Intel pegs its Oregon payroll at $1.8 billion

The Oregonian
October 11, 2011

by Mike Rogoway

With its mammoth chip factories, outsized employment and advanced research facilities, Intel's central role in Oregon's economy isn't often overlooked.

But just in case you weren't paying attention, Intel has commissioned a new study that spells it out.

The report, by the Oregon economic consulting firm ECONorthwest, concludes that Intel is responsible -- directly and indirectly -- for as much as a quarter of all the economic activity in Washington County, and more than 5 percent of all the economic activity statewide.

Though Intel's headquarters are in Santa Clara, Calif., its largest and most complex operations are in Washington County. It employs more than 16,250 working to design, manufacture and market computer microprocessors. Intel has more employees than any other Oregon business.

Many trade groups and companies produce studies to underscore their economic importance and bolster their political clout. ECONorthwest produced an earlier report for Intel in 2003, and a similar one for Nike in 2005.

The new study's conclusions rely heavily on calculating "multiplier effects" -- the impact a dollar that Intel spends, for example, as it ripples its way through the community. These indirect effects are difficult to measure, and somewhat speculative.

But Intel's 12-page report also contains some hard data.

For example, Intel paid its employees annual salaries, bonuses worth more than $117,000 on average. By comparison, ECONorthwest says that the average annual salary in Oregon was just under $40,000 in 2009. In Washington County, it was $52,200.

"We hope that the public is aware of the significant positive benefits that Intel has to the state's economy," said Bill MacKenzie, Intel's Oregon spokesman.

One number that's not in the study: Intel's tax bill.

The company used to advertise its annual payments as another indicator of its economic contribution. But beginning in 2001, Oregon changed its income tax structure to exempt companies that sell most of their products out of state. Intel sells nearly all its Oregon microprocessors to manufacturers in Asia.

Its huge work force contributes substantially to Oregon's personal income tax revenue, but Intel has negotiated a series of property tax exemptions for its Oregon equipment. The latest deal, negotiated in 2005, kicked in last year and is worth $579 million to the company over 15 years.

"There's nothing new in this report," said Chuck Sheketoff, founder of the Oregon Center for Public Policy, a liberal group that studies the impact of tax policy on low-income Oregonians.

Intel is a big employer, Sheketoff said, but its tax breaks are costly for schools and other social programs that its employees rely on for their families.

"While they do some good things charitably, I don't think that lets them off the hook," Sheketoff said.

Intel has argued that the tax incentives play a key role in making Oregon an economical place to operate. And MacKenzie, the company's spokesman, said that the payoff for the state has been significant.

"The tax incentives pale in comparison to the numbers that this report shows in terms of what we inject into the Oregon economy," he said.

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