Few documents have ever been more misleading than a 116-page U.S. Chamber of Commerce report this spring on how state employment laws affect job growth, a study that can be read as a direct attack on California and its employment laws.
For just one example: The Chamber ranks Mississippi high in its “good” category while listing California dead last when it comes to the way state laws affect both hiring by private businesses and the creation of new businesses.
And yet…only 139 new businesses opened in 2009 (the most recent year the Chamber could study) in Mississippi, compared with 10,087 in California. This state contains a little over 12 percent of the national population, but 19.5 percent of all new businesses opened here, compared with Mississippi's .00026 percent. The California number, thus, far exceeds the state's proportion of the national populace, so some business people must believe things are not so bad here.
The Rating Not a Random Act
The full report can be read at http://www.uschamber.com/sites/default/files/reports/201103WFI_StateBook.pdf.
Why compare California and Mississippi? Because the Chamber chose Mississippi’s Republican Gov. Haley Barbour to present its report and because that report ranks California at the bottom in many categories, while laughably putting Mississippi near the top.
It’s not surprising that Barbour, a jovial former national chairman of the GOP, likely 2012 Presidential candidate and forever a vocal booster of his state, immediately seized on the report to defend the fact that Mississippi has no labor laws going beyond the most basic federal requirements. No laws regarding how much notice companies must give before laying off workers. No laws on how companies handle unused vacation time accrued by employees. No minimum wage above the federal level of $7.25 per hour (California’s has been $8 per hour since 2008).
It was just about the first time anyone has ever given Mississippi a positive rating in anything. That state, after all, has the lowest per-capita income in America, the lowest life-expectancy and ranks last in the category of child welfare, according to the Annie E. Casey Foundation. Among other sad measures.
Barbour will surely use the Chamber’s high ratings for his state as part of his upcoming campaign. Don’t expect him to make much mention of the other realities.
The Chamber report doesn’t mention them, either, but some others are reading that report as a kind of reverse guide to how well-off citizens are in the many states. The lower the ranking in the Chamber’s employment-encouragement index, generally speaking, the higher the standard of living.
Talk About Poverty
Where more than 25 percent of Mississippians live below the federal poverty line of $22,000 per year income for a family of four, that figure is barely 15 percent for California, despite its having by far the nation’s highest number of illegal immigrants, who are often paid below minimum wage. This suggests that many of the jobs that keep Mississippi’s unemployment rate right at the national average of about 9.7 percent (compared with 12.2 percent here) are extremely low-paid. That's despite the jobs in three new Mississippi factories Barbour loves to tout, plants opened by Toyota, General Electric and the Russian steel company Severstal.
One thing for sure: Regardless of how unfounded and unreliable the Chamber’s rankings of employment encouragement might be, this state’s Chamber of Commerce and other business lobbies will be using them for years in efforts to soften business-related regulations here.
But there is little or no evidence to back the claim that low minimum wages equal high employment. Washington state, for one, has America’s highest minimum hourly wage at $8.55 per hour, while Mississippi uses the federal minimum, which is $1.30 lower. Yet Mississippi’s unemployment rate hovers around half a percent higher than Washington’s.
It’s interesting to note that keeping Mississippi company in the Chamber report’s “good” category are poverty-ridden states like Alabama, South Carolina and Texas (where more than 21 percent of the populace lives in poverty). Meanwhile, accompanying California in the “poor” employment encouragement category are states like New York, Oregon, Washington, Hawaii, Pennsylvania and Connecticut. Where would you rather live?
Plenty of economists are critical of the Chamber study, saying many policies it claims are bad for job creation have little or no relation to creating jobs. One example might be laws protecting corporate whistle-blowers from firing. Another could be laws like the California measure that requires employees be given breaks for meals and rest.
There is, of course, another way to look at the entire report, to wit that it is intended as a tool for the Chamber’s member businesses to use when lobbying for lighter state regulations. In fact, that’s about the only sensible way to read it – which means anyone who takes this report to heart makes a big mistake.
Mr. Elias may be contacted at tdelias@aol.com.
His book, “The Burzynski Breakthrough,” is available in a soft cover, fourth edition. For more Elias columns, visit www.californiafocus.net
