we are to arrest the growth in inequality that increasingly is producing an economy, a political system and a society of the people and by the people, but for the rich.

Ernie Niemi is president of Natural Resource Economics Inc. in Eugene.

30 Comments

  1. The forest products industry was one of the hardest hit in the recession due to the crash of the housing market. Housing construction isn’t even back to half of what it was in 2007. Sawmills were particularly hurt. Most have struggled with severe losses during this time. Whether union or not most had to cut employment back because of the lack of demand for lumber. With the exception of Weyerhaeuser, no other milling company I’m aware of exports logs. Most would like to see the timber stay here so log costs aren’t so high.
    Automation like any other manufacturing endeavor is a must in order to remain competitive in a global market. This is especially true in wood products as labor is the second highest cost next to the raw materials. In our capitalist system wages, like other costs, can rise as markets allow. Artificially raising wages just adds to cost, lowering margins. If margins are too low for too long mills cannot afford to make improvements or even take care of necessary maintenance. Some go out of business.
    Lumber, plywood and paper are all commodity products sold in the US and elsewhere. That being the case, margins are generally thin already due to the very competitive nature of these markets. They are still very tough.
    Log exports, regulations, environmental rules which are constantly changing, healthcare and pension costs (and their uncertainty), taxes ( of all kinds) and many other outside influences also affect wages. Simply wanting them higher doesn’t make it a reality.

    Oregon does have a harvest tax similar to Washington State:
    http://www.oregon.gov/dor/TIMBER/Pages/how-timber.aspx

    Attached is a link to the Oregon Department of Revenue. It outlines the various harvest taxes paid by timber owners and purchasers when timber is harvested and also where the money goes. At just under $4.00 per thousand board feet for all timber harvested, except from Indian lands, and at approximately 3.2 billion feet harvested annually, do the math.

  2. The Northwest forest plan took away our access to public timber. Just about all the small family sawmill shut down.
    The corporate landowners got richer. The local communities suffered. As long as the timber resources are controlled by the few and public timber is just for the rich and the corporate environmental groups the wealth of this nation will continue to concentrated by the one percent.
    The people need access to their natural timber resources.
    Every month the BLM and FS should be selling small timber sales to the public.

    • Another way to look at this Bob is that the Timber Industry’s massive over-cutting and roadbuilding – especially within the public’s ancient, old-growth forests and along pristine watersheds – took away your access to public timber.

      Or how about this one:

      “My dad took away my access to the car.”

      Response: “Bummer, dude, how rotten of your dad to do that.”

      Vs

      “My decision to drive the car while drunk forced my dad to take away my access to the car.”

      Response: “Bummer dude, but you were really stupid to drive your dad’s care while drunk.”

      • Matthew

        Re: Your unfounded charges of massive over-cutting
        Please see my reply to 2nd Law @ http://forestpolicypub.com/2014/01/30/our-languishing-public-lands/comment-page-1/#comment-37487

        Re: The quotes in your opening post
        * Reining in the nation’s extreme inequality really worked well for the communist party in the USSR. In case you have forgotten, everyone but a select few in power got pulled down to the lowest level. Those who ignore history are doomed to repeat it.

        Re: “Most job losses stem, instead, from management’s efforts to get rid of workers, replace workers with technology, and avoid hiring workers”
        –> As the author said, this is happening in all industries – So maybe you ought to try to understand what is going on instead of quoting those who are tossing out oversimplified nonsense? Are you aware of globalization? Are you aware that their are many who would like to take all of our industries from us? Keeping costs low to where you are a viable competitor is the only way to keep us from loosing even more jobs and dragging this country down into the gutter. Globalization is the culprit not greedy industrialists. There are plenty of people in Bangladesh, India, Malaysia and elsewhere who are willing to work hard at lower wages to rise out of real poverty. When the fast food service industry wanted to go on strike for a $15/hour wage, didn’t they realize that that was the same as asking for $0/hour? Their whole industry was about to fold when the rest of the nation returned to eating at home until the industry figured out how to automate and make eating out affordable again. How many people would be willing to spend the effort to go to college or even get a high school diploma if inequality was removed? And if you are going to say you don’t want it removed entirely then you better be real specific as to what inequality should be reduced to, how you are going to do it and who you are willing to hurt in order to get it down there. How are you going to keep that one percent from moving to a tax haven? Are you able to micromanage the world’s economy like you have micromanaged the forests? Making roasted endangered species like the Pacific Fisher available to all doesn’t sound too good to me.

        • “Keeping costs low to where you are a viable competitor” is precisely the issue – because while costs and wages are going down for the average American, corporate CEOs are making money hand over fist.

          In 1960, the average corporate CEO at America’s 350 largest companies made 20.1 times more than the average worker.
          In 2012, the average corporate CEO at America’s 350 largest companies made 275 times more than the average worker.

          Yes, there’s a class war being fought – and the rich are winning.

          • Travis

            You are absolutely correct that the ratio of CEO pay to average employee pay is continually rising and significantly so and without any reasonable justification imho.

            However, that is not a forestry issue any more than in any other organization.

            Is the answer, a government takeover of businesses? I don’t think so. Stockholders could do something about this but they generally have chosen not to. When I look at corporate performance of companies compared to CEO salaries and bonuses, there is no justification for many of the big payments so I don’t understand what stockholder’s are thinking.

            The really big joke is the line that these salaries are justified by the risks taken by the CEOs that could cost them their jobs. That totally ignores the risk and greater consequences to the average employee of loosing their job to automation a mis-communication or an unreasonable superior covering up the supervisor’s mistake by blaming it on the employee. Looking at history, I don’t see anyplace that we can draw from to change this injustice which has existed within mankind since time began. At least our employers can’t kill us as easily for poor performance as some employers were able to in past times.

            One of the reason’s that the rich are winning is that a great many of them are willing to work 80 hour weeks and do anything else to get more. I chose not to pursue some opportunities to make the really big bucks because I saw that it was going to cost me more than it was worth. We need no more laws, we just need to enforce the ones that we have when executives/politicians at all levels step on others to get ahead. The government hasn’t enforced the existing laws so I don’t see the government as the answer and I sure don’t see anarchy as the answer. What is your answer?

  3. I would happily argue that Barack Obama is not trying to rein in the nations extreme inequality of political power. I would easily argue that he is, in fact, grabbing more political power and forcing his will upon the American people. Never in American history have we seen the three branches of government reaching so far outside of their defined constitutional rights. I doubt that anyone here could name a timber industry owner or manager that receives an income within the top 1%. While I tend to believe that the income of the factory worker, logger and forester is declining, I tend to doubt the income of the owners is anywhere near the top 1%. Just my 10 cents because two cents has been deflated to the rate of worthlessness.

    • Another hanging curve over the plate.

      It took me 58 seconds to answer Nerickaby’s challenge: “I doubt that anyone here could name a timber industry owner or manager that receives an income within the top 1%.”

      Weyerhaeuser CEO Daniel S. Fulton received $7 million in compensation in 2012. With the 1% mark at $388,000, I’d say Dan is a comfortable one-percenter.

      And that was after my 11% nightly beer, too. Yawn.

    • “And all our current environmental laws just make him richer”

      maybe, but I bet he’d be happier without all those pesky environmental laws

      SAMPLE OF WEYERHAEUSER ENVIRONMENTAL VIOLATIONS (July 91-Sept. 92) IN WASHINGTON
      [*Note: Fines are often contested and reduced. This does not indicate that this amount was actually collected by the Washington Dept. of Ecology. For example, the Dept. of Ecology ordered the Weyerhaeuser Paper Co., Cosmopolis, to prevent obnoxious odors from its wastewater treatment ponds and to continuously monitor the area for hydrogen sulfide emissions. Ecology rescinded a $79,000 penalty issued to Weyerhaeuser. Source:Dept. of Ecology News Release, 19 September 1991]

      $2,000 fine* Weyerhaeuser Company, Longview, for exceeding the daily fecal coliform maximum limit in the mill’s wastewater discharge permit on 24 June 1992.
      Source:Dept. of Ecology Enforcement Summary July-September 1992

      $6,000 fine* Weyerhaeuser Company, Longview, for improperly disposing mineral oil containing PCBs on 18 December 1991. Source:Dept. of Ecology Enforcement Summary Jan-March 1992

      $150,000 fine* Weyerhaeuser Company, Cosmopolis, for 15 hydrogen sulfide odor violations involving its wastewater treatment ponds between May 15 and September 11, 1991.

      $4,800 fine* Weyerhaeuser Company, Everett, for venting non-condensible gases for a total of 73 hours in December 1990.

      $10,000 fine* Weyerhaeuser Paper Co., Cosmopolis, for exceeding the daily maximum biochemical oxygen demand limit on 9 September 1991. Source:Dept. of Ecology Enforcement Summary

      $40,000 fine* Weyerhaeuser Paper Co., Cosmopolis, for excessive discharges of fecal coliform during June 1991 that resulted in a precautionary seven-day closure of oyster beds in Grays Harbor.

      $9,800 fine* Weyerhaeuser Paper Co., Longview, for unauthorized venting of non-condensible gases on 21, 22 Feb. 1991 and opacity violations from 15 November 1990 to 19 February 1991.

      $3,200 fine* Weyerhaeuser Paper Co., Longview for exceeding the 35 percent opacity limit from the #10 recovery boiler on 7, 18, 19, 27, 29 March 1991; exceeding the total reduced sulfur limit from the #10 recovery boiler on 4 April 1991; and exceeding the total reduced sulfur limit from the lime kiln on 29 May 1991.

      $1,200 fine* Weyerhaeuser Paper Co., Cosmopolis, for exceeding the opacity limit from the hog fuel dryer on 11 June 1991.

      $1,000 fine* Weyerhaeuser Paper Co., Everett, for prolonged continuous venting of non-condensible gases on 12 March 1991. Source:Dept. of Ecology Enforcement Summary, July-Sept. 1991

      SAMPLE OF WEYERHAEUSER ENVIRONMENTAL VIOLATIONS (1995) IN WASHINGTON
      $500 fine, Weyerhaeuser Paper Company, Cosmopolis, for non- permitted discharge of approximately 500 pounds of sodium hydroxide into the Chehalis River. Status: Paid.
      Source:Dept. of Ecology Enforcement Summary, Jan-March 1995 Web Site

      $20,000 fine, Weyerhaeuser Paper Company, Cosmopolis, for exceeding its daily maximum fecal coliform limits of NPDES permit on June 5, 9, 13, 14, 16, 17, 19, 20, 25, 1 July. Status: Paid.

      $15,000 fine, Weyerhaeuser Paper Company, Longview, for exceeding permit requirements for effluent discharge and total suspended solids to the Columbia River. Status: On appeal to Ecology for relief of penalties. Source:Dept. of Ecology Enforcement Summary, July-Sept. 1995 Web Site

      • Guy: These amounts are chickenfeed to the big international corporations. They have accountants and lawyers handling this minutiae in their spare time. The environmental laws and their proponents are keeping federal and state lands off the market, and those resources are measured in the $billions. Spotted hoot owls and southerly marbled murrelets are Big Timber’s best friends — same with black backed woodpeckers and other ESA listed memberships. The environmental industry has been played like a pair of bongos by Big Timber for more than 30 years and the evidence is everywhere.

        • And let’s not forget that the environmental movement is also a large, money making enterprise which is an expert manipulator of government, industry and the public as well……….the evidence is undeniable………………………

          • And let’s not forget that the timber industry and other resource extraction industries are also a large, money making enterprise which are an expert manipulator of government, industry and the public as well……….the evidence is undeniable………………………

              • Eric, you reap what you sow buddy. You are new to this site, but a review of most of your comments will reveal a high level of condescending talk and name-calling. If you post some condescending, ridiculous comment expect a cut-n-paste ridiculous comment back…at least from me, because I’m not much of a ‘high roader’ when dealing with sh@t like this. But for the sake of discussion, please enlighten all of us and tell us exactly what type of response to your condescending, ridiculous original post you’d find acceptable.

                The grassroots, non-profit conservation groups working on public lands policy that I work for, and that I’m familiar with, could hardly be called “large, money making enterprise(s).” That’s such a laughable joke it really makes you look like a [fill in the blank]. I’m sick and tired of those of you who think that grassroots, non-profit conservation groups only seek to protect public lands and promote public lands management based on science and the law because we love the money!?! Whatever dude.

                • Matthew:
                  The Sierra Club, Wilderness Society, Green Peace and others are not just grass roots, non-profits. They are about money and lots of it. They aren’t always about the law or science either. Some are also into Eco-terrorism. To say otherwise is dishonest. If your group is as you say and strictly about science based decisions on how best to protect and manage the land that’s great and I’m all for it, but let’s not pretend that the entire environmental movement is now or has always been pure in its motivations. I agree that resource extraction industries have not always been good either. They didn’t have the knowledge they do now but at least most are trying and rarely do they get credit for doing so, especially by folks in the environmental arena.

                  • Hello Eric, Please give us some real world examples of where the Sierra Club, Wilderness Society and/or Greenpeace “are also into eco-terrorism.” Also, please give us some examples of where Greenpeace is even currently active in national forest management issues in the US. The same could really be said of the modern Sierra Club, which really isn’t very involved or invested in national forest policy issues.

                  • Eric

                    Matthew is definitely not about science based decisions. He doesn’t even believe the fundamental principles of plant physiology as it applies to Forestry. I have tried to educate him on the relationship between stand health/vigor and stand density but he’ll not have any of it.

                  • you need to be careful tossing around terms like eco terrorist, it is slander pure and simple, like calling someone a rapist just for the hell of it, I request you watch your language. Having been a member of all those organizations, I take strong exception.

                    The idea that those top heavy organizations are into eco terrorism is laughable and shows how little you actually know about sierra club and wilderness society, but I can see some prefer the comic book version.

                    • Any more like that and I am asking Sharon to remove you from this blog Mr. Haller. I have seen too much trash talking here. And have no tolerance to hear more from you, Maybe you are new here but I recall we agreed to assume at least the appearance of civility and throwing a term like terrorist around is hardly that.

                      Do I make myself clear sir?

                      I try to maintain a posture of civility to all sides on this blog and I expect the same from you, Please.

                      And Sharon are please called upon at this moment to speak with this man privately and inform him of certain things or you lose me.

                    • Taken out of context the way you and Matthew have done makes it sound like I’ve said some things I didn’t. Going back to my original statement about the environmental movement, the point I was making is that they are not all grass roots and that there are many of these organizations who are motivated not just about the environment, but that there’s a big money angle as well. I did not say that any one specific organization is into eco-terrorism either. I said that there are organizations who have been into that. Again it was about the main point I was making that the “movement” isn’t all pure. Yes, it would be slanderous if I was accusing any one of them of doing that without proof. There have, in fact, been some that have, but it was a general statement in a bigger point that I was making. It’s just like statements made about the “Timber Industry” from folks like you.
                      Lastly, if you read further down in my original statement, I positively acknowledged groups like yours, if scienced based in their direction. I also pointed out that Industry has made mistakes too.
                      Its unfortunate that when these types of discussions are being had that parties who disagree can’t seem to avoid the personal attacks. Maybe you and Matthew should take the chips off your shoulders for a moment and try to really listen and understand what’s being said.

                    • Moderates on both sides don’t like to be lumped in with the extremes, especially here. Yes, it is easy to push people’s buttons but, some of us do try to keep those incidents to a minimum. However, many of us also “respond in kind”, when provoked. Matt is very good at detecting rhetoric, and he pushes us to have better arguments for our various points of view. He likes to make people (and Agencies) walk their talk, so to speak. Yes, there is a fuzzy line there, too. A big wide one, in some cases! Let’s drop the partisan political blather, folks, from both sides.

        • Bob, you’re right it’s chickenfeed, I didn’t mean to imply that Dan Fulton was taking a personal financial hit with environmental fines. I’m sure he could cover them all personally and not miss his monthly mortgage payment. But he won’t personally pay a penny, and since pollution is just a cost of doing business to many companies, if it helps the bottom line he’ll probably pick up a bonus for it. But I also would agree that the environmental “industry” (whatever that means) is keeping billions of dollars worth of wildlands, rainforest, farmland, clean water, endangered species, wildlife refuges, healthier-than-they-would-be-otherwise marine habitats, etc. etc., “off the market.” Somebody’s gotta do it, so I’m glad the “environmental industry” is stepping up to the plate.

          • Guy: I got into the habit many years ago of characterizing the part of the environmental movement that is involved in full-time jobs as the “environmental industry” as a counterpoint to the common term “timber industry.” That’s the extent of it, and it seems like a fair characterization to me. If somebody has a better term, I’d be willing to try and adapt.

            But, just as the timber industry is sometimes accused of being out-of-control loggers and bankers hell-bent on destroying our forests and grasslands because of a few individuals and organizations, the same can be said of the environmental industry. I’m pretty sure that most people and businesses on both sides of the fence are reasonable, well-intended, and competent, but I do know that it is the radical outliers that make the news and sometimes seem to have undue influence over the rest of us. In general, I am in agreement with much of what you say; however, the “industry” that has been built upon spotted owl “protection,” marbled murrelet “habitat” and a few other notable examples has done far (far) more damage than good to both people and to the environment. In my opinion.

            • For what it’s worth:

              From Dictionary.com

              in·dus·try
              [in-duh-stree]
              noun, plural in·dus·tries

              1. the aggregate of manufacturing or technically productive enterprises in a particular field, often named after its principal product: the automobile industry; the steel industry.

              2. any general business activity; commercial enterprise: the Italian tourist industry.

              3. trade or manufacture in general: the rise of industry in Africa.

              4. the ownership and management of companies, factories, etc.: friction between labor and industry.

              5. systematic work or labor.

              From Merriam Webster

              in·dus·try
              noun \ˈin-(ˌ)dəs-trē\

              : the process of making products by using machinery and factories

              : a group of businesses that provide a particular product or service

              : the habit of working hard and steadily

              ——————-

              So, if we are going to call people and organizations that care about, and advocate for, the environment the “Environmental Industry” does that mean that people/organizations that work on religious issues are called the “God Industry?” or the “Religious Industry?” Or people/organizations that work to feed the hungry, are they the “Hunger Industry?” Or how about groups and people that provide shelter to the homeless? Are they the “Homeless Industry?” I’m not sure that the term “industry” as defined, or as commonly used, actually applies very well to all these examples, including “Environmental Industry.” But hey, to each their own.

              • Thanks, Matt: I’d go with definitions #2 and #5 on this: “any general business activity” and “systematic work.” I’m sure others might support “the habit of working hard and steadily,” too. Seems reasonably accurate and fairly innocuous.

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