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Red States, Including the ‘Newly-Reds,’ Excel at Job Growth

But for them, the U.S. economy might already be in another recession.

by
Tom Blumer

Bio

July 29, 2011 - 12:00 am

Now that state employment information for the first half of 2011 is available, one can’t help but notice which states are up, as well as a particularly telling example of one which is down.

Though admittedly the comparison isn’t apples to apples, it’s worth noting that of the 757,000 seasonally adjusted jobs added in the overall economy this year from January through June, the ten states with the highest percentage employment growth were responsible for well over half, or 390,000 of them, even though they only have about 20% of the nation’s population:


What’s more, as the economy by all accounts decelerated in May and June, the ten states above stayed relatively strong. While the country as a whole gained only 43,000 seasonally adjusted jobs in those two months, they added over 90,000. Democrats who accuse Republicans of wanting the economy to tank, please note: If it weren’t for these ten states, we might already be in the midst of another recession instead of possibly heading towards one, as Goldman Sachs and others have recently asserted.

Six of the ten (Nebraska, North Dakota, Oklahoma, Texas, Utah, and Wyoming) have been conservative strongholds for decades. Montana, though its governor and two senators are currently Democrats, has been a red state in all but one presidential election since 1972. The final three highlighted above — Michigan, Ohio, and Wisconsin — were previously governed by Democrats who were replaced with GOP governors this year. All three are in the early stages of what may be remarkable turnarounds. I call them “the newly-reds.”

Led by Governor John Kasich, Ohio’s January-June seasonally adjusted jobs pickup is the Buckeye State’s best performance since 1994. Not coincidentally, that’s about when then-Governor George Voinovich stopped being even sort of conservative. Regardless of the party in charge, Ohio was governed like a blue state until Kasich came along. Even more impressive, in terms of what has actually occurred (i.e., the not seasonally adjusted figures), the state has added just over 200,000 private-sector jobs in the past five months, the best February-June total since 1999, when the national economy, largely due to Kasich’s previous work on the federal budget as a congressman, was far stronger.

In March, Kasich and the General Assembly tentatively won a bitter battle with the state’s public-sector unions and passed “SB5.” As I noted several weeks ago, SB5 prohibits public employee strikes, limits the subjects of collective bargaining, requires public employees to pay 15% of their health insurance costs, and prohibits forced union “contributions” by nonunion public workers. In June, the governor signed a two-year budget which closed a projected $8 billion deficit dumped on the state by predecessor Ted Strickland without raising taxes and while keeping all-funds spending virtually flat. The Buckeye State reaped an almost immediate reward: Standard & Poor’s, which had downgraded the state’s debt rating just as Strickland departed in January, revised it to “stable” shortly after the budget’s passage.

The SB5 victory just noted is tentative because opponents have succeeded in getting a repeal initiative on the November ballot. It may not be an exaggeration to say that the state’s nascent recovery hangs in the balance.

Michigan’s performance is a bit less impressive, principally because it still has so far to go. Wolverine State employment contracted by over 600,000 on Democratic Governor Jennifer Granholm’s watch, so one shouldn’t be too impressed with the improvements achieved just yet. Nevertheless, Republican Rick Snyder, who succeeded Granholm, seems to have put a foundation in place for continued employment progress. In stark contrast to recent contentious budget battles, the state created an atmosphere of relative certainty by passing a budget four months ahead of time. Most notably, it features “a big reduction in business taxes,” which consumers end up paying anyway, and “an almost equal increase in income taxes.”

Then there’s Wisconsin. Has any state’s governor ever been vilified as severely and viciously as Scott Walker during his battle with the state’s public-sector unions earlier this year? Walker won’t get a thank-you card from them any time soon, but he should, because the alternative was massive government layoffs, most of which, as the Weekly Standard’s John McCormack has noted, have been avoided:

Walker’s budget repair bill, known as Act 10, is working just as he promised. To make up for a $2.8 billion deficit without raising taxes, state aid to school districts (the largest budget line) was reduced by $830 million. Act 10, Walker said, would give districts “the tools” needed to make up for the lost money as fairly as possible.

… Now that the law is in effect, where are the horror stories of massive layoffs and schools shutting down? They don’t exist — except in a couple of districts where collective bargaining agreements, inked before the budget repair bill was introduced, remain in effect.

McCormack goes on to explain that schools in Milwaukee and Kenosha have each laid off hundreds of teachers because those districts’ unions “cleverly” concluded contracts which avoided the employee health care and pension contributions contained in Walker’s budget repair bill. Teachers who have lost their jobs might be questioning union leaders’ “wisdom.” Meanwhile, the state’s employment pickup this year is more than triple that seen under Democrat Jim Doyle during all of 2010.

As to poorly performing states, the booby prize goes to Connecticut, which after eking out small early gains has lost 9,000 seasonally adjusted jobs in the past two months. Only a fool would believe that this result has nothing to do with Democratic Governor Dannel Malloy’s poor public policy choices since he took office this year.

Malloy pushed billions of dollars of tax increases through the Nutmeg State’s legislature with promises that he would rein in spending in negotiations with the state’s unions. Fat chance of that. As of when this column was written, the unions, in the midst of a 20-year contract expiring in 2017 (you read that right), still hadn’t budged, even though because of their intransigence Malloy had to lay off over 6,500 state employees earlier this month.

Imagine that. A Democratic Party politician promises he’ll rein in spending after he gets his “needed” tax increases, and then fails in his followthrough. We’ve heard that tune far too many times, including now from President Obama and Democrats in Washington. Far too often in the past, spendaholic Dems have been accompanied off the cliff by go-along, get-along Republicans. Governors Kasich, Snyder, and especially Walker have shown that the “newly-reds” have a better way.

Along with having a decades-long career in accounting, finance, training and development, Tom Blumer has written for several national online publications primarily on business, economics, politics and media bias. He has had his own blog, BizzyBlog.com, since 2005, and has been a PJM contributor since 2008.
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