December 26, 2012

Forbes, ranking the "Best States for Business," finds "a clear separation between right-to-work states and those that are not."

"All but one of the top 10 states have right-to-work laws on the books (No. 5 Colorado is the exception). Of the bottom 10 states, No. 46 Mississippi is the only right-to-work state."

21 comments:

Calypso Facto said...

Looks like it has a stronger scientific basis than global warming.

I'm sure the "science-based" Democratic Party will therefor be quick to endorse the right-to-work movement.

SteveR said...

There's something else going on, I'm not 100% sure, besides that simple "right to work" explanation. What could it be?

Are the govenors cool?

hawkeyedjb said...

There are lots of variables that can determine business climate vs business success; it's also worth asking if having a good "Business Climate" is even a goal in a lot of places. There are plenty of Californians who think having a crappy business climate is a good thing.

AllenS said...

You wanna talk about a web site opening slowly, nothing is slower than opening Forbes.

Rusty said...

Just thought I'd add this.
Got this at Reason.It's for Bob who sreadfastly believes economics is a matter of opinion.




part of a government effort to extend home-ownership in lower-income neighborhoods. Now comes a new study from the National Bureau of Economic Research that says, quite bluntly. that the CRA played a major role.

In the academic world, mealy-mouthed delivery of even powerful conclusions is the norm, so it's refreshing to see authors Sumit Agarwal, Efraim Benmelech, Nittai Bergman, Amit Seru answer the title's question, "Did the Community Reinvestment Act (CRA) Lead to Risky Lending?," with the clear, "Yes, it did. ... We find that adherence to the act led to riskier lending by banks." The full abstract reads:

Yes, it did. We use exogenous variation in banks’ incentives to conform to the standards of the Community Reinvestment Act (CRA) around regulatory exam dates to trace out the effect of the CRA on lending activity. Our empirical strategy compares lending behavior of banks undergoing CRA exams within a given census tract in a given month to the behavior of banks operating in the same census tract-month that do not face these exams. We find that adherence to the act led to riskier lending by banks: in the six quarters surrounding the CRA exams lending is elevated on average by about 5 percent every quarter and loans in these quarters default by about 15 percent more often. These patterns are accentuated in CRA-eligible census tracts and are concentrated among large banks. The effects are strongest during the time period when the market for private securitization was booming.

Investors Business Daily does a very nice job of summarizing the nature of the pressure brought on lenders (that's IBD's most excellent graphic, above):

"We want your CRA loans because they help us meet our housing goals," Fannie Vice Chair Jamie Gorelick beseeched lenders gathered at a banking conference in 2000, just after HUD hiked the mortgage giant's affordable housing quotas to 50% and pressed it to buy more CRA-eligible loans to help meet those new targets. "We will buy them from your portfolios or package them into securities."

She described "CRA-friendly products" as mortgages with less than "3% down" and "flexible underwriting."

From 2001-2007, Fannie and Freddie bought roughly half of all CRA home loans, most carrying subprime features.

Note that the authors of the study caution that their work here may actually understate the impact of the CRA. How? Because the study assumes that the major impact of CRA took place when banks were undergoing examination regarding their compliance with CRA goals. If banks found it difficult to shift gears in preparation for such exams, they may have altered their overall behavior to satisfy politicians and regulators. Or, as the authors put it in their conclusion, "If adjustment costs in lending behavior are large and banks can’t easily tilt their loan portfolio toward greater CRA compliance, the full impact of the CRA is potentially much greater than that estimated by the change in lending behavior around CRA exams."

The housing meltdown and the Great Recession. Something else for which you can thank the feds.


ken in sc said...

Mississippi is officially a RTW state but unions there still force workers to join using threats and intimidation—on the workers as well as employers.

As I have posted before, my son had to join the Teamsters to have a minimum wage job in a supermarket in Biloxi.

garage mahal said...

I'm sure the "science-based" Democratic Party will therefor be quick to endorse the right-to-work movement.

Why would I care what states are best for business? Utah is the "best" but I know of nobody that wants to move and live there.

edutcher said...

And this surprises us, why?

hawkeyedjb said...

"I know of nobody that wants to move and live there."

Utah's growth in population, 2000 to 2010: 24.8%, or third fastest growing state.

Thank you, Paulene Kael, for your contribution to the discussion.

Drago said...

garage: "Utah is the "best" but I know of nobody that wants to move and live there."

Too funny.

purplepenquin said...

Well, duh! Of course paying very low wages and not having to worry about most safety issues makes things a lot cheaper for businesses, which I reckon is a good thing.

But is it really good for the state as a whole?

Gahrie said...

Well, duh! Of course paying very low wages and not having to worry about most safety issues makes things a lot cheaper for businesses, which I reckon is a good thing.

Please explain how the right to work automatically means low wages and dangerous working conditions?

And while you are at it, try to justify the fact that Congress exempts itself from the laws the rest of us must follow...including wage and safety laws.

purplepenquin said...

Please explain how the right to work automatically means low wages and dangerous working conditions?

History has proven that when labor is discouraged/banned from organizing, lower wages, less benefits & unsafe workplace conditions are more likely to occur. Lots of info is available if you really wanna know more....here is a good place to start.

For real, you think that these big businesses are pushing for these new laws so they can be able to pay their workers more?

try to justify the fact that Congress exempts itself from the laws the rest of us must follow...including wage and safety laws.

You must have me confused with someone else, 'cause I never said I approve of that policy/law.

Brew Master said...

purplepenquin said...
Well, duh! Of course paying very low wages and not having to worry about most safety issues makes things a lot cheaper for businesses, which I reckon is a good thing.

But is it really good for the state as a whole?



But of course, paying inflated Union wages is a good way to have your low skill manufacturing job shipped to a foreign company.

And apparently Purple has never heard of OSHA.

Businesses locating in your state, bringing jobs and money into the economy is most definately a good thing.

Unions making your company unprofitable so you have to close shop in the US, not a good thing.

Where are the child labor sweatshops in the US PurpleP? Oh, thats right, they are in foreign countries and not here. All thanks to those wonderful Unions.

Where are all those wonderful Union manufacturing jobs? Shall we examine the city of Detroit, the shining example of what happens when Unions and their politics takes over for decades at a time.

Or is that not a model that you would like to hold up to scrutiny?

Brew Master said...

purplepenquin said...

History has proven that when labor is discouraged/banned from organizing, lower wages, less benefits & unsafe workplace conditions are more likely to occur. Lots of info is available if you really wanna know more....here is a good place to start.

For real, you think that these big businesses are pushing for these new laws so they can be able to pay their workers more?


Please provide an example of where private sector unions have been banned in the US.

Do you think business can stay in business by paying their workers what Unions demand? Is there not a minimum wage in this country? Do we not have federal regulations on safety in workplaces? Have those advances come with the help of Unions? Yes they have, are those Unions neccessary to keep those in place? Probably not.

Are Unions killing the businesses that they have been traditional strongholds for them? Once again, lets look at Detroit Vs car manufacturers in right to work states.

wyo sis said...

The fact that Garage knows no one who wants to move to Utah must be a great comfort to those in Utah. It would be a very good thing for people to self sort in the way Garage seems to suggest. I wonder if that might be the point.
Things that make you go hmmmm.

purplepenquin said...

And apparently Purple has never heard of OSHA

I've heard a lot about OSHA. They are the guys that'll come around after someone is hurt or dead.

I guess you haven't heard that not all safety concerns for all industries are covered by federal or even state agencies. For example: There are very few OSHA policies, and no WI state laws, that deals with fatigue issues. It is completely legal for most employers to require adults to work 10 hours (or whatever) without a break. That can be a annoyance when you're sitting in a cubical, but can be deadly when working around heavy electrical equipment or climbing in the rafters of a coliseum.

Do you think business can stay in business by paying their workers what Unions demand?

Heh. Reminds me of the ol' saying: They make demands while we put forth offers.

Anywhos...yes, of course businesses can survive negotiating with organized labor. Two current examples are the NFL and practically all of Hollywood.

Also, a look at our history shows that the great economic expansions of the 1950s-1960s coincided with very high union membership in America. I ain't saying that organized labor was the only reason we saw good times...but it does dispel the myth that it will automatically kill business, no?

Meanwhile, both the Great Depression of 1929 as well as the Great Recession of 2007 occurred with union membership very-very low. Again, I ain't saying that is only 'cause organized capital was completely running the show, but it kinda dispels the What is good for business is automatically good for the country meme, no?

Have those advances come with the help of Unions? Yes they have,

I was actually looking up some links to answer your questions before I saw that you answered 'em yourself and that we agreed...lol.

are those Unions neccessary to keep those in place? Probably not.

Unless you are of the beleif that nobody is working to chip away those advances brought forth by organized labor, I don't understand why you would have this opinion.

If capital is gonna organize & bargain as a collective (in the form of a corporation) then labor must also do the same, because a balance of power between 'em is best for our economy as well as for our society as a whole.

Brew Master said...

purplepenquin said...
I've heard a lot about OSHA. They are the guys that'll come around after someone is hurt or dead.

My experience with government agencies such as OSHA, the FDA, etc, must be quite different from yours. In multiple jobs over my lifetime many government Orgs have had an up-front proactive presence at job sites, and not just reactionary. This has occurred in both Union, and non-Union facilities, both open and closed shops.

It is completely legal for most employers to require adults to work 10 hours (or whatever) without a break.

Federal law does not mandate break periods under any labor law that I can find. However, each state that I have looked at provides for mandatory break periods, most of them for any work scheduled over 6 hours. I stopped looking after a dozen or so. There may be states out there that do not have such a law on the books, but I have not found any yet.
Aside from that, can you point to any company in the US, right to work or not that does not provide breaks as a matter of company policy? Any at all? Especially with your example of 10+ hours with no break. I’d be curious to know about any such company, as I would personally avoid purchasing any product they produce.


Anywhos...yes, of course businesses can survive negotiating with organized labor. Two current examples are the NFL and practically all of Hollywood.
How about the auto industry in Detroit? Even with the massive loss that the taxpayers are taking on the sale of government owned stock of GM, that company still saddled with the same unsustainable benefits packages for Union workers. They still have the same problems as before.

Also, a look at our history shows that the great economic expansions of the 1950s-1960s coincided with very high union membership in America. I ain't saying that organized labor was the only reason we saw good times...but it does dispel the myth that it will automatically kill business, no?
Organized labor had nothing to do with the expansion of manufacturing during this time period. The boom times of post WWII was due to the production capacity of the rest of the world being smashed and useless, while our capacity was untouched. We did not have to rebuild from scratch. Organized labor took advantage of this period of boom times and built in unrealistic expectations that the production output of this country would remain unchanged, and on top, without having to compete in a global market for labor. The first wake-up call for the US should have been the boom of the Japanese auto industry, which put the US to shame. Instead labor doubled down on their entrenched interests, and they are in the situation they are in now.

Brew Master said...

Meanwhile, both the Great Depression of 1929 as well as the Great Recession of 2007 occurred with union membership very-very low. Again, I ain't saying that is only 'cause organized capital was completely running the show, but it kinda dispels the What is good for business is automatically good for the country meme, no?

Hardly, the Great Depression occurred during the infancy of the Union movement in this country. In that time period (getting close to 100 years ago), unions were very much in need, and provided their greatest good. Labor laws and conditions during that time period were absolutely awful, and the unions were able to provide a great service to the American workers, and people, by helping to reform working conditions for the better. However, that is no longer the case. The big victories of the Unions have all been won, generations ago. What they fight for now can be generously described as marginal benefits at best, and more often than not the positions they take and defend are actually counterproductive to both the company they negotiate with, and the workers they represent.

Have those advances come with the help of Unions? Yes they have,

Unless you are of the beleif that nobody is working to chip away those advances brought forth by organized labor, I don't understand why you would have this opinion.

Show me an industry that has less labor laws applied to it today than it did 10 years ago, or 20, or 30, or 50, then you might have a point. The nature of government bureaucracy is that it never goes away, it only grows, and protects itself.
Giving workers in a state the right to work for a company without having to join a union is not chipping away at the advances brought forth by organized labor, it is chipping away at the monopoly that some unions have used to the detriment of both the companies, and the various states.

I have worked in both Union shops, and non-Union shops. I have worked in some really nasty conditions where the union was beneficial to the workers, and IMHO very much needed (slaughterhouse). I have also worked in industries where the Union was nothing but a protection racket for workers that had been there 20+ years, and was used as a sledgehammer to stifle company growth, as well as opportunity for new workers.
There are times when a Union is necessary, and times when they are sclerotic and counterproductive. Allowing the workers themselves the choice to opt out of a bad union is a good thing.

mikee said...

If Texas had good skiing, Colorado would fall off the list.

purplepenquin said...

In multiple jobs over my lifetime many government Orgs have had an up-front proactive presence at job sites, and not just
reactionary.


Well, I reckon if you're more involved with the inspections you would've noticed 'em more. I'm only aware of the Feds showing up once in the past 20 years on one of our job sites, and that was because someone had died at a different location the week before.

One of the many reasons I place more faith in union than OSHA is the time a co-worker was asked to climb a truss to adjust a fixture. When asked where a harness was, boss-man told my buddy there was no need for one and get up the truss or go home. It was kinda surreal, most of us just dropped our jaws. But then his boss-man quickly came over, reminded the dude that there was an actual contract involved and to go find a damn harness before the whole crew walked off.

Don't get me wrong. I ain't badmouthing OSHA. But they are mostly "top-down", while the unions are much more hands-on.

However, each state that I have looked at provides for mandatory break periods

Wisconsin, thelocationofthisblogaswellasmoi, has no such laws for adults. (Minors are protected). I first looked it up a few years ago while working at a call center for a waterpark resort. We were given no breaks (during busy seasons, not all the time...~2-3 weeks 3-4 times a year) for our 5 hour shifts, and would oftentimes be required to work a double. We were all grumbling about it and couldn't beleive it was legal but sure enough it was/is. Two other call centers I worked at afterwards also would not allow breaks/meals, tho those shifts were only 4-5 hours.

Granted, those were sitting-down jobs so it ain't as much of a safety issue as what I do now. The reason my union puts meal/break language..as well as other safety issues...in our contracts is because our work is often physically intensive as well as sometimes very mentally challenging, and there are times an employer would work us without a break. Not 'cause they are dicks, but rather 'tis just the nature of the business sometimes.

How about the auto industry in Detroit?

Yes, you keep bringing that up. If I recall correctly, some of the American automakers have been severely hurt but others are doing ok...yet all of 'em are unionized, no?

*shrug*

You also say that labor unions had nothing to do with the boom-times in America, yet you seem to put all the blame for the bust-times on 'em. Not sure how to reply to that, so how about if I just nod my head thoughtfully as we move on...

The nature of government bureaucracy is that it never goes away, it only grows, and protects itself.

You have a lot more faith in Big Gov't than I do. While I'm sure they may have some good intentions when looking out for the average worker, I'd rather have a voice a lot more localized.

Allowing the workers themselves the choice to opt out of a bad union is a good thing.

Allowing them to opt out of paying for the union, while requiring the union to still represent them, is a bad thing.

Unfortunately, there isn't an easy answer to that problem. I can kinda understand why folks on the losing end of a vote will feel cheated when told they have to still pay their fair share, but democracy is kinda messy like that sometimes.