Klamath Falls millionaire pushes 'JOBS Plus' agenda
By DON McINTOSH, Staff Reporter
A tussle over unemployment and welfare benefits has broken out in Salem. On one side are organized labor and the governor's office; on the other side, Klamath Falls Republican State Representative Steve Harper and the millionaire who helped put him in office - Richard L. Wendt.
At issue is House Bill 3203, which Harper introduced in March.
On the surface, the bill has mostly to do with the composition of a board which will decide how the state complies with a new federal law, the Workforce Investment Act of 1998. That act gives states until July 1, 2000 to set up "one-stop centers" to handle applications for social welfare benefits including unemployment, injured worker retraining, and food stamps. Harper's bill would scrap an existing board which has been working on compliance, and replace it with a board that has stricter business control and less labor involvement.
As if that weren't enough to provoke labor opposition, the bill establishes as an official state goal that welfare and unemployment be reduced. Over a two-year period, the welfare caseload would be cut by one-fifth, and total annual weeks of unemployment benefits would be cut by one quarter.
Finally, HB 3203 would establish "work first" as the operating principle of the state's unemployment insurance and welfare benefit system. In other words, recipients would be forced to get a job first, and then get training.
Oregon AFL-CIO President Irv Fletcher, who is following the bill, is concerned that "work first" will get rid of two crucial concepts in the unemployment insurance system: "suitability" and "work attachment."
Suitability is the principle that workers should not have to take just any job that comes along. For example, skilled craftsworkers who make $20 an hour should not have to take service jobs at $6.50 simply because they're available. "Work first" could undermine this.
Work attachment is for employees laid off because a company has a temporary shortage of work - workers receive benefits so they can remain available for recall when work becomes available. Though only a minority of unemployment benefit recipients are "work-attached," it's a primary principle of unemployment insurance.
"A 'work-first' program might reduce the unemployment caseload, but that's not necessarily a good thing," says Chuck Sheketoff, director of the Oregon Center for Public Policy in Silverton.
"Should we have a goal of reducing the amount of automobile insurance payments in the state regardless of how many accidents there are? Of course not," he added.
Unemployment insurance, after all, is an insurance policy, paid for by an employer payroll tax, intended to safeguard employers and employees during economic downturns. Harper's bill is a step in a campaign to redefine unemployment insurance as akin to welfare, and therefore deserving of elimination.
It's a campaign that in no small part has been orchestrated by one of Oregon's wealthiest residents, Richard Wendt of Klamath Falls.
Anatomy of an anti-welfare millionaire
Wendt is used to getting his way. Since its founding in 1960, his company Jeld-Wen has become the world's largest manufacturer of doors, windows, millwork and specialty wood products. It has over 200 subsidiary companies in 40 states and 10 countries, in such diverse industries as wood products, real estate titles, and time share resorts. It employs some 15,000 workers worldwide, over 2,000 in Oregon. Forbes magazine has estimated the company's annual revenues at $850 million a year.
Jeld-Wen entities in Oregon include Eagle Crest Resort in Redmond; Pelican Butte Ski Resort; Running Y Ranch in Klamath Falls; Gleneden, Grey Gull, Cascade Forest, and Harbor Links; time share resorts Trend West and WorldMark the Club; Omnititle in Redmond; Amerititle; Pozzi Window in Bend; United Window and Door in Stayton; Bend Door Company; BEN-FAB in Klamath Falls; Klamath Door Company; Advanced Wood Resources in Brownsville, a manufacturer of wood pellets for use as fuel; Challenge Doors; Specialty Fiber; Thomas Lambert; and Jeld-Wen, Jeld-Wen Real Estate and Jeld-Wen Fiber.
None of Jeld-Wen's Oregon employees are represented by a union.
Union officials in southern Oregon describe Jeld-Wen as an octopus that runs Klamath Falls like a company town. It has a hand in a local bank and a local auto dealership. It hired right-wing circuit court judge Ted Abram right off the bench as its energetic political advocate.
Wendt bankrolled the candidacy for state representative of the head of the local chamber of commerce, Steve Harper. Wendt contributed at least $10,000 to support Ballot Measure 47 in 1996, which limited property taxes. And he gave $25,000 to the 1998 gubernatorial campaign of the anti-labor, anti-tax Bill Sizemore and organized a Klamath Falls fundraising event for Sizemore's campaign.
But by far Wendt's biggest political achievement has been JOBS Plus.
A mogul with a vision
At every stage, Wendt and his company Jeld-Wen have been key players in developing what is now JOBS Plus. The campaign started with 1990's Ballot Measure 7.
Based on an idea Wendt had been mulling for 20 years, the measure, as written, was to abolish unemployment benefits, food stamps, and welfare benefits, and use the money to put the former recipients to work in subsidized or unsubsidized jobs at 10 percent less than the minimum wage. Wendt gave over $180,000 in cash and in-kind contributions to the campaign for the measure. It passed in every county but his own. [There in Klamath County, Wendt is well-known, and only there did labor seriously oppose the bill.] The measure was to begin as a pilot project in the six counties where support had been the highest.
But Democrat Barbara Roberts, voted in as governor during the same election, declared Ballot Measure 7 "dead on arrival." To be enacted, waivers from the federal government were needed; after all, the three programs it affected were federally mandated. The waivers were initially denied. Wendt fought to get a more acceptable version of the measure passed by the 1991 Legislature, without success. Facing the death of an idea, he sued Barbara Roberts to force her to work harder to get a federal waiver. Sheketoff believes the suit would have lost, but in any case, Roberts decided to negotiate a compromise with Wendt. She took this compromise proposal to the 1993 Legislature, where it was approved over the opposition of most Democrats in the House and Senate.
Under the terms of the compromise, unemployment, welfare and food stamps would not be abolished. Instead, a portion of their funding would be diverted to fund a subsidy for employers who would hire from the unemployment and welfare rolls. Dubbed "JOBS Plus," the program would be used as one tool to get jobs and job experience for the chronically unemployed or difficult-to-employ.
Implementation of JOBS Plus required several federal waivers to existing rules; the waivers were granted in September 1994 and the six-county pilot program began in November of that year.
Right away, Jeld-Wen sent letters to businesses in the six counties and placed ads in papers around the state trying to convince businesses to take part.
The 1995 Legislature made further modifications to the program, and it went statewide July 1, 1996.
Here's how it works:
Employers hiring JOBS Plus workers are reimbursed by the state for the minimum wage portion of the worker's wages for up to six months, with no requirement to hire the employee at the end of the subsidy. Program participants receive paychecks instead of benefit checks. After 30 days on the job, employers pay $1 an hour into an individual account for the workers to receive additional job training and education after they are employed. They also provide a mentor for the employee. Finally, JOBS Plus hires have to be for new jobs - employers are not allowed to replace existing workers with subsidized JOBS Plus workers.
Business bear and the welfare honeypot
Jeld-Wen executive Chuck Hobbs downplays the extent to which his company has used state-subsidized labor and dismisses the notion that the company's motive in pushing the program is its own financial gain. Hobbs denied that Jeld-Wen was unusual in the extent to which it uses JOBS Plus placements, but the statistics suggest otherwise.
Since the statewide JOBS Plus program began in July 1996, 130 workers have been placed in 13 Jeld-Wen companies. That amounts to between $600,000 and $800,000 in welfare, food stamp and unemployment benefits converted to a wage subsidy for the largest privately-owned company in Oregon. Just under half of the JOBS Plus placements were hired permanently by the Jeld-Wen companies at the expiration of their subsidized term; most of the remainder have found jobs elsewhere.
Incidentally, companies that hire people off the welfare rolls and keep them for at least 400 hours in a year are also entitled to tax breaks from the Internal Revenue Service. The biggest breaks go for hiring workers who were on welfare for at least 18 consecutive months before the date of hire. In those cases, the Welfare to Work Tax Credit is as much as $8,500 during two years, depending on the worker's salary. As federal tax records aren't publicly available, it's not known whether Jeld-Wen has applied for these tax breaks.
But whether or not Wendt has financial motives in pushing JOBS Plus, he is clearly motivated ideologically and personally.
In 1994, to spread the anti-welfare gospel, Wendt founded and funded a non-profit organization, the American Institute for Full Employment (AIFE). AIFE works closely with Oregon's JOBS Plus, and it also sends people to state legislatures around the country to promote the idea of converting welfare and unemployment benefits into wage subsidies for companies. [So far, such programs have been created in Mississippi, Texas, Kentucky, Wisconsin and Delaware.] On the AIFE website are links to right-wing think tanks - Heritage Foundation, Cascade Policy Institute, Cato Institute and the National Center for Policy Analysis. Because the group is a non-profit educational organization, Wendt's contributions to it are tax-deductible.
Boundaries between Jeld-Wen, JOBS Plus and AIFE are very blurry. Jeld-Wen executive Hobbs, a former Reagan Administration official, described AIFE as a "not-for-profit subsidiary of Jeld-Wen." Phone calls to the AIFE phone number are sometimes answered "JOBS Plus." Anita Moore, a Jeld-Wen employee, works full time recruiting businesses to JOBS Plus. Jeld-Wen executive Bob Kingzett also has a voicemail box at AIFE. When AIFE staffers lobby in Salem, they speak as Jeld-Wen employees. Bill Early, executive vice president of Jeld-Wen, has served as chair of the state JOBS Plus advisory board from the beginning, and Richard Wendt himself sits on the Klamath County JOBS Plus advisory board.
Back to the present
HB 3203 may be intended to expand JOBS Plus.
It's clear that Jeld-Wen wrote the bill. At a March 29 hearing at which critics of the bill testified, when Representative Harper was unable to answer questions about the bill, Jeld-Wen attorney Heidi Neill stood and answered for him.
Jeld-Wen attorney John Courtney and Hobbs, confronted with union criticisms of HB 3203, say the bill is consistent with the language and intent of the Workforce Investment Act it is designed to implement. Courtney said unions are wrong to think that HB 3203 will eliminate job attachment and suitability.
What are the motives of the bill? Interpretations differ.
Jeld-Wen representatives say it's about expanding training opportunities for workers and empowering individuals to become self-sufficient through work, training and education designed to promote career advancement.
An analysis of the bill by the Oregon Public Employees Union concluded that it would greatly expand the subsidized jobs program.
One JOBS Plus placement specialist thinks it's about increasing the portion of unemployment insurance recipients in the subsidized jobs program - since unemployment recipients have worked in the past, one might presume they are better quality workers. Another analyst thinks it's about the job market. If employers can find ways to throw those on unemployment and welfare into the job market, it could exert downward pressure on wages as more workers compete for the same jobs.
Fletcher said the bill is basically a statement that the governor has done a bad job preparing for the Workforce Investment Act. "I doubt very much the governor is going to want to give up his authority. And he's sure not going to want to give it to Jeld-Wen."
It may also be a slap against the Employment Department, which administers unemployment insurance benefits and has been much slower than Adult and Family Services (AFS) to push workers into JOBS Plus. Of the 8,340 JOBS Plus placements so far, just 36 percent have been from Employment Department referrals. AFS also has shown a greater eagerness to slash its caseload. HB 3203 makes AFS the lead agency in determining how the one-stop centers will be run.
The bill is expected to be narrowly approved by the House Business and Consumer Affairs Committee headed by Representative Roger Beyer, R-Molalla, though as of press time, it had been held up for several days without a hearing. One Republican member of the committee was reportedly opposed to the bill and its supporters were busy lobbying him.
Oregon Public Employees Union legislative director Rich Peppers said it remains to be seen whether Harper will make it a priority bill for his caucus once it gets out of committee.
Kitzhaber aide Cam Preus-Braly said it is definitely one of the governor's priorities to oppose it.