April 22, 2009

Precursors of Unemployment

Monique Chartier

A forum entitled "A Budget that Reflects East Providence and Pawtucket's Priorities" and sponsored by

the Campaign for Rhode Island's Priorities, the Rhode Island Foster Parents Association, the Unitarian Universalist Legislative Ministry-RI, the Rhode Island Chapter of the National Organization for Women, the Service Employees International Union, and the RI Federation of Teachers and Health Professionals

will take place this Monday in East Providence. The flyer announcing the event asks

How will the [state] budget affect our schools, our health care, our elderly care, and higher education? Funding for essential programs and services has been drastically cut over the past several years, including cuts to nursing homes, child care, hospitals, Head Start, and even our schools. Costs for health care and higher education have been skyrocketing. Can the residents of East Providence and Pawtucket expect this to continue? Will our State Representatives and Senators advocate for the right tax and budget choices that will help strengthen the economy in Rhode Island?

Well, I couldn't agree more about the importance of the last item. But inasmuch as a prior sentence deplores the cuts to various services, it is difficult to believe that the forum will not come to the conclusion that the "right tax and budget choices" means, regretfully, raising taxes, with other considerations such as the impact on the economy of such a course of action a distant second.

The timing is propitious, therefore, of an analysis by Jim Lindgren at the Volokh Conspiracy about the correlation between states with high unemployment and the level of their unionization and income tax rates.

With sincere apologies to my union friends (but not my tax-raising aquaintances), here goes.

As the nation considers increasing marginal tax rates and facilitating greater union membership, I thought it might make sense to look at the states with the highest and lowest unemployment rates to see if there might be any relevant patterns. The six states with the highest unemployment rates are:
12.6% Michigan

12.1% Oregon

11.4% South Carolina

11.2% California

10.8% North Carolina

10.5% Rhode Island

And the result?

Putting this together, 3 of the 6 states with the highest unemployment (California, Oregon, and Rhode Island) have both high marginal income tax rates and high union representation. Michigan has high unionization but moderate marginal income tax rates, and the Carolinas have high marginal income taxes, but low unionization rates.

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Just read the flyer... what a hoot. Just might attend for kicks. Justin will appreciate this part of it:

"Special guest Tom Sgouros, editor of the Rhode Island Policy Reporter, will moderate the discussion."

When I think of Tom, "moderate" isn't the first word that comes to mind. Sounds fair and balanced. lol

PS On a diametrically opposed note, tonight's meeting of the East Providence Taxpayers Association went well. Should be a good few months ahead.

Posted by: Will at April 23, 2009 12:51 AM

I was wondering when someone would bring up those bastions of unionism in the Carolinas, often held up as bright and shining examples.
That'll give Gov. Sanford something to brag about in his presidential campaign, I'm sure.

Posted by: rhody at April 23, 2009 1:02 AM

Not just high unionization rates are a factor, but Democrat control (which in turn are controlled by unions - particularly public sector unions).

In turn, this causes high taxes.

This in turn causes employers to flee.

The Rustbelt states are notable for long-time Democrat control - Michigan, Illinois, New York, Massachusetts (outside of the 128 belt), Rhode Island.

California is now transforming into a Rustbelt state, thanks to Democrat control (and public sector union control of the Democrats).

In fact, it is difficult to think of any area that has been controlled by Democrats for a long period of time that has done well economically in recent years.

Posted by: Tom W at April 23, 2009 11:01 PM
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