Where the candidates stand

Today's paper has an article about where the two presidential candidates stand on various employment/free trade issues.

For the most part, it's a more balanced article than what we've seen in the last few days from the paper, but I must question why claims by unions get so much attention.

"Unions claim this - unions say that..."

Everyone knows that when it comes to presidential campaigns, unions are almost the same as the Democrat Party - so why would a union claim about Sen. John McCain's position be a matter of discussion that the McCain campaign needs to respond to?

Did the paper not have any questions of their own to ask about the policies and philosophy of the candidate?

And what about claims from the business community that Obama's tax plans and spending would have a detrimental impact on jobs and the economy? What about the claims from exporters that NAFTA has actually helped them increase their businesses and hire workers? Only the claims of the unions are brought up as the basis for the discussion.

I commend the author for providing balance in the answers, but all of us should question the basic premise of the article: that Democrat-dominated union claims about Republican policies being solely to blame for the economic condition of Ohio and Toledo are somehow valid, while ignoring the Democrat-dominated local government that, despite state and national economies, always has us ranked among the worst.

Toledo's economy, regardless of political party of the president or the governor, constantly ranks among the worst in the state. We traditionally have the highest unemployment of all the urban counties in Ohio - and we have held this distinction for about 20 years. That is not the fault of the president - nor even the governor - no matter whether they are R's or D's.

That's the fault of the local decisions that are anti-business, 'not business friendly,' embrace taxation and spending, and encourage dependency on government. It's also the fault of the complaining unions (most but not all) who push for more and more from their employers (including government) regardless of the market's ability to support such things - and then who blame elected officials for not 'protecting' them from competition. And it's also the fault of the voters who think that doing the exact same thing and electing the exact same philosophies that got us into this mess will somehow result in a different outcome.

In every society, free markets (truly 'free' markets) are the catalyst for success. Even today, as many Democrat elected officials are calling for higher taxes, other nations are moving away from such stifling economic approaches and lowering their corporate tax rates. But the solution being offered by Obama is to force higher taxation upon businesses and individuals - and then redistribute those funds to individuals who are 'more deserving.'

I find it funny and rather hypocritical that the same politicians who so readily embrace and want to duplicate the socialist medical programs of other countries vigorously reject the tax policies that are proving so successful in other countries.



Side note: In their 'special report' on Sunday, our paper tried to make the case that Ohio has suffered under the last eight years of Republican leadership in the White House. They don't come right out and say it, but the message, to any paying attention, is clear - as it is in most of their agenda-driven 'news' stories.

What might have been missed was this note, explaining their sources for the date used to justify the article:

"...and Policy Matters Ohio, a nonprofit policy research organization that tracks economic policy in Ohio."

Now, just for reference, I went back through the archives to see how the Buckeye Institute was described in Blade stories. In the 15 most recent articles done by the paper (not letters to the editors), the Buckeye Institute is described as either 'conservative,' or 'free-market.'

So why didn't they identify Policy Matters Ohio as a union think tank (8 of their 13 board members is/was in a union or represented unions in their jobs)? Why don't they identify it as a liberal/progressive think tank that is focused on 'fairness' of outcome rather than equality of opportunity?

If they need to identify the philosophy of the 'conservative' or 'free-market' think tank, shouldn't they also identify the philosophy of 'liberal' or 'socialist' think tanks?

Yes, these questions are rhetorical. But you need to know they slant the stories by the descriptors they use - so you can better judge the reliability and objectivity of the information they present.

Sick days mandate would make Ohio sicker

The National Federation of Independent Business/Ohio (NFIB) has conducted a study to evaluate the impact of the so-called Healthy Families Act, otherwise known as 'sick days Ohio,' and the results are not good.

According to the evaluation, this mandate on employers to provide seven paid sick days could result in the loss of 75,000 jobs. It would also place a $1.17 billion burden on the state's employers in costs of providing those days and the administration of the proposed law.

Surprisingly, roughly 20% of the job losses would be in companies with fewer than 20 employees - firms that are exempt under the proposal. Not surprisingly, many of the job losses are from labor-intensive sectors like food services, eating and drinking places and general retail trade.

The study extrapolated lost sales as result of the impact implementation of this law would have: $9.4 billion from 2008-2012.

(My Eye On Toledo interview with Ty Pine of NFIB on NewsTalk 1370 WSPD begins half-way through the show.)

STUDY ANALYSIS

Of course, proponents for the mandate say this study is not reliable because it was done by NFIB. From today's paper:

Dale Butland, spokesman for the Ohioans for Healthy Families coalition, questioned the NFIB's internal study, noting it assumed a worst-case scenario that every eligible employee would use all seven days every year. He noted the U.S. Bureau of Labor Statistics has shown that 54 percent of those with paid sick leave now don't use a single day in an average year.

"The conclusion flatly contradicts two independent studies that have been done, one by Policy Matters of Ohio [in Cleveland] and the Institute for Women's Policy Research [in Washington]," he said. "Both studies found that employers would save money.

"They looked at things this study did not," he said. "They looked at less lost productivity because sick workers tend to be less productive than healthy workers, and because there would be less spread illness in the workplace, faster recuperation times, and improved retention of skilled employees."

First, I continue to be amazed at the description of one group being biased while another group is not. NFIB's study is not independent, but the one done by Policy Matters of Ohio is???? The board of Policy Matters of Ohio is comprised of liberals and labor unions - no bias toward the mandate there, I'm sure.

Additionally, the Policy Matters report uses data provided by Institute for Women's Policy Research, so is it really two 'independent' reports?

Then there are the authors. For Policy Matters study:

Amy Hanauer is founding Executive Director of Policy Matters Ohio. In addition to running the organization, she studies work, tax policy, energy policy, gender and racial disparities and other issues for Policy Matters. Hanauer has a Master’s of Public Administration from the LaFollette Institute at University of Wisconsin, Madison and a B.A. from Cornell University. She is on the board of trustees and executive committee of the national think tank Dēmos and on the national advisory committee to the Economic Analysis and Research Network.

For NFIB:

Bruce D. Phillips was appointed senior fellow in Regulatory Studies at the NFIB Research Foundation in October 2000. He analyzes the impacts of regulations on small firms using a new proprietary model that measures both direct and indirect regulatory costs. In addition, Phillips works in various applied policy areas, using both NFIB surveys and other government data to study policy areas such as labor regulations, health-care costs and tax policies as they affect small firms.

From 1979 to 2000, Phillips served in a variety of capacities with the Office of Advocacy of the U.S. Small Business Administration, directing contract research and building both private and census-based databases to study the structure of small firms. ... Phillips was also a senior professorial lecturer in the School of Business Administration at Georgetown University in Washington, D.C., from 1985 to 1994.

Phillips received a bachelor's degree in economics (magna cum laude, Phi Beta Kappa) from Queens College of the City University of New York. He completed his M.A. in economics, as well as his doctoral studies, at the University of Maryland.

Based upon their backgrounds, which author do you think has the more scholarly research on the issue?

Finally, there are the studies themselves.

Butland says his studies looked at 'lost productivity, illness spread in the workplace and retention of employees.' Those are subjective aspects of a mandate and rather difficult to measure. Contrast those evaluations with this background on the study from NFIB:

"The study was conducted using the Business Size Input Model program of the Regional Economic Models, Inc. input-output system. The system produces short- and long-term forecasts for detailed industry sectors when external shocks are applied. Specifically, the model estimates future changes in jobs, output (sales) income and productivity for Ohio by business size and industry by comparing forecasts without change to forecasts with change (the mandate). The shock in this research is the additional sick leave costs, which are calculated to represent one percent of employee compensation (based on federal Bureau of Labor Statistics compensation data), as well as record-keeping and bookkeeping expenses. Note that overtime and replacement worker costs are not included in the cost analysis and would substantially increase the costs of the mandate if applied. Moreover, the research does not account for the additional costs placed on employers who currently provide paid sick leave but must comply with the additional administrative mandates." (emphasis added)

Policy Matters report methodology is documented and lists surveys, interviews and estimates. Both reports are linked, so you can review the methodologies and make your own determination.

THE ORGANIZATIONS

Both Policy Matters and NFIB are non-profit, non-partisan organizations.

NFIB is an organization of businesses and they must, in order to maintain credibility, be realistic and honest in critiquing the impact of potential laws. Their mission "is to promote and protect the right of our members to own, operate and grow their businesses."

Policy Matters sees inequality in the economy and works to correct it by providing a 'more fair' economy in Ohio. Their mission "is to conduct high-quality research promoting decisions which benefit our whole community. Given the challenges of a rapidly-changing economic system, rising wage inequality, new issues in education and changes in the way work is organized, it is imperative that high quality research focuses on creating an economy that works for everyone.

When comparing the information coming from the groups, it's important to remember that their lack of partisanship (Republican/Democrat) cannot be confused with a lack of philosophy or a lack of bias. Just because you claim to be non-partisan, it does not mean that you do not have an agenda and produce research that supports a pre-conceived conclusion. Evaluating the methodologies wil tell you whether or not the information being presented is objective.

CONCLUSION

Having evaluated the so-called Healthy Families Act, I'd already concluded that the mandate was anti-business, costly and would do more to harm Ohio's struggling economy than it would to help it. The NFIB study provides documentation that the expected negative impact is real. With headlines like "Jobless rate worst since early 1990s," we certainly don't need to compound the problem.

Even Gov. Ted Strickland recognizes that passage of this mandate would be bad for Ohio so he was trying to work out a compromise. That effort appears to be failing as businesses stand their ground and tell him any mandated paid sick time will be opposed.

The other day I had a phone call from a fellow blogger in Kentucky. He'd been to a local chamber of commerce meeting and was questioning a statement made there: that businesses were beginning to look more favorably at locating in Ohio since we reformed our business tax structure. This is good news for Ohio.

But any gains we may see as a result of those tax reforms will be for naught if we replace previously onerous taxation with onerous benefit mandates in the form of the so-called Healthy Families Act.

Even California rejected mandated paid sick days - and Ohio must do the same.

'Not business friendly' - Post #8 - Payday Lending

My last guest on Eye On Toledo was Jamie Frauenberg, Executive Vice President of Checksmart Financial and President of the Ohio Association of Financial Service Centers. (Pod cast should be available here.) We discussed HB 545, a new Ohio law regulating payday lending.

Among the various provisions of the law, which was passed by the House and is under consideration in the Senate, are a limit on Annual Percentage Rate (APR) of 28%, restricting borrowers to no more than four loans per year, and a requirement for borrowers to participate in a state-mandated financial education class prior to a third loan.

Accordingly, in order to keep track of how many loans people take out and whether or not you need to be financially educated, there is a requirement for a state-wide data base to track such activity - and the state must develop and provide such financial education classes.

Opponents of the law have some very valid points:

* APR is only applicable to long-term loans which payday lenders don't offer. If our state legislators are so worried about usury, then maybe they should look at other types of fees that have higher APRs - like bad check fees (as high as 1400% APR) or even the late payment requirements for government utility/water bills (as high as 1200% APR). Both of these costs are equivalent to the $15 fee charged for borrowing $100 - an APR of about 391%.

* In both North Carolina and Georgia, the number of bad checks written went up after payday loans were similarly regulated.

* Using payday lending is a choice. For some people, it is a good financial choice that is cheaper, easier, more convenient and more logical than other options. There are some individuals who abuse the choice, but such individual action should not be the reason to limit the choice for everyone in the state.

Proponents make points which are based upon, imho, emotion and the idea that individuals who make poor choices need to be prevented from doing so and held harmless from any consequences:

* They routinely trot out a small number of individuals who have serious financial difficulties and have not used the option of a payday loan responsibly. They imply that most - if not all - payday loan customers are the same.

* They say that individuals are going into debt and that the state must break the cycle of debt by prohibiting these types of choices that they believe contribute to the cycle of debt. (note: eliminating one option that may contribute to some people's debt does not mean that those individuals change their spending habits nor that they stop borrowing.)

* They claim it is morally wrong to charge so much for a loan and, as a result, such companies are predatory and need to be prohibited from doing so.

Not Business Friendly

The payday lenders say this new law will put them out of business, resulting in the loss of about 6,000 jobs in Ohio. Elected officials (Rs and Ds) say they need to act in order to 'help' the citizens of Ohio and to 'protect' them from making such a financial mistake.

Even the Toledo Blade got into the act with their editorial calling these job providers 'legal loan sharks.' Of course, the editors there truly believe that government needs to take care of us and prevent us from having a choice we could abuse (smoking, mortgages, payday lending) - after all, they certainly know what's good for us, even if we don't.

"Payday industry backers claim the interest-rate cap would put Ohio's 1,600 stores out of business and 6,000 Ohioans out of work. To that we say good riddance. The state, as well as the people suckered into using their services, will be better off."

Yes, you see, The Blade thinks that running companies - employers - out of the state is a good thing!

But that's not the only anti-business comment they make.

"As we noted a year ago, the watchdog groups Policy Matters Ohio and Housing Research and Advocacy Center reported that check-cashing and payday-loan outlets have been growing like a plague in Ohio for a decade..."

This industry is growing - obviously because they are meeting multiple needs of the people who utilize them. And not every customer can be as portrayed by the proponents of the law because, if they were, these companies would be bankrupt themselves.

National Campaign

But note the description of Policy Matters Ohio? It's not described as the liberal, union-backed think tank that it is. (Seven of the 12 board members of Policy Matters Ohio are current or former members of unions - or represent unions in their jobs. State Sen. C.J. Prentiss, D-Cleveland, is a founding member.) It's called a 'watchdog group.' What they don't tell you is that Amy Hanauer, the founding Executive Director of Policy Matters Ohio, is on the board of Demos another liberal think tank whose latest focus/issue is debt.

"Demos is a national, non-partisan (and nonprofit) public policy, research and advocacy organization. Based in New York City, Demos publishes research reports and books, hosts public forums, and works with advocates and policymakers around the country in pursuit of three overarching goals: a more equitable economy; a vibrant and inclusive democracy; and a public sector capable of addressing shared challenges and working for the common good."

(Sounds like the other socialist, anti-capitalistic groups with whom they affiliate.)

They, along with several other organizations, want increased government regulation on credit cards, pawn shops, payday lenders and just about any other company that provides various choices for individuals.

They don't believe that such debt is the consequence of frivolous spending or irresponsible finances, but because there is too much 'inequality' in the world and poor and middle class 'families' (they never use the term 'people') are being preyed upon by such industries.

Accordingly, these national organizations are reaching out to like-minded state groups to promote laws that conform to their opinions of what financial options should be available to citizens. They've even included the National Council of Churches, which is why so many ministers have joined the debate.

Their quiz on their "new thrift" website that claims the 'most valuable current pro-thrift idea' is 'alternatives to payday lenders.'

Of course, if one industry is under attack, it's very likely that another will benefit. So, it should come as no surprise that the credit unions will be the 'vehicle of choice' for the state's new lending programs and that they, too, are intricately involved in the 'new thrift' initiative (through the National Federation of Community Development Credit Unions - a CDCU is a credit union with a specialized mission of serving low- and moderate-income people and communities).

Interestingly, credit unions are not subject to the same truth in lending laws that payday lenders and banks must follow. And credit unions also charge 'fees' which have high APRs - but since they're part of the 'solution,' such issues are being overlooked by the proponents and the legislators.

Political Wrangling

From a state perspective, the Republicans were afraid that the Democrats might own this issue during a critical state/national election cycle. So, despite significant opposition to the proposed regulations, in light of a forced vote on the issue, the GOP leadership decided to lower the targeted APR from 36% to 28% and then get behind the bill. So the bill passed with significant GOP support.

From a national perspective, this is more about controlling the economy and limiting individual choice to 'approved' industries, ones that are community-owned rather than 'for profit.' And Ohio's state-wide groups are more than willing to be a part of the effort.

Bottom Line

Ohio is losing population and businesses. We certainly don't need to pass more laws that force particular industries out of the state.

The goal - of 'saving' citizens from these 'evil predators' so they 'break the cycle of debt' - will not be met. Removing an option that serves many responsible individuals does not mean that irresponsible individuals suddenly change their behavior.

The government should not create a state-wide data base of individuals utilizing a specific lending service. Furthermore, the state should not be mandating financial classes in order to obtain a loan. Nor should the state spend taxpayer dollars to do these things.

It is the height of arrogance to believe that the state can make a better decision than the individual when it comes to what type of loan best serves a person. And with all the criticisms of government tracking coming from the left side of the political spectrum, I find it highly contradictory and hypocritical that these same left-leaning groups are supporting a state-wide data base of people who borrow money.

This is a bad law whose intent is to eliminate payday lending in Ohio and will not accomplish the goal of 'helping' people who are financially irresponsible in the first place. The Senate should reject this and, especially, the emotional appeal being presented by the proponents.

If you agree, you can share your thoughts with our elected officials here.

Other perspectives:

* interest rates reflect risk and by limiting possible returns to a set interest rate, you effectively forbid legal loans to any group of people whose collective risk rate exceeds that rate.

* Testimony to Ohio General Assembly - Senate Finance and Financial Institutions Committee on May 7, 2008, by Tom Lehman, Ph.D., Associate Professor, Economics in Marion, Indiana

* In defense of payday loans