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How Timber Companies Destroy Rural Oregon

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If you spend time in rural Oregon, you hear a lot of bitterness. Those damn environmentalists stopped our logging by prioritizing owls over people and now our towns have gone to hell.

Oregon is an interesting state in the sense that fifty years ago, the entire place, including Portland, was basically a natural resources-based economy that was largely interconnected economically. It also had a unique form of funding counties through timber taxes that came out of the O&C lands, which was a revoked railroad grant that included much of the state’s private timber lands and that was managed by giving the counties a chunk of the timber money. This is what funded schools, police, fire, etc. These services have declined significantly, especially in southern Oregon. Part of this is that this led to an anti-tax mentality that has been reinforced by right-wing Californians moving there. Some of these counties, especially Douglas County, have almost no social services at this point because people are angry and pissed and won’t tax themselves as they blame Salem and the Portland liberals and the environmentalists.

Here’s the problem with all of this–it was never true. The spotted owl primarily lived on federal lands because the old growth timber it requires was long gone in the private lands except for very small pockets. There were a few specific mills by 1993 that still relied on giant old-growth logs, but not very many. If you look at the employment numbers before and after the listing of the spotted owl under the Endangered Species Act, you see it made almost no difference, especially when compared to the real reasons for the decline in the industry–automation and the export of unprocessed logs to Japan. From my Washington Post piece on this:

Working-class environmentalism thrived in an era when workers believed they were assured a stable future. Yet transformations in the nation’s economy in the 1970s curtailed this shared effort. Deindustrialization, automation, outsourcing and a renewed era of union-busting weakened the New Deal coalition, as well as the bonds between labor and environmentalism, putting workers on the defensive. And after 1973, efforts by environmentalists to clean up industry fueled employers’ narratives that any such regulation would close factories and move jobs abroad.

Yet many of these jobs were disappearing regardless of environmental regulation. Beginning in the 1970s, the timber industry began engaging in rapid improvements in efficiency and automation, drastically cutting the number of workers needed. In 1978, the timber industry employed 136,000 people in Oregon and Washington. Four years later, that number declined to 95,000. The number of workers needed to produce the same amount of lumber fell by about 20 percent between 1982 and 1991.

Changing export policy also transformed the industry. Beginning in 1962, the timber industry began shipping unprocessed logs to Japan rather than processing them in the United States. While the amount of timber being shipped increased, the number of workers needed plummeted and thousands of jobs were lost. Exports exploded during the Reagan years, and between 1979 and 1989, lumber production in the Northwest increased by 11 percent — while employment dropped by 24,500.

Blaming environmental regulation for those losses, however, was largely a lie. The Endangered Species Act didn’t precipitate an immediate loss of jobs. By 1994, after most logging in the national forest was shut down, some 91,000 workers were still employed in the timber industry; most of the jobs had disappeared over the previous 20 years for unrelated reasons.

To reiterate, environmental protection did not cause significant job losses in the Oregon timber industry.

I bring this up today because of this outstanding ProPublica piece on Falls City, a small town in the Coast Range, and how the timber industry has decimated places like this because these now giant operations that serve as profit machines for shareholders don’t pay the level of taxes that they used to. Moreover, it’s important to note that the Coast Range, a once gloriously beautiful and ecologically complex place that is now a giant timber plantation, was completely unaffected by the owl and yet these towns are horrible. Here’s an excerpt:

Wall Street real estate trusts and investment funds began gaining control over the state’s private forestlands. They profited at the expense of rural communities by logging more aggressively with fewer environmental protections than in neighboring states, while reaping the benefits of timber tax cuts that have cost counties at least $3 billion in the past three decades, an investigation by OPB, The Oregonian/OregonLive and ProPublica found.

Half of the 18 counties in Oregon’s timber-dominant region lost more money from tax cuts on private forests than from the reduction of logging on federal lands, the investigation shows.

Private timber owners used to pay what was known as a severance tax, which was based on the value of the trees they logged. But the tax, which helped fund schools and local governments, was eliminated for all but the smallest timber owners, who can choose to pay it as a means to further reduce annual property taxes.

The total value of timber logged on private lands since 1991 is approximately $67 billion when adjusted for inflation, according to an analysis of data from Oregon’s Department of Forestry. If the state’s severance tax had not been phased out, companies would have paid an estimated $3 billion during the same period. Instead, cities and counties collected less than a third of that amount, or roughly $871 million.

Polk County, home to Falls City, has lost approximately $29 million in revenue from timber sales on federal land. By comparison, the elimination of the severance tax and lower property taxes for private timber companies have cost the county at least $100 million.

“You have that tension between this industry that still employs people, but we’re losing some of the benefits of that relationship,” Falls City Mayor Jeremy Gordon said. “As those jobs diminish, there’s less and less support to subsidize that industry in the community.”

The entire thing is absolutely outstanding. The takeaway is clear–do not blame environmentalists for job losses and the economic struggles of natural resource communities. Blame the real problem–capitalism and the politicians capitalists buy, which in this case included former Oregon governor John Kitzhaber, who signed the legislation that changed the tax formula to make it more friendly to the timber industry.

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