And Inequality for All

How do we resolve Lane County’s great income divide?

Tonya Bunning
Tonya Bunning

Tonya Bunning became a single parent of two teenagers when her husband left. She remembers thinking, “Oh, crap. What do I do? Where do I go?” Bunning and her children went to live with her family in Arizona for a year and a half, but her severe asthma and unhappy children led her back to Oregon. The family of three sold all they could, fit the rest in their van and drove to Eugene.

Here in Oregon, Bunning says she was fired from Dari Mart after she developed a bone spur, despite having a doctor’s note in hand. She says the store told her it needed an employee with the use of both arms and, because of her injury, she only had use of one. They paid her for the extra half hour that it took to fire her and then she left.

For the last few weeks, Bunning and her family have lived in their car without an income. During the day they turn to First Place Family Center, sandwiched between Civic Stadium and South Eugene High School. The center provides them with toiletries, laundry utilities and computers for job and housing searches.

Most of the families utilizing First Place Family Center are at about 30 percent area median income, meaning that an average family of two makes roughly $1,000 a month, according to Assistant Director Diana Wise. “Welfare helps, but it won’t rent you an apartment,” she says.

Nearly 200 families visit the First Place Family Center each month, yet funding for the center is decreasing. Roughly half of the center’s funding comes from government money, but just like schools in Lane County and around Oregon, First Place is receiving less and less each year.

Look around. Income inequality, when the wealthy in a society become richer and the poor become poorer, is rampant. Ronald Reagan’s trickle-down economics promised us that America would prosper by giving tax breaks to businesses and the upper class. But ask the 99 percent: Have Reaganomics worked? The answer is resoundingly no.

Juan Carlos Ordóñez, communications director of the Oregon Center for Public Policy (OCPP), a progressive think tank based out of Silverton, says the three primary things that exacerbate income inequality in Oregon are the state’s less-than-progressive tax structure, lack of prioritization of public education and the decline in labor unions. To fix the income gap and stop the sinking of the middle class and the poor, Oregon needs to repair its tax system, support its students and let labor do its job.

Some are more equal than others

The plight of the unhoused is well known in Eugene. If you want to know how poor a city or a county is, just look at the poverty rate, the number of families on welfare, free lunch statistics and so on. The status of the impoverished is well documented.

It is near impossible, however, to draw a bead on the wealthiest Eugeneans. In fact, Oregon state laws protect individual corporations and the citizens from having to unveil how much they pay in income tax. What can be told is the low tax rate paid by the wealthiest Oregonians and the amount corporations in Oregon are not paying.

According to Pulitzer Prize-winning journalist David Cay Johnston since 2000 the median income of all Americans has slipped, “proof that tax cuts for the rich do not create general prosperity.” Between 1979 and 2007 the income of the top 1 percent of households cumulatively rose by 240.5 percent, while the income for the bottom fifth grew by only 10.8 percent, according to the Economic Policy Institute.

You might not associate income inequality with Eugene, but in 2012 Eugene was ranked the 22nd worst city in the nation for income inequality and 36th for poverty, according to research by the financial media company Bloomberg.

Drive a few miles from First Place, and you will find homes worth up to $1 million in the south hills. An hour’s trek west boasts a home in Blachly worth nearly $4 million, according to local real estate broker Sally Nunn. And, on any given day, one of the more than 400 private aircrafts owned by residents of Lane County might be flying overhead.

During the recession, the Emerald City and the rest of Lane County lost thousands of middle-class manufacturing jobs only to be replaced by low-wage service sector employment and high-income jobs, says Brian Rooney of the Oregon Employment Department.

Loss of middle-class jobs is certainly one logical explanation for the inequality felt in Eugene. However, long before the Great Recession, problematic trends at both the state and national level were unfolding, casting a shadow from Spencer Butte to Autzen Stadium. Especially in the last two years, tax cuts for the wealthiest Oregonians and corporations have considerably reduced state funding.

Paying taxes is so 1975

Con-way, a multi-national freight transportation and logistics company based in Eugene, earned a reported $79 million profit in 2009. The next year, Oregon’s Measure 67 raised the minimum corporate tax. Con-way succeeded in getting out of a $75,000 minimum corporate tax it owed Oregon by using a Business Energy Tax Credit, thanks to a ruling by the Oregon Supreme Court in 2013.

Using this tax loophole, no less than 24 profitable corporations paid no Oregon income tax in tax year 2011, according to OCPP. This puts more pressure on lower-income Oregonians, Ordóñez says. “When you cut taxes on the rich it means you cut public funds like public education or it means you pass on the taxes to someone else,” he says. “What makes the most sense is to have the most well-off and corporations contribute more.”

The Con-way loophole will cost the state $40 million during this budget period, according to the Oregon Legislative Revenue Office. In the next two budget periods it will cost Oregon $18 million and $19 million respectively. The reason it’s costing Oregon so much right now is that corporations are using the Con-way case to get tax returns from previous years.

What this means for people like Tonya Bunning is that publicly funded facilities, such as the shelter she and her family need to help them get back on their feet, will likely face more cuts due to lack of state revenue.

Oregon is actually projected to get more funds from its lottery than by taxing corporations during the biennial of 2013-2015, according to the OCPP. Professor Aaron Gullickson from the UO Department of Sociology calls the lottery the “most regressive tax system” because the people who buy lottery tickets are mostly in the low-income brackets, while the people who benefit from lotteries are generally in higher-income brackets. Gullickson calls the lottery the “Hail Mary” of the poor.

In 2010, Oregonians voted yes on Measure 66, increasing taxes to 11 percent for individuals who had an income of greater than $250,000 a year. In 2012, the Oregon legislature allowed Measure 66 to expire and the highest tax bracket was eliminated and the next highest tax bracket was reduced from 10.8 percent to 9.9 according to the Department of Revenue’s Oregon Personal Income Tax Statistics. So someone who makes $4 million per year will be taxed the same rate as someone who makes $130,000 per year.

It wasn’t always like this, Ordóñez says. “In broad terms we need policies to make sure prosperity is broadly shared,” Ordóñez says. “Looking back at what we did before as a nation gives us a clue as to what we can do now to be more inclusive than we were back then.”

The more tax cuts the wealthy receive, the more income inequality there will be, according to a report by the nonpartisan Congressional Research Service, which shows that “as the top tax rates are reduced, the share of income accruing to the top of the income distribution increases — that is, income disparities increase.”

Some, like John A. Charles Jr., president and CEO of the Cascade Policy Institute, a libertarian think tank, say that income inequality is something that shouldn’t bother people. “It’s not a real issue,” Charles says. “It’s a perceived issue by some people.” He adds that income inequality is a “natural outcome by a free society.”

Charles’ assertions do not line up with reports from the Congressional Research Service, which found that “large income and class disparities adversely affect health and economic well-being.” While health concerns are a byproduct of income inequality, income inequality itself could partially be a byproduct of the loss of middle-class jobs.

The Oregon Employment Department found that roughly 3,600 middle-class manufacturing jobs were lost and replaced with both high-income and low-income jobs in Lane County during the Great Recession. Rooney says that county government lost 2,100 jobs between 2010 and 2013, and education lost 1,100 jobs between 2009 and 2013. Although he says the losses seem to have stopped, the Lane County unemployment rate is hovering at 6.8 percent.

As a result Eugene saw a 10 percent increase in the Gini Coefficient — the measurement used to illustrate inequality. According to Bloomberg, Eugene had a 6.8 percent increase in terms of people living below the poverty line starting in 2008. Now the poverty rate in Eugene is 27.6 percent without counting the unhoused population.

Thanks to the loss of middle-class jobs in the area, Eugene’s unemployment rate was slightly higher than the Oregon average at the peak of the recession. Oregon had a peak unemployment rate of 11.6 percent while Eugene’s was 12.8 percent.

Even for the employed, the high unemployment rates could have a negative effect: A lack of wage growth is directly linked to high unemployment, and there doesn’t seem to be any growth in the average wage in Oregon since before the recession, says Nick Beleicicks from the Oregon Employment Department.

The school deficit

By the time the babies born in Oregon in 2014 attend school at the ripe age of 5, about 48 percent of them will qualify for free and reduced lunches, says Hanna Vaandering, president of the Oregon Education Association (OEA). She says there is a 23 percent poverty rate for students in Oregon. The most telling factor of student success is their families’ socio-economic status. In other words, those born into poverty are more likely to be impoverished later in life themselves.

Vaandering says that we’re serving our advantaged children well, but we’re not addressing the issue of poverty. “Education is the cornerstone of democracy,” Vaandering says. “It allows a path for everyone to pursue the American dream.”

In Lane County, Joe Kosewic, a retired public employee from Ohio, crunches numbers into maps to illustrate statistics in order to make the issue of poverty clearer to folks. Kosewic’s maps show that 9,487 students live in poverty in Lane County. And more than 80,000 people in Lane County were on food stamps as of May 2013.

Schools get their funding from income and property tax. With the passing of Measure 5 in 1990, property tax was changed so that $5 out of every $1,000 of assessed property value went to education, says Bob Estabrook of the Department of Revenue.

Add that to the tax cuts on income tax, Vaandering says, and funding for education is decreasing. For example, from fiscal years 2008 to 2014, Oregon has dropped its funding for K-12 education by 3.1 percent, according to the Center on Budget and Policy Priorities.

The Quality Education Commission says Oregon schools would need $2.4 billion added to their current budget in order to achieve the state’s education goals. If corporations were taxed the same amount that they were in 1973-1975, the amount of additional funds that would partially go toward schools would be $2.1 billion, according to the OCCP.

“We’re not holding corporations accountable to pay their fair share because they say they’re the job creators. Therefore if they’re not paying their fair share, how do we provide the quality learning environment that every student deserves?” Vaandering asks.

How green is our valley?

For many workers, joining a union is a good way to ensure benefits, job security and a living wage. Since the late 1970s, however, there has been a dramatic decrease in workers represented by unions, which directly coincides with the striking increase in income inequality, according to a report done by the Economic Policy Institute.

The OEA, a union that represents over 45,000 educators, shares a goal with the Service Employees International Union (SEIU): getting the wealthiest Oregonians and corporations to pay more of their share of taxes. “If we can’t eradicate [income inequality] then we can certainly make it far better than it is today,” SEIU Local 503 President Heather Conray says. “We have to be able to take action to effect change.”

SEIU prides itself on organizing those most affected by income inequality, including impoverished women. The union provides them with living wages as well as voter registration in order to make sure their voices are heard.

On July 28, the Eugene City Council voted to provide paid sick days to all Eugeneans. Laurie Treiger, the campaign manager for Everybody Benefits Eugene, says that her fight won’t stop income inequality from happening, but it is a push in the right direction.

“Lower-income folks are already starting at such a disadvantage,” Treiger says. “It’s like you’re looking at a race and lower-income folks are starting 100 yards behind the middle- and upper-income folk. At least now if we give them paid sick days we are not giving them a sprained ankle on top of that.”

As Gullickson points out, the most effective way to end income inequality is to implement a more progressive tax system; however, in the fight against income inequality, even something as simple as giving paid sick time to Eugene workers is highly contested. In mid-July the county commissioners passed three ordinances to fight Eugene’s paid sick days ordinance.

While unions, educators and workers’ rights advocates fight the battle against income inequality, Tonya Bunning is simply happy to have found First Place Family Center. “I’m just thankful this place is here because right now I don’t have the ability to feed my kids or take showers or wash our clothes,” Bunning says. “So, at the very least I can make sure they eat breakfast, lunch and dinner.”

Currently, Bunning is looking for a job. “My kids mean everything in the world to me, and I would do anything to provide for them and make sure they’re taken care of,” Bunning says.

The biggest fight for a more progressive tax system, Ordóñez says, would have to come at the federal level. But, he says Oregon should “do no harm” and stop giving tax cuts to the wealthiest Oregonians and corporations.

This story has been updated.

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