Louisiana’s Labor Market Improves but More Work to Do

Originally published at Pelican Institute.

​With its rich cultural heritage and strategic location along the Gulf of Mexico, Louisiana boasts significant economic potential. However, recent data underscores the need for the state to tap into this potential and enhance its economic growth, especially in comparison to its neighboring states.

As of September 2024, Louisiana’s unemployment rate is 3.9%, a slight increase from the previous year but below the national average of 4.1%. Over the past twelve months, Louisiana added 2,000 jobs, a 0.1% increase in nonfarm employment. This growth is positive but well below the 1.3% national rate and significantly lower than regional competitors like Texas (2.3%) and Florida (2.1%), where job growth has been much stronger.

It’s imperative for Louisiana to keep pace with its neighboring states. By urgently implementing bold pro-growth policies, such as lowering taxes, reducing regulations, and improving workforce development, the state can create an environment that attracts businesses, generates jobs, and enhances overall economic prosperity.

Comparing Louisiana with Neighboring States
The contrast between Louisiana and its neighboring states is stark. Texas continues to lead the pack, with 327,400 new jobs added over the past year. Meanwhile, Florida has also experienced strong economic growth, with its unemployment rate declining to 2.8%, among the lowest in the region. While still facing economic challenges, Mississippi has recently seen a boost in job creation through pro-business reforms, resulting in an unemployment rate of 3.3%.

Louisiana’s relatively slower job growth and higher unemployment rate prove the urgent need for reform. The state’s heavy reliance on the oil and gas sector, while a source of strength in the past, has created economic volatility. Diversification into industries such as manufacturing, technology, and tourism, coupled with meaningful policy reforms, is not just important but crucial for Louisiana to remain competitive in the region.

Pro-Growth Policy Recommendations for Louisiana
To unlock its economic potential, Louisiana should consider implementing several key reforms that have proven successful in other states:

1. Tax Reform: One of the most pressing challenges for Louisiana is its high tax burden. The state’s complex tax system and reliance on income taxes discourage business investment and slow job creation. Louisiana can follow the example of Texas, which has no state income tax and a relatively low corporate tax rate, making it one of the most attractive states for business. Louisiana should reduce its income taxes, simplify its tax code, and shift to a more consumption-based system that encourages investment and entrepreneurship.
2. Regulatory Relief: Excessive regulations have hampered Louisiana’s ability to attract new businesses and allow existing ones to expand. Streamlining regulations and reducing red tape can help foster a more business-friendly environment. Texas and Florida have prioritized regulatory reform, contributing to their impressive economic growth. Louisiana could benefit from a comprehensive review of its regulatory framework, particularly in sectors like energy, manufacturing, and small businesses.
3. Workforce Development: Many companies report that a shortage of qualified workers hinders growth and there should be better integration of workforce and social services for those in poverty. To address this, Louisiana should pursue the highly successful “One Door” approach used by Utah to integrate workforce and social services programing. The state should also continue prioritizing workforce training and education programs that align with the needs of regional industries and offer upwardly mobile careers.
4.    Spending Restraint: Louisiana’s government spending has grown rapidly over the years, leading to an over-reliance on government programs and interventions. Implementing spending caps tied to population growth and inflation, as Colorado and Texas have done and other states are considering, would help ensure that Louisiana’s budget remains responsible.

By controlling spending and reducing the size of government, Louisiana can create a more predictable business environment, which is crucial for attracting long-term investment.

Moving Louisiana Forward
Louisiana’s economy has shown signs of recovery, but much more work must be done. By embracing pro-growth policies focused on reducing taxes, streamlining regulations, and integrating workforce and social services while prioritizing high-demand, high-value career opportunities, Louisiana can revitalize its economy and compete more effectively with its neighbors. The state’s natural resources, cultural vibrancy, and strategic location give it a strong foundation to build, but success will require bold leadership and a commitment to reform.