It is the 10th anniversary of Santa Fe’s so-called “living wage.” The Albuquerque Journal covered the anniversary today and concluded that “results are mixed.”
Fair enough. It is hard to say that raising the minimum wage is a “disaster,” but when such a small portion of workers earn the minimum wage and those happen to be the most marginal, least-productive workers in the economy, it would take a truly outlandish minimum wage hike to be a “disaster.”
But that doesn’t mean that higher minimum wages are harmless or somehow beneficial as we have pointed out regarding younger workers in Santa Fe.
Ironically, while mom-and-pop businesses in Santa Fe are forced to pay $10.66 an hour, their elected officials in Washington with unlimited claims on the United States Treasury pay some of their workers nothing.
It is also sad, per the anecdote at the conclusion of the Journal article, that a young person would pick up and move all the way from North Carolina to work in fast food. Rather than relying on government mandates to increase one’s pay, wouldn’t she be better off studying part time to gain an associates degree in some kind of skilled trade (plumbing, welding, electrician, hair-stylist) where there is a real future rather than using those scarce resources to pick up an move her entire family for another unskilled, low-wage job?
Regardless of minimum wage policies, there are modest disparities in pay levels for even unskilled work, but the long-term impact of a few $$ an hour raise as opposed to a long-term increase in skills and marketability is minimal.
Overall, conservatives shouldn’t blow the impact of increased minimum wages out of proportion in terms of overall economic impact, but that doesn’t make it good policy either.
(Albuquerque, NM) – The Rio Grande Foundation is one of 77 organizations in 44 states celebrating “National Employee Freedom Week” which lasts from August 10-16. The week marks an occasion to educate workers on their freedom to join or not join a labor union.
There is no more basic freedom enshrined in the United States Constitution than that of free association. That includes the choice not to be forced to join or pay dues to a union as a precondition of employment. This right is protected under “Right to Work” legislation which has been adopted by 24 states, not including New Mexico.
According to a poll of 500-502 respondents conducted by Google Consumer Surveys, approximately 84.7 percent of New Mexicans answered “Yes” to the question: “Should employees have the right to decide, without force or penalty, whether to join or leave a labor union?”
Said Rio Grande Foundation president Paul Gessing, “These poll results illustrate strong support for the basic tenets of a “Right to Work law in New Mexico. No matter how the legislative races pan out in November, there can be no doubt that an overwhelming majority of New Mexicans support the basic principles of “Right to Work.”
Concluded Gessing, “Where implemented, “Right to Work” laws not only protect basic fairness, but they have a proven track record of spurring economic growth and increased employment when adopted. With New Mexico’s economy struggling profoundly, both parties in Santa Fe must consider ‘Right to Work’ as a core component of plans to reform the economy.”
According to a recent article published by National Review Online, a federal audit has found information-technology security weaknesses at New Mexico’s health-insurance exchange.
According to the report:
The final audit report was completed by June 17, 2014, but because it contains such specific information about vulnerabilities, it is not public, according to a letter sent from the Department of Health and Human Services’ Office of Inspector General (DHHS OIG) to the health exchange.
Needless to say, there are still some very significant issues with ObamaCare in New Mexico and around the nation.
In response to the NRO story, Dr. Deane Waldman who holds positions both on the Health Exchange Board and the Rio Grande Foundation, said:
The NM Health Exchange, in conjunction with federal oversight, was beta-testing, de-bugging if you will, our preliminary system for the individual market.
WE found the security problem and fixed it, before implementing our individual market, unlike healthcare.gov. Further, since we could not finish all the beta-testing in time for the federal deadline, WE chose to put off opening our Individual Market for a year until we completely de-bugged the system and proved (with evidence not promises or magical thinking) that it works, again unlike healthcare.gov.
You might find it interesting that WE take the federal deadline seriously, while they keep deferring them, “moving the goalposts” as it were.
By now most New Mexicans are aware that Tesla has broken ground on its “gigafactory” in Reno. To me, it seems likely that this is where the company intended to build its plant all along. After all, Nevada is a “right to work” state, a zero-income-tax state, and Reno is relatively close in proximity to Tesla’s main factory in Fremont, California.
But, some New Mexicans hold out hope that the company is “still evaluating” potential locations. Further comments from Tesla CEO Elon Musk indicated that $500 million might be enough to get the company to set up shop in a given state. For starters, it is clear from the Albuquerque Journal story that the company is looking for $500 million in tax dollars out of pocket. In other words, I’m sure some tax breaks and perhaps even some regulatory favors are expected, but Tesla is looking for $500 million upfront to assist the company with building its factory.
As I have written previously (point 1), taxing other New Mexicans and existing businesses to pay for a new business, no matter how exciting that business may be, is simply wrong and not good economics. Just like with the film industry, tax breaks are one thing, but outright payments are another.
If Tesla is really still in the market for another “gigafactory” location, I think the Martinez Administration should put Democrats on the spot. Give Tesla the equivalent of a “right to work” carve-out and eliminate personal and corporate income taxes for the company and see what happens. It won’t COST New Mexico taxpayers a dime upfront and it will force Democrats in the Legislature to make a decision on policies that should be considered for all businesses in New Mexico.
American Enterprise Institute Education expert Rick Hess spoke yesterday at Rio Grande Foundation events in Albuquerque and Roswell. His Albuquerque remarks were video-recorded and are available below. The Albuquerque Journal covered Hess’ talk and that article is available here.
Those meanies in the Martinez Administration have announced that they are going to reimpose a work requirement on recipients of food stamps. That’s the program that has seen its budget explode in recent years. Growth was particularly pronounced during the recession, but was growing steadily in cost during the economic boom immediately prior to the recession:
But this “work requirement” is hardly the onerous burden the advocates claim. It is only 20 hours and those hours could be spent volunteering in the community. Yes, the classic single mom with kids will always face the issue of babysitting, but perhaps the discussion to have should be over how to reduce the number of single moms out there rather than constantly demanding that taxpayers give them free stuff?
Besides, even if you can’t get a job in New Mexico’s current, poor economy, sitting on your butt at home isn’t going to help you build the skills or network to find a new, paying job. Doing something productive for 20 hours a week in exchange for food stamps is very reasonable.
Recently, site-selection expert John Boyd was interviewed about New Mexico’s chances for getting the Tesla “gigafactory.” His comments were very enlightening. He said that manufacturing companies seek reasons to eliminate states when considering where to build major facilities, and the lack of a right to work law is at the top of the list. In the interview, Boyd again reiterated the need for right to work stating, “I can’t underscore how critical right to work status is.”
Unfortunately, despite polling data (recently released by Rio Grande Foundation) showing that nearly 85 percent of New Mexicans support such laws, they are controversial. In reality, such laws merely prohibit unions and employers teaming up to force new employees to join a union as a condition of employment.
While most people see voluntary association as an American birthright, many unions see it as a dire threat to their funding and political power. So they kill it every year in its first committee in Santa Fe.
Equally problematic is the “go-along” attitude of so many of New Mexico’s business leaders. With 6,000 Tesla jobs hanging in the balance, the need for our legislature to pass a right-to-work law should have been a centerpiece of the recent “Reinventing Our City” conference on Albuquerque’s economy, but it was hardly mentioned by the business and community leaders who spoke at the meeting. To be fair, Mayor Berry has repeatedly noted the importance of right to work in other venues.
Any serious discussion of how to turn around New Mexico’s economy must focus on big, difficult issues like right to work, serious tax reform and a dramatic rethinking of the way in which we educate our children and prepare them for the competitive 21 st century workforce.
Rather than taking on these difficult but important issues (right to work is actually the simplest and likely the most politically viable short-term reform), New Mexico’s statewide chamber, ACI, has recently focused its attention on government contracting. The Chamber is upset that New Mexico’s in-state contractor preference is inadequate and not adhered to closely enough.
I certainly appreciate that businesses want a fair shot at government contracts, but as state taxpayers we should get the best deal possible regardless of where the business is located. Taxpayers shouldn’t be forced to pay above-market prices for government services and construction.
Businesses also have amazing ways of making themselves appear to be in-state when in fact they are not. Do we really want to hire a team of taxpayer-funded investigators to check up on businesses to make sure they are truly “New Mexican?” Simply put, government contracting reform is not going to have a major impact on New Mexico’s economy one way or the other.
The silver lining about New Mexico’s ongoing weak economic recovery is that more and more people are realizing that our state has depended on Washington’s largesse for way too long. That situation is changing both due to federal budget problems and the retirement of Senators Domenici and Bingaman.
This is the time for solutions and that means facing some tough decisions. As explained by Mr. Boyd, a national expert on business relocation, a right-to-work law is a must for any state that wants to grow its economy. It is time for our business and political leaders to upset the entrenched special interests that have been holding our state back for so long.
The alternative is a future of government dependency and poverty.
Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.
As if the fact that they are getting 30 cents on the dollar as part of New Mexico’s film subsidy program were not bad enough (TV shows receive 30 cents on the dollar as opposed to 25 cents for movies), now New Mexico taxpayers are subsidizing The Bachelor, a television show that can only be described as insipid. The “plot” of the show involves one man choosing from a stable of 25 or so women.
The City of Santa Fe is putting up $100,000 to attract the show while New Mexico’s Tourism Department is putting up $50,000 according to KRQE TV.
I’ve never watched the show and I have no idea whether it is good exposure for the city in which it films, but state taxpayers are already losing more than 50 cents on the dollar for film subsidies. Additional taxpayer subsidies for The Bachelor adds insult to injury regardless of the show’s quality or lack thereof.
Notably, this is not Santa Fe’s first go-round when it comes to doubling up on film subsidies. Santa Fe studios also “doubled-up” its taxpayer subsidies by using $23 million to finance construction in addition to the 25 or 30 cents on the dollar thrown in by the state. In Santa Fe apparently, there is no limit on what taxpayers should pay for films and tv.
For an amusing but slightly off-color take on The Bachelor, check out the following clip from Chelsea Handler:
There’s yet another story about Tesla in today’s Albuquerque Journal. While the headline is mostly about the likelihood that the new giga-factory will be located near Reno, to my mind, the real news came from John Boyd, the principal at his namesake site selection firm (he helps businesses figure out where to locate). Said Boyd of New Mexico’s chances to lure Tesla “manufacturing companies look for reasons to scratch off states when considering where to build major facilities — and no right to work law is at the top of the list.”
Boyd continued saying, “I can’t underscore how critical right to work status is.” In conclusion, Boyd again reiterated the dire need for a right to work law in New Mexico saying, “New Mexico has enormous potential to become a manufacturing hub, especially if it were to adopt right to work legislation.”
We at the Rio Grande Foundation have been talking about the importance of right to work for years with no action by the Democrat-controlled Legislature in Santa Fe. Unfortunately, but not surprisingly, right to work is not on the agenda of some crazy people who apparently are also hired by institutes of higher education who want to do “whatever it takes” to bring Tesla to town. Nor is right to work on the agenda of legislators who want to play politics with the Tesla factory but won’t advocate for right to work.
When it comes to film subsidies in New Mexico, the Rio Grande Foundation is about the only organization that publicly, clearly stands in opposition. Some even wonder if our position is legitimate given that it is such a “minority” viewpoint.
— Gwyneth Doland (@GwynethDoland) July 23, 2014
Ironically, outside of New Mexico, there is relatively widespread agreement that film subsidies are poor public policy. The following links are just some of the reports generated in recent years in opposition to film subsidies.
Rutgers Journal of Law & Policy
North Carolina General Assembly
From the left:
The latest Voices for Children “Kids Count” report came out recently with New Mexico ranked 49th. While much of the debate has centered around New Mexico’s dismal rankings and assigning blame for it, liberals have centered their “solutions” on a new pre-k program. Rio Grande Foundation has, of course, proposed a variety of free market solutions to alleviating poverty in New Mexico. The fact is that neither method will have an immediate impact in the same way that the best private-sector anti-poverty program would have. That “program” is called marriage and as the chart below illustrates, it is highly effective.
Creating policies to save marriage is admittedly a challenge and I admit that RGF is not expert on the matter, but given this data, it has to at least be mentioned (and the left certainly won’t do that). Perhaps government can at least stop creating welfare programs that dis-incentivize marriage?
It’s no surprise when you think about it using economics and reasoning. But liberals aren’t known for their understanding of either. And so it is that a new report as detailed in Forbes has found that Wal-Mart (and big box employees in general) are better, not worse-paid than their peers in smaller retail establishments.
In this paper, we characterize the wages that have accompanied the growth in retail. We show that wage rates in the retail sector rise markedly with firm size and with establishment size. These increases are halved when we control for worker fixed effects, suggesting that there is sorting of better workers into larger firms. Also, higher ability workers get promoted to the position of manager, which is associated with higher pay. We conclude that the growth in modern retail, characterized by larger chains of larger establishments with more levels of hierarchy, is raising wage rates relative to traditional mom-and-pop retail stores.
It only makes sense that in the world of retail, more efficient, bigger players will pass on some of the savings to customers and will pass along some of the higher profits to workers. But the fantasy among many is that retail jobs will somehow receive the pay associated with jobs further up the economic ladder.
Maybe next time our friends on the left won’t try so hard to keep Wal-Mart from opening a store here in Albuquerque…ha!
A new report from the University of Arkansas should provide proponents of charter schools and school choice additional ammunition in their efforts to reform a struggling American education system.
According to Reason, Researchers examined data from 21 different states. While the results varied, charter schools were found to be more productive—and generate a higher return on investment—than traditional public schools (TPS). On average, charter school students scored so much better on assessments that spending money on charters was roughly 40 percent more efficient than spending money on TPS. According to the study:
Comparing [National Assessment of Education Progress] achievement obtained in public charter schools versus TPS for 21 states and DC, we find the public charter school sector delivers a weighted average of an additional 17 NAEP points per $1000 invested in math, representing a productivity advantage of 40% for charters; In reading, the public charter sector delivers an additional 16 NAEP points per $1000 invested, representing a productivity advantage of 41% for charters.
The bad news is that, according to the report, as pointed out on page 28 of the report, New Mexico’s charter schools have the lowest State-level Return on Investment for Charter Schools Relative to Traditional Public Schools of the states studied. It is still positive, but not as good as it could be.
Rarely is one vindicated so clearly and yet, clearly, the media is absolutely clueless (that second part about the media is not so rare). A new study done by the State was discussed in some detail in today’s Albuquerque Journal. The results are touted as showing that “film incentives pay off” and that the incentives are “linked to economic gains.”
The reality could not be more different and, unfortunately for our media friends, this fact could not be more obvious. Take just a few numbers from the Journal’s report:
Between 2010 and 2014, the state (taxpayers) paid out $251 million in incentives to the film industry with $103.6 million in state and local tax dollars generated. That is indeed 43 cents on the dollar as the study notes and last time I checked, if I gave you $1 and you gave me back 43 cents, you still owe me money or I’m getting ripped off (it is the latter in this case).
Curiously, this lack of full-time jobs was borne out by the Albuquerque Biz First which carried a listing (only partially available online) of the “top film and video production companies” in New Mexico by full-time employees. The top company in New Mexico has 13 employees and it doesn’t take long to get down the list to one and two person companies. I counted 74 full time employees among the top 21 companies. Perhaps some companies didn’t share how many workers they have and there are obviously greater numbers of part-time workers on any given production, but this is not exactly an industry that is going to lead New Mexico out of a recession with a cost of $50 million annually.
Updated: There was an error in the original posting involving subsidy per job. The correct cost per full-time job per the study is that each job cost taxpayers a bit more than $8,500.
There is a free market think tank in all 50 US states. We are all independent and set our own priorities and allocate resources based on our own priorities. It’s called the State Policy Network and it drives the left nuts.
Recently, we at the Rio Grande Foundation got in touch with our friends in Arizona at the Goldwater Institute to weigh in on a budding case of corporate welfare and economic development gone wrong. Read economist Byron Slomach’s piece from the Las Cruces Sun-News on the current discussion relating to an existing copper wire company based in Doña Ana County that could soon face some taxpayer-assisted competition.
The Hobby Lobby decision generated a lot of attention, but the real threat to ObamaCare is more likely to come from decisions like the one made today by the U.S. Court of Appeals for the District of Columbia in the Halbig case.
Michael Cannon, a health care expert with the Cato Institute, has done extensive reporting on Halbig and its potential impact on ObamaCare. Just yesterday, he summarized the case, saying that it:
(C)halleng(es) the legality of the health-insurance subsidies the IRS is dispensing in the 36 states that did not establish a health-insurance Exchange under the Patient Protection and Affordable Care Act, or “ObamaCare,” and thus have Exchanges established by the federal government. Though the PPACA repeatedly states those subsidies are available only “through an Exchange established by the State,” and there are indications IRS officials knew they did not have the authority to issue subsidies through federal Exchanges, the IRS is dispensing billions of dollars of taxpayer subsidies through federal Exchanges anyway.
More from Cannon on the case here.
In other words, the Courts could offer yet another rebuke to the Obama Administration which has repeatedly ignored or reinterpreted laws passed by Congress in ways that benefit its own agenda. Obama can argue whatever way he wants about what Congress “intended” to write into the law, but what really matters is what the law actually says, as written.
I’m no expert on the Supreme Court, but it seems unlikely that The Court will overturn this decision which is based on clear and unambiguous language. This is good news if you share the view that ObamaCare takes US health care down the wrong path towards big-government command-and-control policiesd and further away from market-based solutions.
As Cannon notes, Large numbers of New Mexicans (more than 94,000 to be exact) could be exempted from the individual mandate in the event that Halbig is upheld or is not appealed:
The following article appeared in the Las Cruces Sun-News on July 20, 2014. Although legislation has passed the House (and will likely pass the Senate soon) to temporarily prop up the highway program and avoid an immediate crisis, the need for fundamental change in how America builds and maintains its infrastructure remains.
The next manufactured crisis coming from Washington, DC involves the federal highway program. According to news reports, the Federal Highway Trust Fund is on the cusp of insolvency, with a cash shortage looming before the end of July. Despite the deadline, lawmakers are at an impasse over how to replenish an account that funds the nation’s highway projects.
U.S. Transportation Secretary Anthony Foxx is warning states would, on average, see a 28 percent reduction in federal dollars to cover the costs of current needs if additional funding is not found. One potential source of funding is a hike in the federal gas tax.
In its current form, the federal highway program is financed through an 18.4 cent-per-gallon tax on gasoline and a 24.4 cent tax on diesel fuel. Unfortunately, while the gas tax more closely resembles a user fee than other taxes charged by Washington, it isn’t. If it were a user-fee, gas taxes would finance roads, bridges and other items that benefit motorists who pay the tax. Instead, over the past decade, Congress has diverted well over $55 billion of gas taxes to non-highway projects, most notably mass transit.
Whether you want more mass transit or less, the fact is that transit riders don’t pay the gas tax, rather motorists subsidize these systems nationwide. Ideally, Congress would create transportation policy under the principal of “user pays.”
Unfortunately, Washington seems to be utterly incapable of making even the most basic reforms. Worse, transportation policies that work in New York and Chicago may not work so well in Albuquerque or Farmington, New Mexico.
The solution is simple: get Washington out of transportation policy and hand it back to the states. After all, as the Highway Program currently operates, Washington simply takes in the gas tax money, adds a bunch of requirements (like costly Davis-Bacon labor rules), diverts for pet projects and mass transit, and returns the money to the states.
This is silly. Washington played an important role in the creation of the Interstate Highway System, but that was completed in 1992.
Several bills have been introduced in Washington over the years that would devolve all or most of the program – thereby eliminating the federal gas tax – to the various states. The latest proposal called the “Transportation Empowerment Act” was introduced by Sen. Mike Lee (Utah) and Rep. Tom Graves (Georgia).
States would then be able to experiment with transportation policies that make sense for their own populations. Gas taxes could be raised or lowered. Or, as Oregon is considering, motorists could be charged based on miles driven. Priorities like transit could be emphasized or reduced also depending on the particular state.
Lastly, absent federal mandates favoring prevailing wage laws, Davis-Bacon states could decide for themselves whether they want to pay union rates for construction projects, build 15 percent more infrastructure, or save taxpayers up to 15 percent. New Mexico is a Davis-Bacon state, but neighboring Arizona, Utah, Colorado, and Oklahoma are not. Amazingly, Texas is the only adjacent state that, like New Mexico, unnecessarily inflates labor rates on public works projects.
Like so many things, the federal government undertook a specific project like the Interstate Highway System only to refuse to see its size and scope reduced. There is no reason for a disagreement in Washington to negatively impact New Mexico roads and bridges, but that is the system Congress has saddled us with.
We at the Rio Grande Foundation have often criticized policies enacted in Santa Fe, but there is no doubt that Santa Fe would do a better job than Washington. And, given innovation and competition from neighboring states to enact the best, most-efficient transportation system, I believe that Santa Fe would improve.
To date, none of New Mexico’s congressional representatives has co-sponsored this legislation or any bill that would really reform the federal transportation system. Unfortunately, that means New Mexico will continue to rely on the whims of a dysfunctional Washington for something as basic as transportation funding.
Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility
The Competitive Enterprise Institute has produced another fine report this week. The topic of he new report is how much better off individual workers would be if the state had a Right to Work law in place (right to work simply means that one cannot be required to join a union as a condition of employment).
CEI’s analysis which looked at economic data going back to 1977, broke down the impact of not having a right to work law by state and found that on a per-capita basis, New Mexicans lost out on $2,638 in annual income.
This is obviously relevant to individual families and workers, but it is driven by the broader growth seen in such states nationwide (updated versions of this and other information can be found in the CEI report):
Carl Graham recently sat down and talked with Fred Martino of KRWG TV in Las Cruces. The video of Graham’s interview can be seen below. Feel free to fast-forward through the valentine to heavily-subsidized so-called “renewable” industry to the 5:25 mark when Graham’s interview starts. After Graham’s interview, there is an interesting (albeit one-sided) discussion of the land the State of New Mexico could receive due to the Organ Mountains Monument land grab.
Check out the following chart from our friends at the Tax Foundation. Looks like New Mexico is a leader in one thing: taxation.
And gas taxes are not the worst tax in the world especially if they are dedicated to funding road construction and maintenance. Unfortunately, a large portion of the 18.4 cent/gallon gas tax collected by Washington is diverted to transit and other “transportation-related” projects.