Four years ago, North Carolina’s unemployment rate was above 10 percent and the state still bore the effects of its battering in the recession. Many rural towns faced jobless rates of more than 20 percent.
But in 2013, a combination of the biggest tax rate reductions in the state’s history and a gutsy but controversial unemployment insurance reform supercharged the state’s economy and has even helped finance budget surpluses.
As Wells Fargo’s Economics Group recently put it: “North Carolina’s economy has shifted into high gear. Hiring has picked up across nearly every industry.”
The tax cut slashed the state’s top personal income tax rate to 5.75 percent, near the regional average, from 7.75 percent, which had been the highest in the South. The corporate tax rate was cut to 5 percent from 6.9 percent. The estate tax was eliminated.
Next came the novel tough-love unemployment insurance reforms. The state became the first in the nation to reject “free” federal payments for extended unemployment benefits and reduce the weeks of benefits to 20 from 26. The maximum weekly dollar amount of payments, $535, which had been among the highest in the nation, was trimmed to a maximum of $350 a week. As a result, tens of thousands of Carolinians left the unemployment rolls.
[…]After a few months, the unemployment rate started to decline rapidly and job growth climbed. Not just a little. Nearly 200,000 jobs have been added since 2013 and the unemployment rate has fallen to 5.5 percent from 7.9 percent.
[…]Even with lower rates, tax revenues are up about 6 percent this year according to the state budget office. On May 6, Gov. McCrory announced that the state has a budget surplus of $400 million while many other states are scrambling to fill gaps.
[…]Because North Carolina built in a trigger mechanism that applies excess revenues to corporate rate cuts, the business tax has fallen to 5 percent from 6.9 percent, and next year it drops to 4 percent.
Although North Carolina is too liberal for me, it is nice to see them turning their economy around with tax cuts on job creators, and benefit cuts to those who choose not to work.
At the end of the day, the only real security that any of us has comes from the skills we have developed by working and the work experience we put on our resumes. The economy is in for some harsh conditions going forward. The more we can get Americans working, the better they will be able to weather the coming storm. A little kick in the ass might hurt, but in the long-term, it’s for the best.
Wisconsin is poised this week to become the 25th “right-to-work state,” ending forced unionization and allowing individual workers to decide if they want to join a union or not.
The Wisconsin Senate just recently passed right-to-work, and our sources in Madison say that the House, which is controlled by Republicans, will enact a similar law in the days ahead.
Republican Gov. Scott Walker, a leading presidential candidate, is sure to sign the bill when it gets to his desk. “This isn’t anti-union,” insists Walker. “It restores worker rights and brings jobs back to Wisconsin.”
Some 3,000 liberal protesters stormed the Capitol in Madison over the weekend to reverse the momentum for the new law. This isn’t Walker’s first dust-up with union bosses. Four years ago, nearly 100,000 activists grabbed nationwide headlines when they protested his reforms in Wisconsin’s collective bargaining process with public employee unions.
If the new law passes, Wisconsin would join two other blue-collar, industrial Midwestern states — Michigan and Indiana — to recently adopt right-to-work. “If you had told me five years ago that right-to-work would become law in Indiana, Michigan and Wisconsin, I wouldn’t have thought it was even remotely possible,” says economist Arthur Laffer.
Laffer and I have conducted substantial economic research showing three times the pace of jobs gains in right-to-work states than in the states with forced union rules that predominate in deep blue states such as California, New York and Illinois.
In the 2003-13 period, jobs were up by 8.6% in right-to-work states, and up only 3.7% in forced union states. Most of the southern states, with the exception of Kentucky, are right-to-work
Many auto jobs in recent decades have moved out of Michigan and Ohio and into states such as Texas, Alabama and South Carolina, due in part to right-to-work laws in Dixie.
But as union power recedes in the Midwestern states, many of the region’s governors see factory jobs returning to their backyards. “Right to work is already lowering unemployment in Indiana and causing a manufacturing revival here,” says Gov. Mike Pence.
Companies are more attracted to right-to-work states, and that means more jobs become available.
Here is Congressional testimony from James Sherk, senior policy analyst in labor economics at The Heritage Foundation. I really recommend bookmarking this article. Even though it is very long, it is up-to-date and comprehensive. I am linking to it because he responds to objections to right-to-work laws raised by unions.
Do right-to-work laws hurt the middle class?:
Union Strength and the Middle Class. Unions and their supporters frequently claim the opposite: that unions helped build the middle class and weaker unions hurt all workers—not just union members. To make this point they often juxtapose the decline of union membership since the late 1960s with the share of income going to the middle class. The Economic Policy Institute did exactly this when criticizing the possibility of RTW in Wisconsin. These comparisons suffer from two problems. First, the absolute standards of living for middle-class workers have risen substantially over the past generation. Inflation-adjusted market earnings rose by one-fifth for middle-class workers between 1979 and 2011. After-tax incomes rose at an even faster pace. Middle-class workers today enjoy substantially higher standards of living than their counterparts in the 1970s.
Secondly, these figures conflate correlation with causation. During the time period EPI examined union membership correlates well with their measure of middle-class income shares. Extending the graph back another two decades eliminates this correlation. U.S. union density surged in the late 1930s and during World War II. It peaked at about a third of the overall economy and private-sector workforce in the mid-1950s. During this time period America had few global competitors. From the mid-1950s onward global competition increased and U.S. union membership steadily declined. Between 1954 and 1970 union density dropped from 34.7 percent to 27.3 percent. Unions lost over a fifth of their support in just over a decade and a half.
During this period middle-class income and living standards grew rapidly. No one remembers the 1950s and 1960s as bad for the middle class, despite the substantial de-unionization that occurred. Over a longer historical period changes in U.S. union strength show little correlation with middle-class income shares. Liberal analysts come to their conclusion by looking only at the historical period in which the two trends align.
Do right-to-work states have lower wages?:
Unions Argue RTW Hurts Wages. In the same vein, unions argue that RTW laws lower wages. As the Wisconsin AFL-CIO recently claimed:
These anti-worker Right To Work laws just force all working families to work harder for lower pay and less benefits, whether they’re in a union or not. The average worker makes about $5,000 less and pensions are lower and less secure in Right to Work states.
This statement contains a degree of truth: average wages in right-to-work states are approximately that much lower than in non-RTW states. This happens because right-to-work states also have below-average costs of living (COL). Virtually the entire South has passed RTW, but no Northeastern states have passed an RTW law. The Northeast has higher COL and higher average wages; the South has lower living costs and lower wages.
[…]All but one right-to-work state has living costs at or below the national average. All ten of the states with the highest COL have compulsory union dues. Analyses that control for these COL differences have historically found that RTW has no deleterious effects on workers’ real purchasing power.
Recently the Economic Policy Institute has claimed that workers in RTW states make 3 percent less than workers without RTW protection, even after controlling for living costs. Heritage replicated this analysis and found that EPI made two major mistakes: it included improper control variables and did not account for measurement error in their COL variables. These mistakes drive their results. Correcting these mistakes shows that private-sector wages have no statistically detectable correlation with RTW laws. The supplement and the appendices to this testimony explain the technical details of this replication. Properly measured, RTW laws have no effect on wages in the private sector.
Although the history of unions shows that unions were a valuable and necessary check on the power of greedy corporations in times past, today unions are using the dues they collect from workers to elect Democrats. The vast majority of political contributions made by the big unions go to Democrats.
So if you oppose what Democrat politicians are doing, it makes sense to free workers from being forced to pay union dues for causes that are against their values. The average rank-and-file member of a union does not share Democrat values on things like abortion and gay marriage, in my opinion. Why should they be forced to pay union dues that go to elect politicians who oppose their values?
I already knew that Hillary Clinton was pro-gay-marriage, and radically pro-abortion, but it turns out that she is a hypocrite on women’s issues, as well.
During her time as senator of New York, Hillary Rodham Clinton paid her female staffers 72 cents for every dollar she paid men, according to a new Washington Free Beacon report.
From 2002 to 2008, the median annual salary for Mrs. Clinton’s female staffers was $15,708.38 less than what was paid to men, the report said. Women earned a slightly higher median salary than men in 2005, coming in at $1.04. But in 2006, they earned 65 cents for each dollar men earned, and in 2008, they earned only 63 cents on the dollar, The Free Beacon reported.
[…]Mrs. Clinton has spoken against wage inequality in the past. In April, she ironically tweeted that “20 years ago, women made 72 cents on the dollar to men. Today it’s still just 77 cents. More work to do. #EqualPay #NoCeilings.”
Meanwhile, she is making “equal pay for women” her top priority.
Hillary Clinton lamented the number of women in the fields of science, technology, engineering and math at a Silicon Valley women’s conference on Tuesday, and called for more action to close the wage gap.
[…]In advocating for closing the pay gap, Clinton also endorsed the impassioned plea for wage equality made by Patricia Arquette in her Oscars acceptance speech for Best Supporting Actress.
“Up and down the ladder many women are paid less for the same work, which is why we all cheered at Patricia Arquette’s speech at the Oscars — because she’s right, it’s time to have wage equality once and for all,” Clinton said.
All right, let’s take a look at the facts on the so-called “pay gap” between men and women.
The official Bureau of Labor Department statistics show that the median earnings of full-time female workers is 77 percent of the median earnings of full-time male workers. But that is very different than “77 cents on the dollar for doing the same work as men.” The latter gives the impression that a man and a woman standing next to each other doing the same job for the same number of hours get paid different salaries. That’s not at all the case. “Full time” officially means 35 hours, but men work more hours than women. That’s the first problem: We could be comparing men working 40 hours to women working 35.
How to get a more accurate measure? First, instead of comparing annual wages, start by comparing average weekly wages. This is considered a slightly more accurate measure because it eliminates variables like time off during the year or annual bonuses (and yes, men get higher bonuses, but let’s shelve that for a moment in our quest for a pure wage gap number). By this measure, women earn 81 percent of what men earn, although it varies widely by race. African-American women, for example, earn 94 percent of what African-American men earn in a typical week. Then, when you restrict the comparison to men and women working 40 hours a week, the gap narrows to 87 percent.
But we’re still not close to measuring women “doing the same work as men.” For that, we’d have to adjust for many other factors that go into determining salary. Economists Francine Blau and Lawrence Kahn did that in a recent paper, “The Gender Pay Gap.”.”They first accounted for education and experience. That didn’t shift the gap very much, because women generally have at least as much and usually more education than men, and since the 1980s they have been gaining the experience. The fact that men are more likely to be in unions and have their salaries protected accounts for about 4 percent of the gap. The big differences are in occupation and industry. Women congregate in different professions than men do, and the largely male professions tend to be higher-paying. If you account for those differences, and then compare a woman and a man doing the same job, the pay gap narrows to 91 percent. So, you could accurately say in that Obama ad that, “women get paid 91 cents on the dollar for doing the same work as men.”
I believe that the remainder of the gap can be accounted for by looking at other voluntary factors that differentiate men and women.
The Heritage Foundation says that a recent study puts the number at 95 cents per dollar.
Excerpt:
Women are more likely than men to work in industries with more flexible schedules. Women are also more likely to spend time outside the labor force to care for children. These choices have benefits, but they also reduce pay—for both men and women. When economists control for such factors, they find the gender gap largely disappears.
A 2009 study commissioned by the Department of Labor found that after controlling for occupation, experience, and other choices, women earn 95 percent as much as men do. In 2005, June O’Neil, the former director of the Congressional Budget Office, found that “There is no gender gap in wages among men and women with similar family roles.” Different choices—not discrimination—account for different employment and wage outcomes.
A popular article by Carrie Lukas in the Wall Street Journal agrees.
Excerpt:
The Department of Labor’s Time Use survey shows that full-time working women spend an average of 8.01 hours per day on the job, compared to 8.75 hours for full-time working men. One would expect that someone who works 9% more would also earn more. This one fact alone accounts for more than a third of the wage gap.
[…]Recent studies have shown that the wage gap shrinks—or even reverses—when relevant factors are taken into account and comparisons are made between men and women in similar circumstances. In a 2010 study of single, childless urban workers between the ages of 22 and 30, the research firm Reach Advisors found that women earned an average of 8% more than their male counterparts. Given that women are outpacing men in educational attainment, and that our economy is increasingly geared toward knowledge-based jobs, it makes sense that women’s earnings are going up compared to men’s.
When women make different choices about education and labor that are more like what men choose, they earn just as much or more than men.
WINTERY KNIGHT 