March 9th, 2005 12:00 am NIGEL JAQUISS | Special Section Stories


WW's cover story about the 1982 recession featured this shot of people lined up outside the downtown Employment Office. In fact, two of the folks depicted were actually WW staffers brought in by the photographer to beef up the line-including reporter Phil Keisling (in construction helmet.) Years later, Keisling was elected secretary of state.


In 1982, Intel officials did something that would have been unimaginable today-they looked out into their gleaming, cavernous microchip factories in Washington County and asked employees to put in 25 percent more hours each week-for the same pay.

Workers were hardly in a position to say no.

In the worst joblessness since the Great Depression, former members of the middle class lined up for meals at Old Town's rescue missions and jostled for places in line outside the unemployment office.

"The '82 recession was a watershed event for Oregon," says US Bancorp economist John Mitchell.

Unemployment in Oregon soared to 12.2 percent-almost twice today's rate.

The busiest place in Portland was the downtown office of the state Employment Division. "A lot of these people are skilled workers out of a job for the first time in their lives and have no idea how to get another one," said the office's assistant manager, LaVon Caldwell.

The timber industry, a pillar of Oregon's economy, was a disaster-half of the state's mills were either shut down or barely running. In timber-dependent Douglas County, joblessness reached 18 percent in 1982; in Curry County, the number was 20.7 percent.

Three times during 1982, Gov. Vic Atiyeh called the Legislature back for emergency sessions, forcing lawmakers to slash the spending levels they had authorized in 1981-even the badly needed Employment Division laid people off, cutting 10 percent of its staff. The problem was simple: Companies and individuals weren't making money, so the state couldn't collect taxes.

"People forget about how bad it was," says Mitchell. "The contrast between then and the '70s, when the place was just on a tear, was amazing."

Runaway inflation plunged the entire nation into recession in the late '70s, but the tight linkage between interest rates and the demand for wood products ensured the damage would be particularly severe in the Northwest. When interest rates soared-the prime rate reached 21.5 percent in 1981-residential and commercial construction nearly stopped dead. Nobody could afford to borrow, and nobody needed to buy wood products.

Nationally, housing starts fell by more than half between 1978 and 1982. Locally, it was worse. The number of building permits issued in Oregon in 1982 was only one-seventh the total issued in 1978.

More than half of the members of Oregon District Council of Carpenters were out of work. Companies that managed to stay afloat demanded handouts. Hyster Manufacturing, a multinational manufacturer of forklifts headquartered in Portland for generations, threatened to shut down unless the city and state bailed it out with millions. (The proffered subsidies weren't enough, and Hyster hightailed it in 1983, eliminating 300 jobs at the site of what is now the Hollywood Fred Meyer.)

At the same time, the price of wheat, Oregon's chief export, plummeted along with the prices of nearly all other agricultural commodities.

The recession changed the state forever. It crushed the remnants of the provincial "Welcome to Oregon-now go home" attitude and replaced it with a desperate hunger to recruit new business to the state. The Legislature overhauled the tax code to spur investment, and voters approved a state lottery to promote economic development.

But for all the gloom and doom, the Federal Reserve's policy of choking off double-digit inflation with high interest rates eventually paid off. Today, Mitchell says, it's easy to look back and see that Oregon's economy bottomed out in December 1982. But at the time, the pain was so great, it took years for people to realize the recession was over.

* Their first office: the downtown Red Lion Hotel, where they nurse their coffee until the waitress kicks them out. Their second office: the GranTree Plaza, where they save quarters for the hallway pay phone. Thus copywriter Dan Wieden and art director David Kennedy start an advertising juggernaut. Their first client: some shoemaker named Nike.

* Ghanaian drumming sensation Obo Addy releases his first album, Kukrudu, with the help of some of some top musicians. WW swoons, calls the album "beautiful, muscular music."

* John Belushi dies of a drug overdose at age 33.

* Leveraged-buyout wizards Kohlberg Kravis Roberts & Co. buy Fred Meyer Inc. for $430 million. The Oregon Investment Council kicks in nearly half the cost from the pension funds of state employees. OIC chairman Roger Meier later receives a sweetheart stock deal from KKR when he retires from the council.

* Described as "Oregon's most dangerous criminal," Steven Michael Kessler escapes from Rocky Butte Jail with five other inmates, shooting and critically wounding a 61-year-old guard along the way. Kessler later surrenders outside a Howard Johnson near Kansas City, Mo., in his underwear.

* Citing shrinking enrollment, the Portland School Board decides to close Jackson High.

* Mayor Frank Ivancie declares war on crime and wants to strengthen police powers, making it illegal to flip the bird to a Portland cop. Critics say the plan is unconstitutional, but Ivancie isn't fazed. "The Constitution is a kind of moving target," he shrugs. "Judges are reinterpreting it all the time."

* After cutting billions of dollars from welfare programs, the Reagan administration distributes 30 million pounds of surplus government cheese to food banks nationwide. Workers at Portland's Life Center hand out free crackers to particularly needy cases.

* Powered by Rindy Ross' battle-cry vocals and saxophone sizzle on the hit single "Harden My Heart," the self-titled Quarterflash album goes platinum.

* Sept. 4 marks the final edition of the Oregon Journal. The scrappy afternoon daily once boasted a circulation of 200,000, but one dark day in 1961 it fell into the clutches of the Newhouse empire, which ultimately decides to fold it into its arch rival, The Oregonian. The Journal's last scoop: legislative shenanigans over SAIF.

* WW first mentions an obscure affliction known as acquired immune-deficiency syndrome-a.k.a. AIDS-in a medical feature on Kaposi's sarcoma.


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