The figures don't lie - an economic case for Right-To-Work in Ohio

In responding to a post on a local Internet forum, I came across some rather startling information regarding right-to-work (RTW) states and Ohio.

It's from the National Institute for Labor Relations Research and it contrasts economic performance of RTW states and Ohio from 1995-2005. It says:

There is overwhelming evidence that Right to Work laws are economically beneficial. Here’s how David Littmann, the former senior vice president and chief economist for the Detroit-based Comerica Bank and current senior economist for the Mackinac Center for Public Policy, summed up the evidence this February in testimony before the Michigan House Tax Committee on Restructuring: “Economic growth in right-to-work states has so convincingly and consistently eclipsed the average growth for non-right-to-work states that it makes the whole argument for workplace flexibility a non-controversial subject.”

Between 1995 and 2005, U.S. Department of Labor data show private-sector job growth in Right to Work states exceeded private-sector job growth in non-Right to Work states as a group by 79% and in Ohio alone by nearly 500%. Over the same period, inflation-adjusted U.S. Commerce Department data show real personal income growth in Right to Work states exceeded overall personal income growth in non-Right to Work states by 39% and exceeded Ohio’s meager increase by 142%. Meanwhile, U.S. Census Bureau statistics show that, from 1994 to 2004, the number of citizens covered by private health insurance grew by 11.5% in Right to Work states, slightly more than double the aggregate growth in non-Right to Work states. In Ohio, over the same period, the ranks of the privately insured actually declined by 0.2%.

I'm certain some people will take exception to the source of the information - the NILRR - because of its mission:

NILRR's primary function is to act as a research facility for the general public, scholars and students. It provides the supplementary analysis and research necessary to expose the inequities of compulsory unionism.

It publishes monographs, brochures and briefing papers designed to stimulate research and discussion with easy-to-read summaries of current events. NILRR also conducts nonpartisan analysis and study for the benefit of the general public.

It will render aid gratuitously to individuals suffering from government over-regulation of labor relations and will provide educational assistance to those individuals who have proved themselves worthy thereof.

But those who do so would be making a grave error. The data isn't from them - just compiled by them. The data is from the government: Department of Labor, Commerce Department and U.S. Census.

The linked article also looks at two states that enacted RTW laws: Idaho and Oklahoma. It's worth your time to examine the article and have some of the information on hand as people begin to discuss the pending Ohio Workforce Freedom Amendment.

Solution to economic problems: give a speech

Taken from DrudgeReport headlines....it pretty much says it all.

Jobless claims rise --- again...

Stock market drops --- again...

Gold prices soar --- again...

WH: Time for Congress to act...

Senate Dems: Don't blame us...

Obama: I know - I'll give a speech! I'll tell Congress to adopt all my ideas, which didn't work last time, because THIS time, they will. All it will take is more government spending and more taxing the rich...yeah...that's the trick!

Where Ohio stands in economic competitiveness

Several reports have been released lately that rank state standings on a variety of items.

The first is not good news. The Institute for Truth in Accounting released their analysis of the 'true' fiscal condition of states. In a press release, they write:

Only four U.S. states have sufficient assets to pay their debt and obligations related to pension and retirees' healthcare

Chicago, (June 27, 2011) -- Today, the Institute for Truth in Accounting (IFTA) announces completion of a significant, comprehensive study of all 50 states' assets and liabilities, including pension and retirement healthcare obligations. The study determined that six states had a per taxpayer burden over $20,000: Connecticut ($41,200), Illinois ($26,800), Hawaii ($25,000), Kentucky ($23,800), Massachusetts ($20,100) and New Jersey ($34,600). The Taxpayer Burden represents the funds that will be needed to pay the commitments the state has already accumulated divided by the state's taxpayers.

'If governors and legislatures had truly balanced each state's budget, no taxpayer's financial burden would exist,' said Sheila Weinberg, Founder and CEO of the Institute. She continued, 'A state budget is not balanced if past costs, including those for employees' retirement benefits, are pushed into the future.'

The study found four states (Nebraska, North Dakota, Utah and Wyoming) have assets available to pay their debt and obligations related to pension and retirees' healthcare.

The study reviewed each state's Comprehensive Annual Financial Report to offset assets against liabilities. For the first time, a detailed analysis of pension and healthcare liabilities uncovered the states' actual obligations. From these calculations, the Institute was able to determine the Taxpayer's Burden.

Employee compensation packages include retirement benefits. A portion of these benefits is earned each period and should be included in the current budget as a portion of current employee compensation costs. Instead most states handle many of benefits on a 'pay-as-you-go' basis. This obligates future taxpayers to cover these past costs - without receiving any benefits or services.

'Though 49 of the 50 states have constitutional or legal requirements to balance budgets, most states employ a variety of financial maneuvers to circumvent this requirement,' said Roger Nelson, chair of IFTA and former vice chair of Ernst & Young. 'The largest of these maneuvers is related to employee compensation.'

Ohio does rank 20th in the list, putting us in the top half of the nation, but the money needed to pay our bills is just under $18.1 billion which equals a $4,700 burden for each taxpayer in the state.

While Gov. John Kasich and the Ohio legislature are taking steps to address these financial burdens, I'm not sure the proposed fixes to date will be enough to cover the obligations.

But if that wasn't enough, the 2011 ALEC-Laffer State Economic Competitive Index was also published and it puts Ohio 49th out of 50 states in terms of our economic performance ranking (see page 101 of the linked report). The good news is that they rank us 38th in terms of our economic outlook, "a forecast based on a state’s standing (equally weighted average) in the 15 important state policy variables shown below. Data reflect state + local rates and revenues and any effect of federal deductibility." It's still in the bottom half of the nation but at least our outlook is better than our performance.

A quote from Gov. Kasich included on the last page of the report:

“The data and analysis from ALEC on state economic conditions is a powerful resource for policymakers who care about reducing spending so they can begin reducing taxes. It’s both a report card and a score card. Frankly, Ohio’s not doing as well as it needs to do. The information that ALEC provides helps us understand our competitive position and helps spur us to do better.”

EPA rules lead to loss of 157 Ohio jobs now with more to come

Press Release from Rep. Bob Latta:

EPA Rules Lead to Shutdowns in Ohio

BOWLING GREEN – Congressman Bob Latta (R-Bowling Green) issued the following statement after Columbus-based American Electric Power (AEP) announced Thursday it would close and downsize three plants in Ohio at a loss of 157 jobs, to comply with the Environmental Protection Agency’s (EPA) new coal-fire plant regulations:

“This is a perfect example of the EPA’s assault on American business and the economy. The cost of complying with burdensome regulations will cause higher electricity bills and fewer jobs in America. Time and time again, I, along with other members of the Energy and Commerce Committee, have said that overreaching regulations and stringent timetables for compliance are a deterrent to job growth and energy stability.

“The EPA must come to terms with the fact that their overly broad one-size-fits-all regulations hurt companies. The EPA should set up amechanism by which states can apply for regulatory waivers, giving states the flexibility to determine their business and environmental priorities.”

AEP expects EPA regulations to cause a net loss of approximately 600 power plant jobs with annual wages totaling approximately $40 million.

-30-

Top 10 worst economic myths

Every year the Business & Media Institute reviews the year's news and comes up with their top 10 worst economic myths. Here is their 2010 list:

10. GM Repayment Shows Taxpayer Bailout Worked

9. All the Economy Needs is More Stimulus

8. Soda is Like Cocaine and Ads Cause Obesity

7. Obama the Tax Cutter

6. The Tea Parties are Astroturf, but Green Groups Aren't.

5. Despite Largest Budget in History, Obama is Fiscally Conservative

4. Lack of Press Freedom in Gulf Doesn't Point to Obama

3. Nearly 10 Percent Unemployment Isn't So Bad

2. ClimateGate? What ClimateGate?

1. The Chamber of Commerce is Taking "Secret Foreign Money" for Election

For details and background on why these items made the top 10 worst economy myths list, see the full article here.

Tax hikes, 2011 economic collapse and the impact on public budgets

We're all being told by politicians at just about every level of government that as the economy improves, revenues for government will increase.

This is not necessarily a wrong premise, since increased economic activity obviously provides more 'income' that government can tax.

However, when government plans to increase the amount of taxation on such 'income' whether it be dividends, wages, capital gains, etc..., people will make plans to reduce what they have to pay and to increase the amount of money they can keep.

Arthur Laffer, in a column in the Wall Street Journal (subscription may be required), makes the argument that people will maximize their income this year to take advantage of the current - and lower - tax rates. He predicts this will have a devastating impact on our economy next year when the economic activity would have normally taken place.

This does not bode well for budget projections or for politicians who are not making cuts in spending now hoping for increased revenues next year.

Toledo's elected officials have already expressed such hope for future revenues and are counting on increased monies to pay for costs they've pushed into next year. They've deferred police overtime until 2011 when it will be paid out at a higher hourly wage since police will be getting a pay increase as of January 1.

But if Laffer is correct, those hoped-for revenue increases will not materialize, leaving us with no additional funds to pay for the extra/delayed costs we know will have to be paid.

So what then? Even more taxes foisted upon us? Well, that seems to be the cycle....

When will they learn?

Reuters features Toledo in article

Yesterday, Reuters and reporter Nick Carey did a story that featured Toledo, "As U.S. recession bites, Ohio hopes fade for Obama."

It's pretty standard, as these types of stories go, but I didn't get a press release from Mayor Carty Finkbeiner's office touting the coverage.

Some interesting points from the article:

A Quinnipiac University opinion poll released on July 7 showed the Democratic president's popularity in America's seventh most populous state had fallen to 49 percent from 62 per cent in May. Even worse for Obama, 48 percent said they disapproved of his handling of the U.S. economy, with 46 percent approving.
...
Unemployment hit 14.2 percent in June in Toledo, a city of about 315,000 people. Many of the roads in and out of the city are in a poor state of repair and many
downtown stores have closed down.
...
"We're not just in a recession here, it's a depression," said Toledo Mayor Carty Finkbeiner.
...
Toledo's retail vacancy rate hit a record level of 14.6 percent.

H/T fellow SOBer, Patrick Poole

Things I'd blog about if I weren't shovelling snow

As many readers know, I live on the Maumee Bay. Usually, this is a delightful location that bring cool breezes in the summer and allows for iceboating in the winter.

But every now and then - certainly not a regular event - we get a forecast for snow and Easterly winds. That means that the lake effect snow is greater than just the snow alone ... and drifts begin to form - usually across our driveway, which is about 80 feet in length.

Yesterday, we shovelled the driveway and porch twice. Today, we'll have to do it again - maybe twice...

So here are the things I'd blog about if I weren't required to go shovel about five inches or so...

* As we discussed last night on Eye On Toledo (podcast with interview), the Toledo Police Patrolman's Association filed an unfair labor practice charge against Mayor Carty Finkbeiner and the City of Toledo. I spoke with
Donato Iorio, the attorney for the union, who explained that Carty's press statement from Thursday provided the proof of the charge.

Carty's statement said:

"Second, Toledo Police Patrolman’s Association negotiators, yesterday, asked for a contract calling for a double-digit increase in pay over three years. That pay raise would virtually force the layoff of all Local 7 and 2058 employees, if it were granted."

Iorio said the negotiations were supposed to be confidential and Carty broke the established ground rules by talking about the union's opening position.

Dan Wagner, the president of TPPA, also told me that the union's bargaining team was ordered to return to the streets, thereby eliminating their ability to meet in negotiations and that the union members were under an internal investigation over Carty's claim that they urged another city union, AFSCME Local 7, to reject the contract the city had negotiated with Local 7 leaders.

* In 2001, President George Bush started to discuss the economy and how things were not as good as we would have liked. He was 'reprimanded' by the Democrats and the press for 'talking down the economy' and for being negative.

I can't help but notice the hypocrisy over the last 18 months or so with Democrats and, now, President-Elect Obama telling us how dire everything is, that we might actually be in a depression rather than a recession, and how government spending and them, of course, are the only things that will save the day. Never mind their complaints over the deficit the last several years, if they don't spend and escalate the deficit, doom and gloom will descend and the world will end.

Also, despite their explanation of how bad things are, it's not anywhere near as bad as it's been - and we survived. In the '70s, unemployment hit 9.0%, inflation skyrocketed, we had to ration gas, labor strikes seemed a daily announcement and interest rates hit 12% and the term 'stagflation' hit the vocabulary.

Policies introduced during those years made things worse. By 1980, the prime interest rate had hit 21.5 with unemployment hitting it's peak of 10.8% in 1983. Many of the policies implemented under Pres. Ronald Reagan had the desired effect and things started to improve.

This is not to minimize the struggles that people face today, but they're not as bad now as they were then, no matter what the media and politicians tell us.

* The Wall Street Journal had a terrific article yesterday by Steven Moore that is a must read: 'Atlas Shrugged': From Fiction to Fact in 52 Years. (subscription may be required)

* Back to the snow, can anyone really talk about global warming with a straight face? This article details some of the record cold temps we've been having, but of particular interest is the discussion from the climate scientists over their modelling and how they admit prior models didn't take everything into account.

I believe wholeheartedly in climate change. If the climate didn't change, we wouldn't have glacial grooves on Kelley's Island just a few miles away from me. I just believe that most of the changes are result of geological and astronomical factors, not man-made and that any actions we take as humans need to be balanced, considering cost and amount of impact. Why spend billions and billions to maybe change the temperature by .1 degree? Is a .1 degree change really going to impact us in such a way that we cannot compensate? Personally, I'd love to have warmer temperatures - I love the location of my house and wouldn't mind if I could grow palm trees here...

* Why don't we have good Bugs Bunny cartoons on Television on Saturday mornings anymore? I realize that some of them have been banned - you never see Yosemite Sam because of his penchant for firing his guns - but they're still classics and should at least be available on the Cartoon Network or something.

Okay - I've put it off long enough...off to shovel snow.

Yes - it IS just us...

In the Toledo and Northwest Ohio area, the economy isn't so good. It's not as bad as it's been in the past, but it certainly isn't where it could - or should - be.

Quite often, people in this area think our local economy is reflective of the nation as a whole. I have pointed out numerous times on local blogs/forums and on my radio show, Eye On Toledo, that we are a strange anomaly when it comes to economy. Today's Blade article on area incomes proves my point.

According to Census figures for 2000-2006, the per capita incomes in Toledo have increased $4,441, or 16%, to $32,209. That's not a bad increase, as it averages 2.6% per year. However, the figures for the nation are much better, increasing $7,869, or 27%, to $36,714.

So the nation, as a whole, is doing so much better than our area. And why is that? The loss of automotive manufacturing jobs and high unemployment are partly to blame, according to the article.

Overall, the local area's per-capita growth has been stunted, more so than that nationwide, experts said. Also contributing is the relatively high unemployment rate for Toledo, averaging above 7 percent for the six-year period.

"Ohio has lost a lot of jobs, and Toledo is part of that," said George Morkzan, a chief economist at Huntington Bank, Columbus. "That's the biggest issue."

So if the poor economy is a localized issue, is it really "all Bush's fault"? Or is it a reflection of our local political environment and governmental policies???

My belief is that a local economy is more a result of local decisions, as these Census numbers clearly indicate. If Toledo is ever to solve the problems of high unemployment, loss of jobs, loss of population and general decline, we have to do more than just change the faces of our elected officials. We have to change the overall philosophy, moving from a 'government is the solution so more taxes are needed to fund government operations' perspective - to one of lower taxation, a focus on essential (mandated) services, and a true business-friendly environment (which doesn't mean taking over the operations of private businesses in order to generate more income for government).

Sadly, I don't see this change occurring. We're too busy repeating the failures of the past to actually learn from them.

Accurate numbers or political spin?

Fellow Samsphere blogger, Skip, of Granite Grok, has an intriguing post about the economy. He takes a look at the status of the economy in 1996, when many were claiming things were good, and compares it to today, when many are claiming we're in a recession.

He references this article:

Democrats on the Economy in 1996:
“Our economy is the healthiest it has been in three decades.” (President Bill Clinton, State of the Union Address, January 23, 1996)

Democrats on the Economy in 2008:
“The bottom line is that this administration is the owner of the worst jobs record since Herbert Hoover." (Senator Charles Schumer, Press Release, March 7, 2008)

The numbers in March 1996 were slightly worse than today. But in 1996, these figures were being hailed as good. Granted, the housing market is in a much-needed correction and the credit crunch has some people concerned. But when it comes to the labor market, I think I'd take today's numbers over those from 1996.

So is it the economy? Or is it the politics?

Quote of the Day

In light of the so-called stimulus plan (which I don't think will 'stimulate' anything positive), I thought this quote from The Patriot Post particularly timely:

"There is no part of the administration of government that requires extensive information and a thorough knowledge of the principles of political economy, so much as the business of taxation. The man who understands those principles best will be least likely to resort to oppressive expedients, or sacrifice any particular class of citizens to the procurement of revenue. It might be demonstrated that the most productive system of finance will always be the least burdensome." ~ Alexander Hamilton (Federalist No. 35, 1788)

Economist looks at the good news

Despite the doom and gloom we hear about - as well as the fact that Ohio seems to be closer to Michigan than the rest of the U.S. in terms of our economy and economic outlook, all was not terrible in 2007.

From Bloomberg.com:

Dec. 31 (Bloomberg) -- The U.S. is ending 2007 with a whine rather than a whimper. It is tough to keep track of what's collapsing faster, home prices or the dollar, and the financial market crisis caused by it has many seers talking recession as we enter 2008.

As always, that delicious negativity receives the lion's share of media attention. But, in many ways, this past year was a pretty good one...

click here for complete article.