Louisiana doesn’t exist in a vacuum, and neither does opportunity. When it comes to the harsh reality of attracting entrepreneurs, creating new jobs and keeping our kids and grandkids home, Louisiana must reckon with the reality that we’re competing against other states in a national — and global — race for a brighter future.
That’s why Louisiana’s economic environment matters, and why eliminating the state’s income tax is so critical — no matter how difficult it might be — before more employers and families flee our state. Naysayers try to shoot down reforms with scare tactics, as if it’s a zero-sum game in which tax cuts and a strong state can’t coexist. That’s why taking a holistic view of the state’s tax and budget policies is necessary. Eliminating the state’s income tax doesn’t have to mean massive cuts or a big tax swap. The Pelican Institute has proposed a plan to flatten personal income taxes, phase them out using extra taxpayer dollars collected above a stronger spending limit and budget responsibly to meet the needs of the state. When we’re talking about taxes, don’t forget whose money it is. Those are hard-earned dollars that belong to Louisianans, and taxes leave them with less money in their pocket for putting food on the table, gas in their tanks and capital for starting a business. Is it any wonder that so many Louisianans leave for states where they can keep more of their money? When families gather around their kitchen table or businesses look at their balance sheets, take-home pay makes a difference. That’s why Louisiana should phase out income taxes as soon as possible. This is fundamental to ensuring that Louisiana can compete with our neighbors, attract and retain talent and become an economic powerhouse. This is the comeback story we can write together. Originally published at The Advocate.
0 Comments
Louisiana’s budget at the beginning of fiscal year 2023 was $47 billion, which is an increase of 63 percent over the last decade. With a state population of 4.6 million, and shrinking, this is a spending burden of more than $10,000 per person. While nearly half of the money in the state budget comes from the federal government, Louisiana’s taxpayers are still on the hook for the total. This growth in state spending is unsustainable given the lack of growth in the state’s economy and a history of net outmigration. This report offers an overview and brief history of Louisiana’s operating and capital budgets and outlines how the state can begin to create a more responsible, sustainable budget over time that remains adaptable to the needs of citizens. Originally published at Pelican Institute. In Let People Prosper episode #39, I talk with Daniel Erspamer, CEO of Pelican Institute in Louisiana, about LA's economic issues, need for tax and budget reforms, and ways that let people prosper. Thank you for listening to the Let People Prosper Show podcast and for reading the newsletter for show notes and key economic insights.
On today's episode of the "Let People Prosper" show, which was recorded on March 31, 2023, I'm thankful to be joined by Daniel Erspamer, CEO of the Pelican Institute for Public Policy in Louisiana. We discuss the Pelican Institute’s “Louisiana’s Comeback Agenda” which includes:
Please like this video and subscribe to the channel if you enjoyed this podcast! Louisiana’s state government is the third most dependent state on federal funding. This is according to a report recently released by WalletHub that shows state rankings, with Alaska and Wyoming coming in at first and second. This follows another report release by the Tax Foundation that also ranks Louisiana as the third most dependent on federal funds, with only Montana and Wyoming ahead. This trend doesn’t appear to be getting any better. In 2014, federal funding comprised just 36% of the state’s total budget, whereas today, that percentage rises to 44%. The substantial increase in Louisiana’s use of federal funds from 2016 to 2017 is primarily due to Medicaid expansion. This program expanded the number of individuals eligible to receive Medicaid, and therefore increased the amount of money in the state’s general fund needed to match the additional federal funding. The match rate ranges from 30% to 40% per year based on personal income in the state. Disaster-related recovery has also contributed to the increased use of federal funds. Beginning in 2020 and 2021, Congress sent a large amount of federal funds due mostly to the COVID-19 pandemic response. There were also two major hurricanes, Laura and Ida, and numerous smaller hurricanes that also occurred in those fiscal years, which prompted an additional influx of federal funding from FEMA, HUD, and other agencies. Every program that is either partially or fully funded by the federal government comes with restrictions on its use – the “strings attached.” The substantial increase in Louisiana’s use of federal funds from 2016 to 2017 is primarily due to Medicaid expansion. This program expanded the number of individuals eligible to receive Medicaid, and therefore increased the amount of money in the state’s general fund needed to match the additional federal funding. The match rate ranges from 30% to 40% per year based on personal income in the state. Disaster-related recovery has also contributed to the increased use of federal funds. Beginning in 2020 and 2021, Congress sent a large amount of federal funds due mostly to the COVID-19 pandemic response. There were also two major hurricanes, Laura and Ida, and numerous smaller hurricanes that also occurred in those fiscal years, which prompted an additional influx of federal funding from FEMA, HUD, and other agencies Every program that is either partially or fully funded by the federal government comes with restrictions on its use – the “strings attached.” Most of the federal funding is used for social safety-net programs. Louisiana has the highest poverty rate in the nation, with nearly 20% of the population in poverty and even more on at least one safety-net program. State and local spending on these programs create an annual burden of nearly $3,000 per person.
To reduce the state’s dependence on federal funds for large line-items such as social safety net programs, the state must empower more individuals to realize their own self-sufficiency and ability to flourish. Work must once again become a priority. WalletHub’s report also compared states using their gross domestic product, or GDP, per capita compared to the amount of federal funds flowing into each state. Louisiana is placed in the “high dependency, low GDP” category, with a GDP ranking of 40th in the nation. Louisiana’s economy is not growing as fast as the rest of the country. With the highest poverty rate in the country, lawmakers need to pursue reforms that will make the state more economically competitive and increase opportunity for all Louisianans. Research has shown that more responsible state budgeting and spending, tax relief, and removing barriers for employers to start businesses and workers to work help reduce the number of people in poverty and reduce the dependency on the federal government by individuals and the state. According to WalletHub and the Tax Foundation, Utah is one of the least dependent states on federal funding. This is because the state reformed its social safety-net system decades ago, linking assistance with employment opportunities. This made Utah the state with the fastest economic and job recovery post pandemic. Louisiana should take a page out of Utah’s playbook and achieve the same. It’s time to reduce the state’s and individuals’ dependence on Congress and the national debt, which exceeds $31 trillion and is shared by all states including our own. And it’s time to get Louisiana off the top of another bad list and into a comeback story that we know is achievable. Originally published at Pelican Institute. Key Point: Louisiana’s labor market looks okay on the surface, but weaknesses remain because of poor policies which hinder economic opportunity across the state. There’s need for a comeback agenda. Louisiana’s Labor Market: The table below shows Louisiana’s labor market over time until the latest data for February 2023 from the U.S. Bureau of Labor Statistics. The establishment survey shows that net total nonfarm jobs in the state increased by 2,400 jobs last month (+0.1%), bringing total jobs to 46,600 jobs below the pre-shutdown level in February 2020. Private sector employment was up by 2,500 jobs (+0.2%) and government employment declined by 100 jobs (-0.1%) last month. Compared with a year ago, total employment was up by 35,500 jobs (+1.9%), which was the 7th lowest rate in the country, with the private sector adding 31,700 jobs (+2.0%) and the government adding 3,800 jobs (+1.2%). The household survey finds that the working-age population declined by 1,181 people (-0.03%) last month, down 12,944 people (-0.4%) over the last year, and down 31,247 people (-0.9%) since February 2020. But the civilian labor force rose by 8,240 people (+0.4%) last month, 4,312 people (+0.2%) over last year, and 9,465 people (+0.5%) since February 2020. These figures result in a labor force participation rate of 59.0% which is up from 58.3% since pre-shutdown but well below the 61.2% rate in June 2009 at the trough of the Great Recession. While the unemployment rate of 3.6% is substantially lower than the 5.2% rate in February 2020, a broader look at Louisiana’s labor market shows that Louisianans still face challenges, especially compared with neighboring states based on several measures. Economic Growth: The U.S. Bureau of Economic Analysis (BEA) recently provided the real (inflation-adjusted) gross domestic product (GDP) in Q3:2022 for Louisiana and other states. The following table shows how U.S. and Louisiana economies performed since 2020. The steep declines were during the shutdowns in 2020 in response to the COVID-19 pandemic, which was when the labor market suffered most. The decline in real GDP annualized growth of -3% in Q2:2022 was the 5th worst and increase of +2.5% in Q3:2022 ranked 23rd in the country. The BEA also reported that personal income in Louisiana grew at an annualized pace of +5.8% (ranked 19th) in Q2:2022 (tied +5.8% U.S. average) and of +2.5% (ranked 47th) in Q3:2022 (below +5.3% U.S. average). Bottom Line: Louisianans gained jobs in February but continue to feel the costs of restrictive policies that reduce opportunities for them to find well-paid jobs. Institutions matter to human flourishing but they are too weak in Louisiana according to the Fraser Institute’s ranking of 20th for economic freedom. And the Tax Foundation recently ranked the Pelican State as having the 12th worst business tax climate and 15th highest corporate income tax rate. The state has improved its tax code recently and lower taxes may happen soon, but excessive government spending, highly complicated personal income tax code, and poor business tax climate contribute to a net outmigration of Louisianans and a 19.6% poverty rate that ranks highest in the country. State and local policymakers should work to reverse this trend by passing pro-growth policies. Comeback Agenda: The Pelican Institute for Public Policy recently released “Louisiana’s Comeback Agenda” to turn things around in the Pelican State by doing the following:
Louisiana’s official poverty rate of 19.6% in 2021 was the highest in the country, according to the U.S. Census Bureau. The map below by American Progress shows that higher poverty rates tend to be in the south. There has been $25 trillion (inflation-adjusted) spent on the “War on Poverty” since it was declared in 1964 and about $1 trillion spent nationally every year, including billions of dollars in Louisiana. In fact, state and local spending per capita on public welfare in Louisiana of $2,924 ranked the 12th highest in the country in 2020.
Given so much taxpayer money has been spent on safety nets, shouldn’t there be fewer than one of every five people in poverty in the Pelican State? We believe so! This is a reason that the Pelican Institute recently released “Louisiana’s Comeback Agenda” to help struggling Louisianans find long-term self-sufficiency through a career instead of safety nets. The failures of the current government safety net system are expensive and costly. These programs should be easy for people to navigate, produce better outcomes, and empower individuals to return to the workforce. To better understand the extent to which programs are achieving these goals, lawmakers should call for routine performance audits. Performance audits dive deeper into the programs than typical financial audits by looking at not only expenditures of taxpayer money on these programs but also examining their outcomes. They provide recommendations for improving outcomes and lowering costs by identifying waste, duplication of efforts, and opportunities for consolidation or outsourcing. Routine, independent performance audits will determine whether programs effectively serve their intended purpose and hopefully make improvements if not. Fortunately, Louisiana’s Legislative Auditor’s office already does some of this. On its website, they note: “Performance Audit Services may audit any state agency, office, department, board, commission, institution, division, committee, program, or legal entity created within the legislative or executive branch of state government. The division conducts at least one performance audit of each executive branch department over a seven year period but performance audits may also result from topics of interest to the public, or requests from legislators, agencies, and other parties. Performance audits improve the transparency of state government.” And there have been some fruit from previous audits. In 2021, the Louisiana Legislative Auditor conducted a performance audit of the Louisiana Department of Children and Family Services’ administration of the Temporary Assistance for Needy Families (TANF) program in response to a request from the Louisiana Senate. The audit report revealed that “DCFS does not collect sufficient outcome information to determine the overall effectiveness of TANF-funded programs and initiatives. The current performance measures that DCFS uses to monitor and evaluate TANF programs are mostly output and process measures which are not useful in determining whether programs are effective at meeting TANF goals.” Auditors also found that “Louisiana has the lowest Work Participation Rate (WPR) in the nation at 3.5% for the federal fiscal year 2020. Under the WPR, states must engage a certain percentage of families receiving cash assistance in specific work activities, such as employment, job searches, or vocational training.” This valuable information was provided because a one-time performance audit of the TANF program was requested. Policymakers and the public would benefit from independent reviews like this on a recurring basis to identify program strengths and weaknesses and take swift action when necessary. By doing so, we can get taxpayer-provided resources to those who need them so they can find career paths out of poverty instead of being trapped living in poverty. Originally published at Pelican Institute. Louisiana is one of the most federally dependent states in the country, ranking 10th in a recent analysis.
The personal finance website WalletHub released a report Wednesday that ranked states’ dependency on the federal government based on three metrics: return on taxes paid to the federal government, share of federal jobs, and federal funding as a share of state revenue. The study ranked Louisiana in 10th overall with a score of 57.46, though the state government’s dependency ranked third. Residents’ dependency was ranked 22nd. Vance Ginn, chief economist at the Pelican Institute, told The Center Square much of Louisiana’s dependency derives from the state’s high poverty rate — 19.6% in 2022 — and the federal funds from various programs that flow into the state as a result. Forty-four percent of all state funding in Louisiana comes from Congress, and the Pelican Institute is working on “finding ways for Louisiana to have a comeback” that boosts businesses and employment, which in turn reduces poverty. “Louisiana is overly dependent on the federal government and the way to reduce that depends on getting more Louisianans back to work,” he said. “The way to get people back to work is removing barriers in the private sector, restraining government spending, providing tax relief, and reducing regulations.” The WalletHub analysis shows only state governments in Alaska and Wyoming receive more funding as a share of state revenues than Louisiana. Neighboring Mississippi ranked third overall in the study, while Arkansas was ranked 28th and Texas 29th. Other states in the top 10 most dependent on federal funding include Alaska in first, followed by West Virginia, Mississippi, Kentucky, New Mexico, Wyoming, South Carolina, Arizona, and Montana. New Jersey was ranked as the least dependent state, followed by Washington, Utah, Kansas, Illinois, California, Massachusetts, Iowa, Delaware, Nevada, and Colorado. The analysis also derived an average ranking for red and blue states, based on how residents voted in the 2020 presidential election. Democratic states produced an average ranking of 30.68, compared to the average ranking of 20.32 in Republican states, suggesting Republican states are generally more dependent than Democratic states. The study also examined how tax rates factor into the equation. Louisiana fell into the “high dependency, low tax” category, with a tax rate that’s ranked 25th in the country. Other analysis compared gross domestic product per capita compared to dependency on the federal government, and WalletHub placed Louisiana in the “high dependency, low GDP” category with a GDP per capita ranking of 40th. Originally published at The Center Square. It was a pleasure to help write this report with the Pelican Institute for Public Policy! Check it out. Today, the Pelican Institute for Public Policy released “Louisiana’s Comeback Agenda,” a bold vision for policy change in Louisiana and a statewide campaign to support the effort. The agenda is intended to serve as a guide for lawmakers, candidates, and community leaders to spark discussion and debate toward proven policies to bring jobs and opportunity to Louisiana. “Poor public policy decisions have caused Louisiana families to suffer for too long, and yet our southern neighbors like Texas, Florida, Tennessee, and North Carolina are thriving,” said Daniel Erspamer, CEO of the Pelican Institute. “Given our unmatched natural resources and cultural assets, Louisiana should be an economic powerhouse, and with the right policy decisions moving forward, it can be.” Louisiana’s Comeback Agenda focuses on six priority policy areas, outlining specific problems and offering specific solutions:
The plan was released just before the gubernatorial forum at the Pelican Institute’s annual Solutions Summit, where candidates were asked questions that dealt with the policy issues outlined in the plan. “We’ve spent months focused on finding real solutions to correct Louisiana’s poor decisions of the past and create increased opportunity for Louisiana’s people going forward,” said Erin Bendily, Vice President for Policy and Strategy at the Pelican Institute. “We’ve reviewed research, examined what other states are doing, and identified where our state can be more competitive. This agenda is the result of that work. We hope that this will help shape the policy discussions in Louisiana in the upcoming legislative session and as voters make important decisions about our state’s leadership and future this fall.” The agenda is the policy centerpiece of a major campaign that aims to bring transformational policy change to the Pelican State. The policy recommendations will be supported by a statewide speaking tour, an ambitious advertising campaign, grassroots activation and education, and legislative engagement and advocacy. “Ultimately, we want Louisiana to flourish, and the policy solutions in the Comeback Agenda are how we will get there,” said Erspamer. “The courage to make these crucial changes will require leadership, bold action, and a groundswell of support from every corner of Louisiana. Working together, we can write the next chapter of Louisiana’s story.” You can read the full paper here. Originally published here. Recent data from the Tax Foundation reveals that Louisiana has the highest average combined state and local sales tax rate of all the states. The bulk of this burden comes from its local taxes, the second highest in the nation. Pair these findings with Louisiana’s progressive income taxes of a graduated personal income tax rate of up to 4.25% and a corporate income tax rate max of 7.50%, and there’s no wonder why the Pelican State has a net out-migration problem. According to the Tax Foundation’s business tax climate index, the state ranks 12th worst in the country. Personal income taxes disincentivize work, and sales taxes can lead consumers to shop elsewhere and businesses to relocate. Employers and consumers want to be where they can keep more of what they earn, which helps explain why Florida, a state with no personal income taxes and a combined sales and local tax rate that’s more than 2.5-percentage points lower than Louisiana’s, had the highest net in-migration last year. Clearly, Louisiana’s tax code needs an overhaul if the growth and flourishing of Louisianans are priorities. But so does the state’s spending. To start, the Pelican State could consider joining the 14 states in the flat-income tax revolution. As more states flatten or remove their personal income taxes, Louisiana’s costly progressive income taxes will become much less appealing. Moving to flat personal and corporate income taxes would be a pro-growth step forward toward the eventual greater goal of eliminating these costly taxes, helping to compete with places like Florida and Texas, both of which don’t have personal income or corporate income taxes. Considering that the ultimate burden of government is how much it spends, reforming the tax code is just one piece of the puzzle. The excessive government spending at the state and local levels, compared with reasonable metrics like the rate of population growth plus inflation which helps measure the average taxpayer’s ability to pay for government spending, burdens Louisianans. Furthermore, Louisiana’s state and local debt is estimated to be about $7,600 per person owed by 2027, plus another nearly $28,000 per person owed in unfunded liabilities over time, so there are clearly massive barriers in the way for Louisianans to flourish. This is an issue because heavy spending leads to heavy burdens on state residents and decreased economic freedom, which Louisiana can’t afford to lose more of, considering how far it falls behind other states. Not surprisingly, Georgia, Florida, and Texas all boast lower spending than Louisiana, with improved economic freedom and poverty rates. Meanwhile, Louisiana has the highest official poverty rate in the country. The rankings for the Pelican State aren’t quite as bad as the highly progressive states of New York and California, which are hemorrhaging population to other states. Incentives matter, so people are voting with their feet to flee high cost, low freedom states.
Louisiana should start its comeback story by adopting a stronger spending limit, similar to the one recently passed in Texas. Spending caps help governments stay limited, which is imperative for states to thrive as it forces them to narrow their scope. In turn, the private sector has more elbow room to grow and people have greater ability to prosper. This would also help provide more surplus funds to put toward cutting, flattening, and eventually eliminating personal and corporate income taxes. Louisiana has too great of a culture and too much potential for it to be squandered by burdensome spending and taxes. It’s time for serious spending restraint and major tax reforms to provide the best path forward. Originally published at Pelican Institute. By Victor Skinner | The Center Square contributor | Feb 16, 2023
(The Center Square) – Louisiana’s combined state and local sales taxes are the highest in the nation, a reality critics contend is one of several tax and spending issues plaguing the state. The Tax Foundation released a report last week that compares state and local sales taxes across the nation, ranking states based on both the state sales tax and combined state and local rates. The research shows that as of Jan. 1, Louisiana’s state sales tax of 4.45% ranks 38th from the top. But when that figure is added to the average local tax rate of 5.10%, the state’s 9.55% combined rate becomes the highest among 50 states and the District of Columbia. "Sales taxes are just one part of an overall tax structure and should be considered in context," according to the report. "For example, Tennessee has high sales taxes but no income tax, whereas Oregon has no sales tax but high income taxes. While many factors influence business location and investment decisions, sales taxes are something within policymakers’ control that can have immediate impacts." The report comes as Louisiana lawmakers are studying potential changes to the state’s tax structure ahead of the 2023 legislative session. Vance Ginn, chief economist for the Pelican Institute, contends that excessive government spending is one factor driving higher taxes in Louisiana, though he believes personal income taxes are having the biggest impact on the state’s economy. "We have got to find a way to restrain excessive government spending at the state and local level," he said. "The sales tax is high in Louisiana … but really the focus should be on the burdensome income tax." The Pelican Institute is advocating for a flat income tax that eventually phases to zero. "That will allow for more job creation and economic growth," Ginn said. The Tax Foundation ranks Louisiana 25th nationally for income taxes, 32nd in the nation for corporate income tax, and 23rd for property taxes. Those rankings, combined with other measures, puts the state in 39th place overall in the foundation’s 2023 State Business Tax Climate Index. The foundation’s most recent report notes that sales tax rates can have a significant impact on where residents make major purchases and where businesses locate, and it cites examples of states that have increased per capita sales by maintaining rates lower than their neighbors. The analysis shows Louisiana’s 9.55% combined sales tax rate is more than 2% higher than Mississippi’s 7.07% rate, and 1.35% higher than Texas at 8.20%. Arkansas’ combined rate of 9.46% is the third highest nationally, behind Louisiana and Tennessee at 9.55%. California has the highest state sales tax rate at 7.25%, followed by four states tied for the second-highest rate, at 7%: Indiana, Mississippi, Rhode Island, and Tennessee. Five states do not have a state sales tax: Alaska, Delaware, Montana, New Hampshire and Oregon. The lowest rates for states with sales tax include Colorado at 2.9%, followed by Alabama, Georgia, Hawaii, New York and Wyoming, all at 4%. States with the highest average local sales tax rates include Alabama at 5.25%, Louisiana, Colorado at 4.88%, New York at 4.52%, and Oklahoma at 4.48%. Behind Louisiana with the highest combined state and local sales tax is Tennessee, Arkansas, Alabama at 9.25% and Oklahoma at 8.98%. States with the lowest average combined rates are Alaska at 1.76%, Hawaii at 4.44%, Wyoming at 5.36%, Wisconsin at 5.43%, and Maine at 5.5%. Originally published at The Center Square. Fairness, like beauty, is in the eye of the beholder. This popular sentiment is certainly true in a free market where buyers and sellers determine prices instead of a third party picking winners and losers. Unfortunately, taxes in Louisiana and other states get caught up in this subjective determination when the questions that really matter are what will help more Louisianans stay in the state, and what will bring them well-paying jobs along the way? A recent presentation by Together Baton Rouge before Louisiana’s House Ways & Means Committee made the case that the state’s tax code is unfair. They pointed to research by the left-leaning Institute on Taxation and Economic Policy (ITEP), which considers the distributional effects of tax systems in each of the 50 states. And as you’d expect, ITEP considers those states without a personal income tax as the most regressive because low-income earners tend to pay a larger share of income to taxes than upper-income earners. The fact, however, is that the majority of Louisiana’s individual income tax revenue is paid by middle and higher-income earners, as reported by the Louisiana Department of Revenue in its annual report. ITEP’s analysis finds that “Louisiana has the 14th most unfair state and local tax system in the country.” And while that’s true in many respects, it’s not necessarily because of rising income inequality as some suggest.
Recent Census data show that people are continuing to leave Louisiana. This is a drain on innovation and job opportunities, so there’s less incentive for businesses to stay. Why would the state resort to trying to smooth the distribution of income, which would inevitably mean raising taxes on entrepreneurs who start businesses and hire workers? Instead, lawmakers’ next steps should be to restrain spending and flatten income taxes until they can be eliminated. This process was started in 2021 by lowering all the personal income tax rates, further stipulating that future increased revenue should “trigger” even lower income tax rates, which could potentially go into effect beginning next year. The state is currently seeing record levels of revenue. In fact, Louisiana is set to have an additional $1.6 billion to use in this fiscal year alone, and there is already an increase of $600 million above current revenue expected for the next fiscal year. But there is a lot of uncertainty surrounding whether the state will hit its revenue targets in future years due to economic downturns and record spending increases. If it does, the state would benefit from the lower tax rates by fueling economic growth. More should be considered in the 2023 legislative session beyond just cutting existing rates. Lawmakers should consider flattening income taxes to just one bracket with a single, low rate for everyone. This is what research has proven effective to incentivize people to work and take risks, much more so than continually taxing their innovative prosperity. Given these factors, a flat income tax would help everyone who pays taxes have skin in the game instead of trying to pick winners and losers. Higher-income earners would still pay much more in taxes with a flat tax rate because their income is higher. Fairness can be a factor, but it shouldn’t be the overarching factor when deciding tax law. The best taxes are those that are broad-based with the lowest flat rate possible, and ultimately without income taxes. This would be fair to workers and the flourishing of Louisianans for many years to come. Originally published at Pelican Institute. The Pelican State has tremendous opportunity and potential.
It’s got a diverse culture, renowned festivals, terrific people, and, of course, delicious food. Yet the burdensome and complicated tax code continues to hold it back from becoming what should be an economic powerhouse. The big first step to propel the state forward should be flattening state income taxes, until ultimately eliminating them. It’s no coincidence that Florida and Texas – which have no personal income taxes – had the highest net in-migration among the states last year, while Louisiana was among the bottom 10 states with the largest net out-migration. Taxing people’s income means taxing their success and desire to work. People want to be where they can keep more of their hard-earned paychecks. The exodus of people from Louisiana contributes to what appears to be a low unemployment rate of 3.5%, but it would be much higher without a shrinking labor force. Reforming taxes by first flattening them down to one bracket (Louisiana currently has three:1.85%, 3.5%, and 4.25%), with one rate until eliminating them, helps to put more money back in taxpayers’ pockets. But it also helps decentralize power from the state to the people, where it should be. This is a big deal for Louisiana as it would improve the state’s tax structure that is currently burdening individuals to fund excessive spending, thereby reducing their opportunities to flourish. What’s worse, often, the money taken in income tax isn’t always spent on meeting needs and addressing true priorities. Every year, these dollars get spent on things like splash pads, sports arenas, playgrounds, museums, visitor centers, and special local projects and programs that don’t go through any sort of vetting process. And the state’s potential deficit and unfunded liabilities continue to climb, building a financial burden of more than $22.3 billion for coming generations to pay and weakening economic growth over time. If only Louisiana had amazing results to show for its egregious spending, but it doesn’t. The latest Census report noted that Louisiana has the country’s highest poverty rate at 17.2%, and Measure of America finds that it has the 4th highest rate of 16-24-year-olds who are neither in college nor employed. These aren’t good signs for future prosperity. Making matters worse, half of elementary-aged public school students in Louisiana are unable to read on grade level. The state ranks low in student achievement relative to other states, as measured by the National Assessment of Educational Progress (NAEP), despite spending more per student than many states. And EdWeek’s Quality Counts Report Card gave Louisiana a D+ ranking for K-12 achievement. Something has to give, and it shouldn’t be families and entrepreneurs. Flattening income taxes could not only help revitalize Louisiana’s economy but also help people flourish. The benefits of such reforms can be seen in places like Texas and Florida, where people and businesses keep moving. If Louisiana joins the state flat tax revolution, it would see a substantial influx of businesses and young people coming to take advantage. The role of any state government should be to preserve liberty and limit its influence. Its role is not to rob its citizens via taxes to pay for excessive government spending and increase debt to an insurmountable burden. The best step forward for Louisiana’s growth and to embrace its bright potential is passing responsible budgets, flattening income taxes, and eventually getting rid of them for good. Originally published at The Center Square. Our new jobs report highlights Louisiana’s economic situation based on the most recent data. The report is based on several key factors that indicate how the economy, labor market, and public policy influence the lives of everyday Louisianans. While some of these data indicate a relatively strong labor market–such as the historically low unemployment rate–there are underlying factors showing Louisiana’s economic struggle. Moreover, the data show that Louisiana lost 36,857 residents from 2021-2022, ranking third worst in the nation. Louisiana’s comeback story will happen through reforms that remove government barriers, bring jobs and opportunity back to Louisiana, and let people prosper. We must decide: Will we continue to hold on to the status quo (which hasn’t done us any favors), or will we embrace the significant reforms necessary to bring jobs and opportunity to Louisiana? We need the latter. Read the full two-pager: Originally published at Pelican Institute. Key Point: Louisiana’s labor market looks okay even as the unemployment rate increased by 0.2-percentage point to 3.5% unemployment rate. But the labor force has 10,622 (-0.5%) fewer people in it than pre-shutdown in February 2020 and private sector employment is 30,000 (-1.8%) below then, indicating a much weaker labor market and economy overall. Labor Market: A job is the best path to prosperity as work brings dignity, hope, and purpose to people through life-long benefits of earning a living, gaining skills, and building social capital. The table below shows Louisiana’s labor market over time until the latest data for December 2022 by the U.S. Bureau of Labor Statistics. The establishment survey shows that net total nonfarm jobs in the state increased by 4,800 jobs last month (+0.2%), bringing this to 50,700 jobs below the pre-shutdown level in February 2020. Private sector employment was up by 4,400 jobs (+0.3%) and government employment rose by 400 jobs (+0.1%) last month. Compared with a year ago, total employment was up by 46,200 jobs (+2.4%) with the private sector adding 45,600 jobs (+2.9%) and the government adding 600 jobs (+0.2%). The household survey finds that the civilian labor force rose by 5,028 people last month and is down 10,622 people since February 2020, which results in the labor force participation rate of 58.5% being 0.1-percentage point lower than it was in February 2020 but well below the 61.2% rate in June 2009 at the trough of the Great Recession. The employment-population ratio is 0.9-percentage point above where it was in February 2020 and nearly back to where it was in June 2009. While the unemployment rate of 3.5% is substantially lower than the 5.2% rate in February 2020, a broader look at Louisiana’s labor market rather than this weak indicator shows that Louisianans still face challenges, especially compared with neighboring states based on several measures. Economic Growth: The U.S. Bureau of Economic Analysis (BEA) recently provided the real (inflation-adjusted) gross domestic product (GDP) in Q3:2022 for Louisiana and other states. The following table shows how U.S. and Louisiana economies performed since 2020. The steep declines were during the shutdowns in 2020 in response to the COVID-19 pandemic, which was when the labor market suffered most. The decline in real GDP annualized growth of -3% in Q2:2022 was the 5th worst and increase of +2.5% in Q3:2022 ranked 23rd in the country. The BEA also reported that personal income in Louisiana grew at an annualized pace of +5.8% (ranked 19th) in Q2:2022 (tied +5.8% U.S. average) and of +2.5% (ranked 47th) in Q3:2022 (below +5.3% U.S. average). Bottom Line: Louisianans gained jobs in December but continue to feel the costs of the shutdowns in 2020 and other restrictive policies that reduce opportunities for them to find well-paid jobs. Institutions matter to human flourishing in countries and states, which is floundering in Louisiana compared with many other states. The Fraser Institute recently ranked Louisiana 20th for economic freedom based on 2020 data for government spending, taxes, and labor market regulation. And the Tax Foundation recently ranked the Pelican State as having the 12th worst business tax climate and 15th highest corporate income tax rate. While the state has improved its tax code recently and lower taxes may happen soon from an expected budget surplus, this lack of economic freedom and poor business tax climate are contributing to a net outmigration of Louisianans to other states, which is a drain on the state’s economic potential now and in the future. State and local policymakers should work to reverse this trend by passing pro-growth policies. Free-Market Solutions: In 2023, the Louisiana Legislature should provide the state’s comeback story by:
By Victor Skinner | The Center Square contributor | Jan 26, 2023
(The Center Square) — New analysis shows Louisiana’s top corporate income tax rate is the 15th highest in the nation, a reality critics contend is holding the state back. Analysis from the Tax Foundation released Tuesday shows that out of the 44 states that levy a corporate income tax, Louisiana’s top 7.5% rate ranks 15th from the top, the highest in the region. Neighboring Texas does not levy a corporate income tax and instead imposes a gross receipts tax on businesses, while Arkansas’ 5.3% rate ranked 33rd, and Mississippi’s 5% rate ranked 34th. "The rate is too high, 7.5% ranking 15th in the nation means Louisiana is less competitive, especially with its neighbors," Vance Ginn, chief economist at the Pelican Institute, told The Center Square. Ginn noted that the corporate income tax ranking follows a previous report from the Tax Foundation that ranked Louisiana as the 12th lowest state for business tax climate, a measure that takes into account other factors. He contends lawmakers can take action to improve the situation. "What we’ve been looking at is finding ways to flatten the corporate income tax," Ginn said, noting that the state’s current system has three brackets. Reducing the three brackets into one would help in the short term, he said, but the long-term focus should be on "eliminating the income tax and finding ways to limit government spending," he said. "What we’ve been looking at is using surplus funds to buy down the corporate tax," Ginn said. Louisiana "really ultimately needs to be more competitive," he said. "People are moving out. Businesses are moving out." Ginn pointed to recent U.S. Census data that shows 67,508 residents left the Pelican State between April 1, 2020 and July 1, 2022, with most of the loss through domestic migration. The Tax Foundation identified 44 states that levy a corporate income tax, which ranged from North Carolina’s 2.5% rate to 11.5% in New Jersey. Behind the Garden State is Minnesota at 9.8%, Illinois at 9.5%, and Alaska and Pennsylvania, which levy top corporate tax rates of 9.4% and 8.99%, respectively. There are 11 states with top rates at or below 5%. North Carolina is followed by Missouri and Oklahoma at 4%, North Dakota at 4.31%, Colorado at 4.55%, Utah at 4.85%, Arizona and Indiana at 4.9%, and Kentucky, Mississippi, and South Carolina at 5%. Nevada, Ohio, Texas, and Washington use a gross receipts tax instead of corporate income taxes, while Delaware, Oregon, and Tennessee impose both gross receipts taxes and corporate income taxes. "Though often thought of as a major tax type, corporate income taxes accounted for an average of just 7.07% of state tax collections and 4.04% of state general revenue in fiscal year 2021," according to the report. "And while these figures are not high, they represent a substantial increase over prior years. Corporate income taxes accounted for 2.26% of general revenue in FY 2020, which is more in line with historical norms." Originally published at The Center Square. In October, the Tax Foundation released the 2023 State Business Tax Climate Index. The report ranks all fifty states based on the collective burdens of each state’s corporate income tax, individual income tax, sales tax, unemployment insurance, and property tax. The results showed that spending restraint funded with a low rate, broad-based taxes provide the best climate for business activity, which supports more jobs, and we all know that work helps provide people with dignity, purpose, and hope, along with the long-term self-sufficiency that is essential for families to flourish. The Tax Foundation’s report notes what many entrepreneurs in Louisiana already know: the state’s business tax climate needs improving. Figure 1 shows that last year the state ranked as the 12th worst among the 50 states, which is an improvement from the 8th worst ranking in the prior year, but still well below where it needs to be to support more in-migration, economic growth, and well-paying jobs. Last year’s ranking was influenced by the corporate tax rank of 32nd, individual income tax rank of 25th, sales tax rank of 48th, property tax rank of 23rd, and unemployment insurance tax rank of 6th in the nation. Source: Tax Foundation
Compared with nearby states, Louisiana ranked ahead of Arkansas (40th), behind Mississippi (30th), and remained well-below neighboring Texas which improved from the previous report to 13th best in the nation. Given the upcoming 2023 session in Louisiana, the state legislature has an extraordinary opportunity to learn from the Tax Foundation’s report on how to improve. For Louisiana to provide greater opportunity for entrepreneurs and families to prosper, the business tax climate must improve by limiting spending, reforming and cutting taxes, and reducing regulatory burdens. Doing so will help more Louisianans live the American Dream. Originally published at Pelican Institute. Key Point: Louisiana’s labor market looks okay with a 3.3% unemployment rate but the labor force has 15,617 (-0.7%) fewer people in it than pre-shutdown in February 2020 and private sector employment is 34,400 (-2.1%) below then, indicating a much weaker labor market and economy. Labor Market: A job is the best path to prosperity as work brings dignity, hope, and purpose to people through life-long benefits of earning a living, gaining skills, and building social capital. The table below shows Louisiana’s labor market over time until the latest data for October 2022 by the U.S. Bureau of Labor Statistics. The establishment survey shows that net total nonfarm jobs in the state increased by 3,800 jobs last month, bringing this to 55,900 jobs below the pre-shutdown level in February 2020. Private sector employment was up by 3,700 jobs and government employment rose by 100 jobs last month. Compared with a year ago, total employment was up by 49,200 (+2.6%) with the private sector adding 49,700 jobs (+3.1%) and the government cutting 500 jobs (-0.2%). The household survey finds that the civilian labor force rose by 840 people last month and is down 1058 people since February 2020, which results in the labor force participation rate of 58.3% being 0.3-percentage point lower than it was in February 2020 but well below June 2009 at the trough of the Great Recession. The employment-population ratio is 0.9-percentage point above where it was in February 2020. While the unemployment rate of 3.3% is substantially lower than the 5.2% rate in February 2020, a broader look at Louisiana’s labor market rather than this weak indicator shows that Louisianans still face challenges, especially compared with neighboring states based on several measures. Economic Growth: The U.S. Bureau of Economic Analysis (BEA) recently provided the real (inflation-adjusted) gross domestic product (GDP) for Louisiana and others states. The following table shows how U.S. and Louisiana economies performed since 2020. The steep declines were during the shutdowns in 2020 in response to the COVID-19 pandemic, which was when the labor market suffered most. The decline in real GDP annualized growth in Q2:2022 of 3% was the 5th worst in the nation. The BEA also reported that personal income in Louisiana grew at an annualized pace of 5.8% (19th best) in Q2:2022 (tied +5.8% U.S. average). Bottom Line: Louisianans gained jobs in November but continue to feel the costs of the shutdowns in 2020 and other restrictive policies that reduce opportunities for them to find well-paid jobs. Institutions matter to human flourishing in countries and states, which is floundering in Louisiana compared with many other states. The Fraser Institute recently ranked Louisiana 20th for economic freedom based on 2020 data for government spending, taxes, and labor market regulation. And the Tax Foundation recently ranked the Pelican State as having the 12th worst business tax climate. While the state has improved its tax code recently and lower taxes may happen soon from an expected budget surplus, this lack of economic freedom and poor business tax climate are contributing to a net outmigration of Louisianans to other states, which is a drain on the state’s economic potential now and in the future. State and local policymakers should work to reverse this trend by passing pro-growth policies.
Recommendations: In 2023, the Louisiana Legislature should provide the state’s comeback story by:
It’s time for Louisiana to join the flat tax revolution. Four states passed a flat personal income tax this year after only four did over the 100 years, bringing the total to 14 states that have or will soon have flat income taxes.
Flattening income taxes provides more opportunities for people to flourish, but eliminating them is best to provide even more prosperity and individual liberty to keep the fruits of your labor. These tax reforms start with spending restraint. Economic data show that the nine states without a personal income tax outperform, on average, the nine states with flat income taxes in economic growth, domestic migration, and non-farm payroll employment over the last decade. Georgia (2024), Idaho (2023), Iowa (2026), and Mississippi (2023) passed flat-income taxes this year. Arizona is set to have a flat income tax in 2023 at 2.5%, which will be the lowest rate in the nation. Through those reforms, these states will have more opportunities to improve the number of well-paid jobs, sectoral growth, and other benefits that advance thriving communities. This contrasts with progressive personal income taxes that disincentivize people from working and living in those states. This is happening in California, where even its wealthy citizens are leaving as personal income taxes soar, and it’s likely to get worse as the top marginal tax rate rises to 14.4% in 2024. Progressive, high-income tax structures produce undesirable outcomes, and states should work toward eliminating personal income taxes. Of course, other taxes and policies matter. Louisiana took a great step in the right direction by dropping our progressive rates and putting in revenue triggers that will lower them further over time. Yet flattening them to one rate would be the best next step. According to the Tax Foundation’s recent report, states without a personal income tax or lower tax burdens overall rank the highest in business tax climate, with Wyoming (1st), South Dakota (2nd), Alaska (3rd), and Florida (4th) leading the way. And those states with the highest personal income rates perform worst, with California (48th), New York (49th), and New Jersey (50th) being last. Louisiana ranks 39th, its best ranking since 2017, after improving three spots from the recent tax reforms. But the state remains near the back of the pack, which could be improved by continuing to cut away at the personal income tax. What would help fund limited government spending with an improved tax system? The increased economic activity from an improved tax system will help increase tax revenue collections, as the state would move more towards a consumption-based tax system. The least burdensome form of taxation tends to be a flat final sales tax with the broadest base and lowest rate possible. Taxing consumption results in less consumption but more savings, which can support greater capital accumulation and economic growth. The ultimate burden of government is how much it spends. Jonathan Williams, who is a co-author of the ALEC report on economic performance by states, recently said, “There are nine states with no income taxes, and they spend substantially less per capita than states with an income tax.” Given major headwinds from D.C., it’s time for Louisiana to join the flat tax revolution by strengthening the state spending limit and flattening its personal income taxes until ultimately eliminating them. Originally published Pelican Institute Key Point: Louisiana’s labor market looks okay on the surface but the labor force is 16,613 (-0.8%) below the COVID-related shutdown in February 2020 and private sector employment is 35,900 (-2.3%) below then. Labor Market: A job is the best path to prosperity as work brings dignity, hope, and purpose to people through life-long benefits of earning a living, gaining skills, and building social capital. The table below shows Louisiana’s labor market over time according to the U.S. business cycle until the latest data for October 2022 by the U.S. Bureau of Labor Statistics. Data compare the following: 1) June 2009—Dated trough of that U.S. recession, 2) February 2020—Dated peak of the last U.S. expansion, 3) April 2020—Dated trough of the last U.S. recession, and 4) October 2022—Latest data available. The payroll survey shows that net total nonfarm jobs in the state decreased by 4,200 jobs last month, bringing this to 60,600 jobs below the pre-shutdown level in February 2020. Private sector employment was down by 3,000 jobs and government employment declined by 1,200 jobs last month. Compared with a year ago, total employment was up by 52,100 (+2.8%) with the private sector adding 52,700 jobs (+3.4%) and the government cutting 600 jobs (-0.2%). The household survey finds that the civilian labor force declined by 6,035 last month and is down 16,613 since February 2020, which results in the labor force participation rate of 58.3% being 0.3-percent point lower than it was in February 2020 but well below June 2009 at the trough of the Great Recession. The employment-population ratio is 1-percentage point above where it was in February 2020, and the private sector employs 38,900 (-2.3%) fewer people than then. While the unemployment rate of 3.3% is substantially lower than the 5.2% rate in February 2020, a broader look at Louisiana’s labor market rather than this weak indicator shows that Louisianans still face challenges, especially compared with neighboring states. Economic Growth: The U.S. Bureau of Economic Analysis (BEA) recently provided the real (inflation-adjusted) gross domestic product (GDP) for Louisiana and others states. The following table shows how U.S. and Louisiana economies performed since 2020. The steep declines were during the shutdowns in 2020 in response to the COVID-19 pandemic, which was when the labor market suffered most. The decline in real GDP annualized growth in Q2:2022 of 3% was the 5th worst in the nation. The BEA also reported that personal income in Louisiana grew at an annualized pace of 5.8% (19th best) in Q2:2022 (tied +5.8% U.S. average). Bottom Line: Louisianans lost jobs in October and continue to feel the effects of the shutdowns in 2020 as many policies are too restrictive to allow more economic growth and prosperity with well-paid jobs. The Fraser Institute recently ranked Louisiana 20th for economic freedom based on 2020 data for government spending, taxes, and labor market regulation. And the Tax Foundation recently ranked the Pelican State as having the 12th worst business tax climate. White the state has improved its tax code recently and lower taxes may happen soon from an expected budget surplus, this lack of economic freedom and poor business tax climate are contributing to a net outmigration of Louisianans to other states over time, which is a drain on the state’s economic potential now and in the future. State and local policymakers should work to reverse this trend by passing pro-growth policies.
Recommendations: In 2023, the Louisiana Legislature should provide the state’s comeback story by:
Louisiana has many of the right characteristics for families to flourish. This includes abundant natural resources and thriving petrochemical, oil and gas, and tourism sectors. In fact, New Orleans was recently ranked as the 9th fastest-growing city for 2022 by the American Growth Project. They note that the worker shortages in New Orleans “could indicate the city has even more room to grow in coming years.”
But there’s substantial room for improvement as people and businesses are leaving the state. A big part of that is because of the poor state business tax climate that the Tax Foundation recently ranked as the 12th worst in the country. If it’s too costly to run a business, then employers and workers will go elsewhere. This is especially true when it comes to personal income taxes. Louisiana should join the many states in the flat tax revolution to avoid the negative effects this tax has on people’s livelihoods. This year, four states passed a flat personal income tax, making a soon-to-be total of 14 flat income tax states across the nation. One of them is Louisiana’s neighbor, Mississippi, currently ranked 30th in business tax climate. With a flat income tax, Mississippi's status will improve, but not as much as it could if it also eliminated the personal income tax altogether. Even the improvement of flattening income taxes won't support as much prosperity as eliminating them. The nine states without personal income taxes, including nearby Texas and Florida, show better economic growth, domestic migration, and non-farm payroll employment when compared to flat-tax states. Uncoincidentally, Florida ranked 4th best and Texas 13th in business tax climate. High personal income taxes contribute to Louisiana’s northern neighbor, Arkansas, ranking 40th in business tax climate, and the progressive darlings of California and New York ranking 48th and 49th, respectively. Personal income taxes in the business tax climate index rank 25th in Louisiana, 37th in Arkansas, 49th in California, and 50th in New York. But the marks against Louisiana don't stop there. The latest edition of the Rich States, Poor States report from the American Legislative Exchange Council, which notes the economic performance of the 50 states based on economic output, migration, and job creation from 2010 to 2020, reveals that Louisiana ranks last. The report also compares the upcoming economic outlook for all the states across 15 policy variables, which put Louisiana at 20th, still behind Texas (11th) and Florida (8th), but above Mississippi (27th), although that will likely change in the next report given Mississippi's new flat tax policy. What continues to show up as a contributing factor for Louisiana's lackluster tax policies and economic performance, when compared to its neighboring states, is a hefty burden of personal income taxes. People are fleeing states with high personal income taxes for good reason. Progressive personal income taxes disincentivize work, as people's hard-earned money, that's already being devalued by the current 40-year high inflation, decreases even more. Naturally, people gravitate toward states where they can keep more of what they make. What's a state to do for funding once personal income taxes are eliminated? One poor answer to fund government spending is with higher property taxes. This is a weak spot to the overall tax system in some states without personal income taxes, like Texas, which are a result of excessive local government spending. The better answer that many no personal income tax states primarily depend on for funding is consumption-based taxes. A flat final sales tax with the broadest base and lowest rate possible is best. Although taxing consumption results in less consumption, the benefit is that people save more, which allows for more capital and economic growth. If Louisiana hopes to see more economic growth and thriving people in its state, like the recent growth in New Orleans, flattening personal income taxes should be a top priority until their ultimate elimination. Originally published at The Center Square Today, the Tax Foundation released the 2023 State Business Tax Climate Index. The report ranks all fifty states based on the collective burdens of each state’s corporate income tax, individual income tax, sales tax, unemployment insurance, and property tax. The results show that spending restraint funded with low rate, broad-based taxes provide the best climate for business activity, which supports more jobs; and we all know that work helps provide people with dignity, purpose, and hope, along with the long-term self-sufficiency that is essential for families to flourish. The Tax Foundation’s report notes what many entrepreneurs in Louisiana already know: the state’s business tax climate needs improving. Figure 1 shows that this year the state ranks as the 12th worst among the 50 states, which is an improvement from the 8th worst ranking in the prior year, but still well below where it needs to be to support more in-migration, economic growth, and well-paying jobs. This year’s ranking is influenced by the corporate tax rank of 32nd, individual income tax rank of 25th, sales tax rank of 48th, property tax rank of 23rd, and unemployment insurance tax rank of 6th in the nation. Compared with nearby states, Louisiana ranked ahead of Arkansas (40th), behind Mississippi (30th), and remained well-below neighboring Texas which improved from the previous report to 13th best in the nation. The Texas model of relatively less government spending, no personal income tax, relatively low tax burden, and a sensible regulatory system have propelled it to substantial prosperity over time. This helped Texas diversify its economy from being as dependent on oil and gas activity as it was in the 1970’s and 1980’s. Still, Texas ranked behind the more fiscally conservative Florida (4th), who can provide an even better direction for where Louisiana should head if it wants more businesses to thrive in Louisiana. The Tax Foundation’s report also provides caution of what not to do: don’t be like California (48th), New York (49th), or New Jersey (50th). These states have high government spending, high personal income taxes combined with other tax burdens, and a costly regulatory climate. Given the upcoming 2023 session in Louisiana, the state legislature has an extraordinary opportunity to learn from the Tax Foundation’s report on how to improve. For Louisiana to provide greater opportunity for entrepreneurs and families to prosper, the business tax climate must improve by limiting spending, reforming and cutting taxes, and reducing regulatory burdens. Doing so will help more Louisianans live the American Dream. Originally posted at Pelican Institute Louisiana Economic Situation October 2022
Key Point: Louisiana’s labor market looks okay on the surface but the working-age population is 12,366 (-0.35%) below pre-shutdowns in February 2020 and private sector employment remains 35,900 (-2.2%) below then. Moreover, the decline in real GDP annualized growth in Q2:2022 of 3% was the 5th worst in the nation. Labor Market: The best path to prosperity is a job, as work brings dignity, hope, and purpose to people by allowing them to earn a living, gain skills, and build social capital that endures. The table below shows Louisiana’s labor market over time according to the U.S. business cycle until the latest data for September 2022. Net total nonfarm jobs in the state increased by 5,000 last month, resulting in increases for 11 of the last 12 months but remains 56,900 jobs below the pre-shutdown level in February 2020 while the working-age population is down 12,366 since then. Compared with a year ago, total employment was up by 95,600 (+5.2%) with the private sector adding 98,100 jobs (+6.4%) and the government cutting 2,500 jobs (-0.8%). The labor force participation rate of 58.5% is 0.1-percentage point lower than it was in February 2020 but well below June 2009 at the trough of the Great Recession. The employment-population ratio is 1-percentage point below where it was in February 2020, and the private sector employs 35,900 (-2.2%) fewer people than then. Louisianans still face challenges given these latest figures for the labor market and remain well below the pre-shutdown trend. Economic Growth: The U.S. Bureau of Economic Analysis (BEA) recently provided the real gross domestic product (GDP) for Louisiana and others states. The following tells the story of the U.S. and Louisiana economies over the last two and a half years. The steep decline was during the shutdowns in 2020 in response to the COVID-19 pandemic, which was when the labor market suffered. The decline in real GDP annualized growth in Q2:2022 of 3% was the 5th worst in the nation. The BEA also reported that personal income in Louisiana grew at an annualized pace of 5.8% (19th best) in Q2:2022 (tied +5.8% U.S. average). Bottom Line: Louisianans continue to feel the effects of the shutdowns in 2020 and policies that are too restrictive in allowing more economic growth and prosperity with well-paid jobs. This has influenced a net outmigration of Louisianans to other states over time, which is a drain on the state’s economic potential now and in the future. State and local policymakers should work to reverse this trend by passing pro-growth policies following the Pelican Institute’s roadmap for a comeback story. Recommendations: In 2023, the Louisiana Legislature should provide the state’s comeback story by:
Originally posted at Pelican Institute NEW ORLEANS— The Pelican Institute for Public Policy, a New Orleans-based free market think tank, has announced the hiring of Dr. Vance Ginn and Jamie Tairov. Ginn will serve as the institute’s chief economist and Tairov as senior policy associate.
“I am thrilled to welcome Vance and Jamie to the Pelican team as we work to write Louisiana’s comeback story,” said Pelican CEO Daniel Erspamer. “The best talent in the country is required to accomplish bold change and ensure everyone in Louisiana has the opportunity to flourish. Vance and Jamie bring nationally recognized policy expertise, research excellence and a deep commitment to winning on behalf of Louisiana families to achieve our mission at this critical time of charting a new path for Louisiana.” Ginn is a free-market economist. Before joining the Pelican Institute, he served as the chief economist at the Texas Public Policy Foundation and is currently policy director for the Alliance for Opportunity campaign, a multi-state poverty relief initiative featuring Louisiana, Texas and Georgia. In 2019 and 2020, he served as the associate director for economic policy of the Office of Management and Budget at the Executive Office of the U.S. President. He has contributed to The Wall Street Journal, Fox News, The Washington Post and National Review. “I’m excited to join the fantastic team at the Pelican Institute and hit the ground running toward providing proven free-market policy solutions that let people prosper,” Ginn said. “There is a historic opportunity in Louisiana to work on budget restraint, tax reform and poverty relief. We want to remove barriers and unleash families in search of a bright future in Louisiana. By working toward limited government, there will be unlimited paths for families to achieve their hopes and dreams, and that is what I hope to foster with the team at the Pelican Institute for all Louisianans.” Tairov will bring years of Louisiana policy and budgetary expertise to the Pelican Institute and will serve as senior policy associate. Before joining Pelican, she spent many years in various roles at Louisiana State University, where she completed a master’s in public administration. She then worked as a budget analyst for the fiscal division of the House of Representatives. At Pelican, she will be working to advance solutions in the areas of fiscal policy, social safety net, criminal justice and occupational licensure. “I am so excited to join the Pelican Institute and work to advance proven policies that will give all Louisianans the opportunity to flourish,” Tairov said. “Through proven social safety net and criminal justice reforms, as well as changes to our state’s complex tax code and budgetary systems, we really can write Louisiana’s comeback story.” |
Vance Ginn, Ph.D.
|