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GOP-Governed and Right-To-Work States Saved the Economy’s Bacon in 2011

Blue and union-dominated states were mostly mediocre, or worse. Indiana has noticed.

by
Tom Blumer

Bio

January 30, 2012 - 12:07 am

The government’s State and Local Employment and Unemployment report for December released on Tuesday showed that many red states, including most of the “newly-reds” where Republican governors replaced or succeeded Democrats after the 2010 elections, made meaningful progress in job growth and unemployment rate reduction last year. Many blue states didn’t do nearly as well. 2011 again saw right-to-work states significantly outperform those which are not.

Let’s start with the four states where the unemployment rate increased. The worst performer by far was Illinois (all amounts and rates in this column are seasonally adjusted):

Bottom4StatesUnempRateChanges2012

The unemployment rate in President Barack Obama’s home state, which began 2011 below that of nearby Indiana, Missouri, Kentucky, Ohio, and Michigan, ended the year higher than each — yes, even higher than Michigan, the previous decade’s basket case. Illinois only gained 8,000 jobs during the year’s final ten months after gaining 45,000 during the first two.

Who besides entrenched public-sector union-beholden tax-and-spend Democrats didn’t see this coming? In January, the state increased its personal and corporate tax rates by 66% and 45%, respectively; yet its bond rating, recently downgraded, is the nation’s worst. Despite increased tax collections, Illinois continues to be chronically late in paying billions of dollars owed to vendors and medical providers. Promised public-sector union givebacks have been trivial.

Mississippi appears to have been more hurt by the fallout from the BP Gulf oil spill than its neighbors, while Hawaii’s unemployment rate is still pretty low and was at least accompanied by half-decent job growth. That isn’t true of North Carolina, whose puny job growth and stagnant unemployment rate indicate that Democratic Governor Beverly Perdue, who on Thursday announced that she will not run for reelection, didn’t do much in 2011 besides make national news for suggesting that this year’s congressional elections should be suspended.

Now let’s look at the largest unemployment-rate reductions:

FiveBiggestStateUnempRateDdrops2011.png

The top four states listed have Republican governors. Nevada’s comedown beats going in the other direction, but job growth was pathetic, and there is obviously much need for improvement (that the Silver State’s legislature is Democrat-dominated doesn’t help). Newly-reds Michigan and Florida, whose governors are in long-term cleanup mode following the walking, talking disasters known as Jennifer Granholm and Charlie Crist, respectively, saw nice job growth in addition to their rate reductions. Newly-red New Mexico’s 23% rate drop (2.0% divided by 8.6%) was the largest in the country.

Having already noted Nevada, let’s address the other two of the three states with the highest year-end unemployment rates:

ThreeHighestStateUnempRates1211

Democrat-dominated California, whose residents are already among America’s most heavily taxed, where the business tax climate is third-worst in the nation, and where overpaid public-sector unions run rampant, made some progress in 2011. But Governor Jerry Brown, who has placed tax increases on this November’s ballot and is ramping up already out-of-control regulation, seems hell-bent on ruining any future prospects for improvement. Rhode Island’s fiscal situation became so perilous last year that in November it finally enacted meaningful public-sector pension reform. Here’s hoping they can make what some are calling “The Rhode Island Miracle” stick.

Now let’s look at the top six job-gainers in percentage employment growth:

TopSixStatesJobGrowth2012

All six have Republican governors and are right-to-work states. Imagine that. Louisiana has been especially resilient despite the federal government’s deliberately slow approvals of post-spill Gulf drilling permits.

Indiana Governor Mitch Daniels and his state’s legislature have decided that 2012 ought be the year to get with the right-to-work prosperity. Though the Hoosier State outperformed most of its neighbors during the former George W. Bush budget director’s first four years in office, the past couple have been more than a little rough. In 2011, the state added only 18,000 jobs, and its unemployment rate dropped by only a half-point to 9.0%. Daniels and Republicans rightly believe that passing right-to-work would improve the state’s competitiveness, especially against its other Midwestern rivals.

At the time this column was drafted, Indiana’s House had passed the legislation, and State Senate approval followed by Daniels’ signature appeared to be a virtual certainty, while organized labor and Indiana’s Democratic legislators were quite furious. The PR-challenged unions were seriously considering disrupting the Super Bowl in Indianapolis on February 5.

Earlier this month, in one of the most ignorant moves I’ve seen in some time, union leaders brought in two members from Oklahoma, which in 2001 was the last state to enact right-to-work legislation, to moan in public about how miserable the Sooner State has since become.

Hoosier state workers should be so unfortunate:

  • At 6.1%, Oklahoma’s year-end unemployment rate was almost a third lower than Indiana’s; at the end of 2003, the two states’ rates were almost identical.
  • Since 2001, the Sooner State, whose workforce is about half of Indiana’s size, has added over 87,000 jobs, about the same number as Indiana has lost.
  • The deal closer is a stunner which yours truly did not expect. Oklahoma’s per capita personal income, which trailed Indiana’s by 9% in 2001, exceeded it by 4% just nine years later.

Though we shouldn’t forget that Oklahoma’s immigration law-enforcement measures enacted several years ago have also worked in its favor (another thing organized labor has opposed), it’s hard to see why the vast majority of Hoosiers who are not union members shouldn’t have the opportunity to see Sooner-like improvements.

The bigger picture is that if it weren’t for the states where Republican governors are applying common sense solutions to fiscal and economic problems, along with most of the states where getting many jobs doesn’t require you to pay union dues, the economic “recovery,” such as it is, would be somewhere between awfully weak to nonexistent. Yet Washington’s Democrats, led by the president, continue to insist on applying baked-over versions of the policy choices which have left the country as a whole feeling blue during his three years in office.

(Thumbnail on PJM homepage assembled from multiple Shutterstock.com images.)

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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