Right to Work the wrong path for W.Va.

“I can tell you of a land where they eat and drink out of golden vessels and gold is as cheap as iron.”

Those words spoken to 16th-century Spanish explorer Vasco Nunez de Balboa, produced the legend of El Dorado, a mythical city whose streets were said to be paved in gold and whose legend inflamed the imaginations of treasure seekers from the Spanish conquistadores to Sir Walter Raleigh and, more recently, West Virginia state Delegate Eric Householder, except that Householder’s El Dorado goes by a different name. He calls it “South Carolina”.

In Householder’s mind South Carolina is a place of burgeoning prosperity where unemployment and taxes are low, wages are high, government is small, and citizens are less dependent. And South Carolina isn’t the only such place. According to Householder, seven other states – North Carolina, Georgia, Texas, Oklahoma, Florida, Tennessee, and Virginia – are similarly flourishing because, as he maintains, they have “Right to Work” laws — a policy he wants West Virginia to adopt.

Right to Work laws are designed to counteract “big labor” and “forced unionism,” the standard villains of conservative ideology. They, along with safety net programs that redistribute incomes, are held to be the causes of all economic misery. So, it’s understandable that dogmatists such as Householder assume that states that have done the most to rid themselves of these bugaboos enjoy greater prosperity.

But, do they? Let’s look at the measures Householder listed.

On unemployment, the Bureau of Labor Statistics July report ranks four of Householder’s Right to Work states with unemployment rates below the national average — Oklahoma, Virginia, Texas, and Florida. But, the other four — South Carolina, Tennessee, Georgia, and North Carolina — have rates that are among the worst in the nation. Meanwhile, West Virginia has a lower unemployment rate than all but two, Oklahoma and Virginia. Taken togther, the unemployment rate in Householder’s Right To Work states is no better than the national average and significantly worse than West Virginia’s.

Regarding wages — implying, as Householder does, that Right to Work laws raise wages is disingenuous since the way in which these laws theoretically make states “more competitive” is by driving wages down. So, it’s not surprising that 2011 Economic Policy Institute data show that only one of Householder’s Right to Work States – Virginia — had a median wage higher than the national median. The other seven all had wage rates below the national median and five of them were lower than West Virginia’s. Taken together wage levels in Householder’s Right-to-Work States are significantly worse than in the nation as a whole.

On taxes, the Tax Foundation 2013 Business Tax Climate Index, which combines personal and corporate taxes, ranks three of Householder’s states — No. 5 Florida, No. 9 Texas, and No. 15 Tennessee – in the top half of all states. But, five are in the bottom half — No. 27 Virginia, No. 34 Georgia, No. 35 Oklahoma, No. 36 South Carolina, and No. 44 North Carolina. West Virginia outperforms most of them, coming in at No. 23. Taken together Householder’s Right-to-Work states have worse-than-average tax rates.

On dependency: Dependency can be looked at in two ways — rates of dependency among citizens and the dependency of each state on federal government spending. For dependency among citizens, we’ll look at the percent of residents who participate in the Supplemental Nutrition Assistance Program, commonly known as food stamps. Seven of Householder’s Right-To-Work states rank in the top half of states for dependency on food stamps, including five of the top fifteen – No. 5 Tennessee, No. 8 Georgia, No. 10 Florida, No. 11 South Carolina, No.14 North Carolina. Only No. 39 Virginia is not in the top half. West Virginia ranks 12th. Taken together, Householder’s Right-to-Work states are significantly more dependent on food stamps than the rest of the nation.

As for state dependency on the federal government, the Internal Revenue Service’s summary of Federal Taxation and Spending shows that three of Householder’s Right-to Work-states — Texas, North Carolina, and Georgia — contribute more in taxes than they receive in federal expenditures, but five — Oklahoma, Florida, Tennessee, South Carolina, and Virginia — receive more than they contribute. To use Mitt Romney’s formulation, Householder’s Right-to-Work states are more likely to be takers than makers.

On the size of government: This is the only category in which a majority of Householder’s Right-to-Work states fulfilled his promise. According to the Tax Foundation, all eight states fell below national averages for per capita state spending and for growth in spending over the past decade. On the other hand, West Virginia’s per capita spending is already about average for the eight states and our rate of growth in per capita spending is actually less than it is in any of Householder’s states. So, there isn’t much for West Virginia to emulate.

In summary, while the economies of Householder’s Right-to-Work states grew faster than the nation’s since the year 2000 – or at least they did until the 2008 economic crash — the growth failed to translate into prosperity for the people of those states. Why? For two decades nearly all economic gains have been allocated to the top 5 percent of income earners. Right-to-Work laws exacerbated that inequity. Now that you know the consequences, as Eric Householder evidently did not, you can judge whether it’s a path West Virginia should take.

— Sean O’Leary can be contacted at seanholeary@gmail.com. This column and others may also be seen at www.the-state-of-my-state.com

 

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