I’m not sure of the origin of the now cliché phrase “Never waste a good crisis,” but there’s no doubt that conservative and corporate forces have been the exemplary practitioners of this craft.
In Connecticut, groups like CBIA and most Republicans have been disciplined and focused on the idea that Connecticut is an expensive place to do business, in terms of taxes and labor, and that lowering those costs is the key to restoring job growth. It’s the same trickle-down economics of yesteryear – and an argument that hasn’t withstood much close scrutiny. But they’ve repeated the line with such persistence that it’s been accepted as conventional wisdom.
There’s no disagreement that Connecticut’s economy is sagging. But we are, after all, in a global recession. So I thought it would be interesting to see how Connecticut really stacks up with other states. Do states with low taxes and low-wages also have low unemployment? As the legislature debates a proposal to close corporate tax loopholes, for example, how are other states that already have “combined reporting” doing in terms of employment?
Here are a few general conclusions:
- Of the 23 state’s that have “combined reporting” (a way to close corporate tax loopholes), 15 of them have unemployment rates that are lower in Connecticut. Eight have unemployment rates higher than Connecticut (and those eight include Michigan, which pretty clearly has a different set of problems).
- 18 States have a top income tax rate higher than Connecticut. Of those, 10 have lower unemployment than Connecticut and 8 have higher unemployment in Connecticut.
Some of the places that are often trumpeted by CBIA as “low-cost” alternatives to Connecticut are hardly weathering the economic storm better than we are. Alabama, for example, doesn’t have a minimum wage above the federal minimum, has a low personal income tax rate, and – like Connecticut – does not have “combined reporting” laws that prevent corporate tax loopholes. The median income for a family of four there is about two-thirds that of Connecticut. Have these business-friendly conditions helped Alabama avoid the recession? Not at all. Alabama’s unemployment rate is two percent higher than Connecticut’s. Florida – another low-tax and low-wage state is even worse: unemployment there is over 12%.
What about Connecticut’s dubious distinction as a state that is shedding jobs faster than anywhere else in the nation? According to the Bureau of Labor Statistics, it just isn’t true. Connecticut is not doing well in this area, to be sure, but in the past year, Kansas – with about two-thirds of our population – lost more jobs. Nevada, also with roughly two-thirds of our population, lost 15,000 more jobs than Connecticut. The closest state to Connecticut in population is Oklahoma (who knew?), which also lost more jobs than Connecticut. I’m guessing blame for this lies with some poor state legislator who suggested that Oklahoma employees should get paid sick days.
And in fact, many of the so-called “high-cost” states have, in fact, done better at preserving jobs. Vermont, with a minimum wage over $8.00 per hour, a top income tax rate that is about 2.5% higher than Connecticut’s, and combined reporting still manages to have unemployment 3% lower than the country as a whole (2.5% lower than Connecticut). Then there’s Hawaii, with the 6th highest median income in the country, a combined reporting law, and an income tax on the wealthy of 11%. Sure enough Hawaii still has an unemployment rate more than 2% lower than Connecticut.
So let’s make Connecticut more like Hawaii. What legislator could argue with that?