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Research Roundup: ALEC Economic Rankings Debunked, Big Business and the Minimum Wage, and More

Reports by the Iowa Policy Project on why ALEC’s economic policy recommendations are the wrong prescription for state prosperity, In The Public Interest on ALEC’s privatization agenda, the National Employment Law Project on big business, corporate profits, and the minimum wage, the State Budget Crisis Task Force on structural fiscal threats to the states, the National Regulatory Research Institute on the status of telecommunications deregulation legislation in 2012, the Commonwealth Fund on the status of state actions to establish health exchanges, The Sentencing Project on the extent of felon disenfranchisement in different states, the National Institute on Retirement Security on the role of defined benefit pensions in reducing economic hardships among older households, and Citizens for Tax Justice on the state-by-state effects of tax breaks for 13 million working families at stake in the federal tax debate.


The Doctor is Out to Lunch: ALEC’s Recommendations Wrong Prescription for State Prosperity — The policy prescriptions of the American Legislative Exchange Council (ALEC) are not a recipe for growth and prosperity — if anything, they are the opposite. That’s the conclusion of this brief by Peter S. Fisher, Research Director of the Iowa Policy Project, which takes a look at the yearly ALEC-Laffer Economic Outlook rankings and judges their validity against the same performance measures they themselves rely on. Taking a look at ALEC’s 2007 rankings and each state’s economic performance in the years since, the analysis finds that there is “virtually no relation” between a state’s ranking and the growth in GDP, while for other measures such as job growth, the correlation was stronger — but in the wrong direction. “The more a state’s policies mirrored the ALEC low-tax, regressive taxation, limited government agenda, the lower the state’s per capita income and median family income throughout the period 2007-2010, and the higher the poverty rate,” writes the author, adding that the numbers show ALEC’s state economic rankings to be “a recipe for economic inequality, low wages, and stagnant incomes that at the same time deprive state and local governments of the revenue needed to maintain the public infrastructure and education systems that are the underpinnings of long term economic growth.”

Profiting from Public Dollars: ALEC’s Privatization AgendaIn The Public Interest published this brief outlining the role of the American Legislative Exchange Council (ALEC) and their corporate backers in promoting costly state privatization efforts in many different sectors through model bills that “have the potential to generate lucrative sources of revenue for ALEC’s corporate sponsors.” The agenda of a number of ALEC task forces are explored, including efforts to make it easier for companies to influence outcomes of privatization proposals, to encourage states to contract with companies to provide “virtual” schools that would be recognized as public schools, to incentivize states to privatize vital health programs, and to force state governments to sell off public prisons to private for-profit corporations. The brief summarizes some highlights from a forthcoming In The Public Interest report, “Profiting from Public Dollars: How ALEC and its members promote privatization of government services and assets.”

Big Business, Corporate Profits, and the Minimum Wage — This data brief by the National Employment Law Project takes a look at the connection between skyrocketing corporate profits and stagnating wages for workers earning at or near the minimum wage, finding that “the majority of America’s lowest‐paid workers are employed by large corporations, not small businesses, and that most of the largest low‐wage employers have recovered from the recession and are in a strong financial position.” Among the report’s specific conclusions are that: 66 percent of low‐wage workers are employed by large corporations with over 100 employees, 92 percent of the largest 50 employers of low-wage workers had largely recovered from the recession and were profitable last year, and the average compensation for top executives at these companies was an astonishing $9.4 million, while the companies had returned $174.8 billion to shareholders in dividends or share buybacks over the past five years.

Report of the State Budget Crisis Task Force — This extensive report from the State Budget Crisis Task Force, a group co-chaired by former New York Lt. Gov. Richard Ravitch and former Federal Reserve Chairman Paul Volcker, examines current and future fiscal threats to six large states (California, Illinois, New Jersey, New York, Texas, and Virginia) and concludes that there are “persistent and growing structural deficits in many states which threaten their fiscal sustainability.” Among the major threats identified are growth in Medicaid spending, the underfunding of retirement programs, eroding and volatile tax bases, spending cuts and the focus on deficit reduction at the federal level, and fiscal stress in local governments. While the report mostly stays away from making recommendations on tax structures, the co-chairs of the task force strongly note that it is their view that “the existing trajectory of state spending, taxation, and administrative practices cannot be sustained,” and that “the basic problem is not cyclical. It is structural.”

The Year in Review: The Status of Telecommunications Deregulation in 2012 — A 2012 year in review report by the National Regulatory Research Institute rounds up the state telecommunications deregulation legislation enacted between 2010 and 2012, highlighting some of the key provisions of the bills enacted into law. In that time, the report notes, 21 states enacted laws that limit what state public utility commissions can regulate, with nine of the states having “severely limited or completely eliminated Carriers of Last Resort obligations and the requirement that carriers provide a tariffed basic local service product.” The report also highlights that all of these states eliminated public utility commission oversight of Voice over Internet Protocol (VoIP) other IP-enabled services, while, as of April, deregulation legislation was pending in an additional 14 states.

State Action to Establish Health Insurance Exchanges — This updated interactive map by the Commonwealth Fund allows users to quickly access information about the status of state action on the health insurance exchanges provided for under the Affordable Care Act. In all, as of July, sixteen states and Washington, D.C. had passed legislation or seen their governors issue an executive order establishing an exchange. Only eight states had indicated they plan not to pursue a state-run exchange, while another 24 are categorized as studying the establishment of an exchange or pursuing alternate options. This resource also details some key aspects of existing exchanges, state legislation, and executive orders for the sixteen states that have established exchanges.

State-Level Estimates of Felon Disenfranchisement in the United States, 2010The Sentencing Project published this report co-authored by professors at the University of Minnesota and New York University looking at the effect of state laws restricting voting rights for those convicted of felonies. According to the report, approximately 2.5 of the total voting age population in the United States is disenfranchised due to a current or former felony conviction — a number equal to 1 out of every 40 American adults. Other key findings in the report include that in six states (Alabama, Florida, Kentucky, Mississippi, Tennessee, and Virginia) over 7 percent of the adult population is disenfranchised and that, nationally, 1 out of every 13 African Americans of voting age is disenfranchised — including 23 percent of African American adults in Florida, 22 percent in Kentucky, and 20 percent in Virginia.

The Pension Factor 2012: The Role of Defined Benefit Pensions in Reducing Elder Economic Hardships — This new study from the National Institute on Retirement Security takes a look at households with defined benefit pension income and concludes that such income continues to “play a vital role in reducing the risk of poverty and material hardships among older Americans.” According to the report, poverty rates among older households lacking pension income were about nine times greater than the rates among older households with DB pension income in 2010 — a ratio that is up from six times greater in 2006. According to the report, governments saved by spending about $7.9 billion less on public assistance to older households because of this income. The analysis concludes that “households with lifetime pension income are far less likely to experience food, shelter, and health care hardship, and less reliant on public assistance,” and that “pensions are a factor in preventing middle class Americans from slipping into poverty during retirement.”

The Debate over Tax Cuts: It’s Not Just About the Rich: Tax Breaks for 13 Million Working Families with 26 Million Children Are Also at StakeCitizens for Tax Justice released this state-by-state analysis of the effects of the tax credits for working families with children that are set to expire at the end of 2012 — the child care tax credit and the expansion of the earned income tax credit. These provisions would affect over 13 million working families, including 25.7 million children, in 2013. With Congress threatening to allow both of the provisions to expire, a total of $11.1 billion in tax savings is at stake — virtually all of which would go to families earning less than $50,000.