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  • Amy's Kitchen: Looking beyond pay

    Wages locally start modestly, but the operation's ability to fuel growth makes up for it, says an expert
  • When state and local economic development practitioners wooed Amy's Kitchen to the Rogue Valley, they repeatedly talked up the wages the organic frozen food purveyor might offer.
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  • When state and local economic development practitioners wooed Amy's Kitchen to the Rogue Valley, they repeatedly talked up the wages the organic frozen food purveyor might offer.
    Even while economic developers and politicians talked family-wage jobs, Amy's Kitchen representatives were noncommittal and avoided talking specific figures until it came time to hire staff.
    While management and skilled positions definitely fit in the realm of family-wage earnings, many hourly wage earners start in the $9-$12 range — not exactly United Auto Workers pay.
    "Amy's Kitchen has always said that we pay a competitive wage for the food-processing industry," said Chief Operations Officer Scott Reed in an e-mail. "Others may have characterized our pay structure in different terms but we have been consistent in describing our pay policies as competitive for our industry."
    It's also in keeping with Rogue Valley hourly wages, which tend to be lower than in the metropolitan areas where many of Southern Oregon's newcomers lived before coming here. There are a variety of factors — ranging from local competition for workers to global competition that go into how large employers determine their pay scales.
    "The wages here reflect the prevailing cost structure for the food-processing industry as a whole," Reed said. "The wages in our Medford plant are the same as we pay in our Santa Rosa operation."
    But the impact of Amy's Kitchen on the local economy goes well beyond the payroll, numbering 518 full-time and 60 temporary employees.
    Bruce Laird, a state regional economic development officer, said Amy's Kitchen is a catalyst for economic growth rather than simply the answer to the area's wage and employment needs. He argued it takes more than steady job growth to provide employment for the area's rising population.
    "If you can run down the unemployment rate, it puts pressure on the work force and kicks up wage rates," Laird said. "At a certain point, there's upward pressure because people have to compete to get workers. If you look around you'll see there is already pressure on entry-level positions, but that doesn't necessarily get you to where you want to go. You've got to soak up jobs in all categories to boost the average and median incomes."
    Medford Fabrication President Bill Thorndike Jr., a Port of Portland commissioner and a regional Federal Reserve Bank of San Francisco board member, cautioned that hourly wages don't tell the whole story.
    "One of the first things to keep in mind is total compensation, which takes into account the benefit packages people have," Thorndike said. "It's one caveat I always have in talking about wages, you want to compare apples to apples not apples to oranges. A $14 straight pay average quickly becomes $20 when you add vacation, holidays, matches for pensions and health-care contributions."
    Thorndike noted that the cost structure for businesses doesn't always match up with the cost of living in the vicinity.
    In his industry of structural steel, Thorndike says cost structures are similar whether you're in Medford, Grants Pass or Portland. What comes into play is housing and other cost of living issues.
    "The cost structure for steel in San Francisco compared to Medford isn't good, unless you can spend $3,000 a month on rent," Thorndike said. "By definition they've priced themselves out of that marketplace."
    Laird argued that Amy's Kitchen is part of a long-term solution for higher wages, primarily because of what it does beyond its walls.
    "The farmland between Rossanley and West Main is being preserved as a working farm because of the higher value of organic crops," Laird said. "You won't have neighbors complaining about overspraying. When Amy's Kitchen purchases produce from that and other farms, that money is staying in the valley through payroll, insurance, packaging, trucking. The only money that leaves the valley is the profit and the costs of goods and services."
    Not only do farmers get a boost from a food processing plant, but dairy farmers as well.
    Umpqua Dairy's new $2.5 million distribution center in Central Point was built in part because of Amy's Kitchen's arrival. The cross-dock facility, which staged its grand opening this week, is staffed with 15 route salesmen, some of whom moved to Grants Pass. Umpqua is now able to distribute its products into California, which in the past was "nearly impossible" to achieve, said company spokesman Brian McQuade
    While Harry & David doesn't compete at the grocery store against Amy's Kitchen, it does to some extent at the production site. Thus it strengthens the underlying wage pressure.
    "We always keep an eye on what the other employers are doing," said Harry & David spokesman Bill Ihle. "We want to be the employer of choice in the valley."
    Further, said Laird, the economic multiplier for a company using local agriculture products is far above a new national retailer — say a Nordstrom or Trader Joe's.
    "Amy's Kitchen's multiplier (the amount a dollar recirculates through a local economy) is somewhere over 4 to 1," Laird said. "In the kind of scale we look at, 5 to 1 is almost unheard of, and 4 to 1 has an enormous impact on the valley. You're going to see other things pop up because of Amy's Kitchen. Everyone wants to snap their fingers and see things appear overnight. People who weren't buying Umpqua are now buying Umpqua. When you're talking organic, other suppliers will continue to earn certification. But it takes time for everybody to get into the system. It takes three years to convert a field to organic."
    Reach reporter Greg Stiles at 776-4463 or at business@mailtribune.com
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