Oregon has nearly 400,000 small businesses. (MoMo Productions/ Getty Images)
House Republicans saw the bill before them near the end of the legislative session as yet another regulation that would make manufacturing harder and stifle Oregon’s competitiveness.
The measure, which is set to take effect later this month, will expand the definition of public works and require businesses to pay the state’s prevailing wage for off-site construction work done for public works projects — things like boiler systems, ornamental iron work and roofing that could be made elsewhere and brought to a construction site.
It passed the House on a bare minimum 31-22 vote, and with warnings from Republicans including Rep. Vikki Breese-Iverson, R-Prineville, that the bill would push manufacturing jobs out of Oregon. Breese-Iverson cited her district’s experience losing door manufacturing facility Owens Corning, which had just announced plans to shut its Prineville plant and lay off 184 workers.
“This might mean I lose more people in my community, and if you’re familiar with my district you know that they are looking in Idaho, not Oregon,” she said. “…This particular bill will keep this trend going with one more, and one more, and one more Oregon manufacturer leaving our great state.”
It’s a common argument from legislative Republicans and business groups, who have pointed to recent headlines like coffee chain Dutch Bros moving its headquarters from Grants Pass to Arizona and Beaverton-based Tektronix, once the state’s largest employer, moving to North Carolina, as proof that the state is unwelcoming to business.
But research shows many businesses aren’t fleeing so much as they’re expanding out of state after getting recruited. And some business leaders say the state’s higher taxes, duplicative regulations and limited industrial land make companies susceptible to leaving.
A report earlier this year from Business Oregon, the state’s economic development agency, alongside researchers at the University of Oregon’s Institute for Policy Research and Engagement found that 68% of businesses that had been contacted by recruiters did eventually expand out of state. As businesses eye other states for expansion, Oregon loses thousands of potential jobs and private investment.
“It’s just an insane success rate for recruitment efforts,” Business Oregon Economist Damon Runberg told the Capital Chronicle. “We don’t see that level of success in the recruitment world, but it seemed almost like a lot of these businesses were ready to expand, and it just took a little bit of a nudge for them to go elsewhere.”
The Beaver State — once ranked among the top half of U.S. states — continues to slide down CNBC’s annual “Best States for Business” list — from 21st place in 2023, 28th place in 2024 to 39th place in July.
That doesn’t mean Oregon is losing its entrepreneurial spirit, Bob Parker, the study’s lead researcher, said in a phone interview. He noted that each month thousands of new businesses register with the Secretary of State’s Office. The number of active businesses has actually increased from 515,000 in 2023 to almost 540,000 businesses in 2025, according to state records.
“It is remarkably easy to set up a business in Oregon relative to other states,” Parker said. “The state doesn’t have a license fee and there’s not a sales tax. So that’s a big plus that Oregon’s got going for it. The challenge for Oregon really ends up not being a recruitment challenge, but a retention challenge.”
A statewide issue
Out-of-state business recruiters are focusing on traded-sector companies, or businesses that manufacture in Oregon and sell their products elsewhere, according to the study.
This includes mostly tech and manufacturing firms, Parker said. Many of the companies surveyed wanted to stay in Oregon, but the financial costs made it difficult to justify, he said. Instead, they expanded to states with lower taxes such as Idaho, Texas and Utah.
The study surveyed nearly 400 businesses statewide. Of the respondents, 43% said Oregon is either a good or excellent place to do business, while 57% of respondents said it is fair or poor, citing concerns about cost of living, taxes, economic conditions and crime and homelessness.
A spokesperson for House Minority Leader Christine Drazan did not respond to the Capital Chronicle’s request for comment, but she previously said taxes and strict regulations are why businesses are growing beyond state lines.
“This report concluded what House Republicans have been saying all along: To strengthen our economy, our state must support businesses by improving incentives and cutting taxes and regulatory burdens,” Drazan said in April.
CNBC’s July rankings also placed Oregon 47th in the nation for “business friendliness,” just above New York, New Jersey and California.
Every time the Beaver State drops in rankings, it makes it easier for out-of-state recruiters to convince Oregon firms to expand elsewhere, Eugene Chamber of Commerce CEO Brittany Quick-Warner said in an interview.
Quick-Warner said Oregon has a history of duplicating business regulations. Oregon’s land use laws, which require cities to go through an expensive and time-consuming process to expand their urban growth boundaries, or the invisible state-approved line around a city limiting where and how it can grow, before annexing and developing new industrial land, can delay projects for years or even decades.
“Companies that want to grow or invest in new equipment can’t find available property with proper infrastructure,” she said.
The state’s corporate activity tax is especially burdensome for small businesses because it is applied to revenue rather than profit, she said. The tax applies to businesses with more than $1 million in taxable commercial activity, taxing them $250 plus 0.57% of taxable commercial activity above $1 million.
“Small businesses might bring in a million dollars a year, but their expenses are $990,000,” she said. “They’re being taxed as though they made a million bucks.”
Chambers in southern and suburban Oregon share similar concerns. Eli Matthews, CEO of the Chamber of Medford and Jackson County, said that the state needs to make a stronger push to market itself as “open for business.”
“I think Salem needs to get the perspective right that business in Oregon needs to be a top priority.” he said. “It’d be great to have big businesses move to Oregon, but I think it’s going to take a lot on the statewide level to change that perception.”
In Beaverton, Chamber CEO Alicia Bermes said she hasn’t heard from members planning to leave the state but noted that most of the businesses that dropped out of the chamber had closed altogether because they weren’t making a profit.
Bermes said she’s asked legislators to not make it harder for businesses or create another tax, noting Beaverton’sis 95% small businesses — meaning most businesses have fewer than 50 employees.
“We’re number one in saying caring words,” she said. “However, how do you do that and keep businesses? Our businesses want to be socially responsible, but they also want to thrive. And I think you can do both things.”
Governor says she’s committed to growing business
Gov. Tina Kotek’s office said she is committed to improving the state’s business climate.
“The governor firmly believes we should be doing everything we can to retain and recruit businesses,” spokeswoman Roxy Mayer told the Capital Chronicle. “She is committed to using every tool at her disposal to make Oregon a place where businesses want to locate and grow.”
Kotek alongside Portland officials called for a three-year pause on new taxes in the Portland metro area, and she worked with Portland Mayor Keith Wilson to waive development fees for housing projects over the three years. She has also directed dollars through Business Oregon and the Governor’s Strategic Reserve Fund to support companies that create and retain jobs.
Mayer said the governor views economic growth as linked to broader quality-of-life issues.
“A solid economy and thriving business environment depend on every person having access to a stable and safe home, healthcare when it’s needed and a quality public education system,” Mayer said.
