Regulatory hurdles pile high for Oregon small business owners.
Entrepreneurs who plan to settle in Oregon: beware the state’s regulatory challenges.
Oregon is the sixth most onerous state in the country for small businesses when it comes to regulatory concerns, according to an exhaustive survey released by the Pacific Research Institute, a San Francisco-based free-market policy advocate.
On a scale from 1 through 50 (1 being the least burdensome and 50 being the most burdensome), Oregon ranked at an overall score of 44.
In the 50-State Small Business Regulation Index, states were ranked based on 14 regulatory components, ranging from workers’ compensation to occupational licensing rules.
States scoring as more burdensome than Oregon are Maine (45), Vermont (46), Connecticut (47), Rhode Island (48), New Jersey (49) and California (50). The top five states ranked as the least burdensome are Indiana (1), North Dakota (2), Texas (3), Kansas (4) and Georgia (5).
“The Index creates a common platform to compare each state’s regulatory burdens on small businesses in order to highlight which regulatory environments are associated with slower small business growth, and which regulatory environments are associated with more robust small business activity,” the report states.
Oregon is not a right-to-work state and has no telecommunications deregulation. It is also an alcohol control state, meaning private wholesalers and retailers are prohibited from selling spirits. These circumstances put Oregon small businesses at a disadvantage, according to the report.
In addition, the state has one of the highest minimum hourly wages in the country at $9.25, or $2 more than the federal standard. Unemployment insurance was another negative contributor.
The index used the estimated employer contribution rate as a percent of total wages calculated by the U.S. Department of Labor as a “proxy for the burdens imposed by each state’s unemployment insurance program on small businesses.” And Oregon ranked the second worst, or 49th most burdensome, for unemployment insurance, with employers paying 1.85 percent of total wages.
Another significant factor—ranked 47th—is Oregon’s Family Leave regulatory structure which is broader than the federal Family Medical Leave Act (FMLA).
The institute’s critical assessment of Oregon’s regulatory structure and how it affects small businesses doesn’t come as a surprise for business owners and entrepreneurs. After all, lawmakers approved paid sick leave and ban-the-box measures during this year’s legislative session.
What’s more, the Office of Economic Analysis earlier this year released a report with data indicating that startups in Oregon dropped to a 40-year low, undoubtedly due to financial and regulatory barriers.
NFIB/Oregon has been fighting a statewide push to raise the minimum wage, which is already the second highest in the nation. Just for the 2015 year alone, small businesses in Oregon fought off nearly a dozen attempts to increase the hourly wage. NFIB/Oregon anticipates another round of renewed efforts to raise the minimum wage to shape the upcoming legislative session.