In the wake of two recent shooting tragedies and ongoing negative attention for the city of Albuquerque, Mayor Richard Berry has asked New Mexico’s Legislature to make changes to the pension system in order to allow police to return to the workforce. The Albuquerque Police Department says 135 officers need to be hired to fully flesh out the local police force.
Earlier this year, the mayor proposed spending an additional $4.7 million to comply with the U.S. Department of Justice’s reform demands at APD. We can all agree that public safety is the first and most important role of government. Unfortunately, there are always infinite wants and limited means to provide those, and it seems like local governments and the local citizenry have been unwilling to prioritize. Over the years, this has led to higher taxes and real economic harm.
At the start of the 2000s, Albuquerque’s gross receipts tax (GRT) rate stood at 5.8125 percent. Currently, it’s 7.1875 percent — an increase of 23.7 percent. That rate will further jump to 7.3125 percent when the recently-passed ABQ BioPark tax hike is in place, a nearly 26 percent increase since 2000. All those tax hikes of a “fraction of a penny” have added up over the years to real money.
Today, our city has 17,100 fewer jobs than at its pre-Great Recession employment peak in March 2007. Yes, New Mexico’s economy remains weak, but its largest city is not helping.
Unfortunately, we’re just getting started. For more than a year now, Berry and a majority on city council have been promoting a costly and unnecessary bus rapid transit system along Central Avenue.
Recently, Paul Gessing sat down with Dan Mayfield of the Morning Brew to discuss several issues the Foundation is working on. Specifically, we talked about an event the Foundation put on relating to civil asset forfeiture. And, while that event has come and gone, several of the issues discussed remain relevant and topical in advance of the 2016 legislative session.
New Mexico doesn’t have a jobs problem. It has a jobs crisis.
Nationally, unemployment is falling, but in the Land of Enchantment, it’s rising. Only West Virginia has a higher jobless rate.
Even worse, labor participation for prime-age workers in our state has collapsed. The Pew Research Center recently found that between 2007 and 2015, New Mexico’s employment-to-population ratio for 25-to-54-year-olds plunged by the sharpest rate in the nation.
There are many tools state policymakers can use to restore vibrant job growth, but perhaps no reform offers more promise than passage of a right-to-work law. By ending the compulsory payment of dues to union bosses, New Mexico would send a clear signal that it’s open for business.
Says who? Site-selection experts. They consistently report a significant portion of their clients prefer RTW states.
New research confirms the value of RTW in creating jobs. The Rio Grande Foundation examined investment announcements posted on the website of Area Development, “the leading executive magazine covering corporate site selection and relocation,” between January 1st and June 30th of this year.
During the period, companies declared that they would add 92,923 positions in expansions, relocations and greenfield investments. RTW states were slated to receive 79 percent of employment – a sum, not surprisingly, far in excess of the 47 percent of private-sector jobs found in RTW states.
It’s true that “correlation is not causation,” and other factors – e.g., transportation infrastructure, workforce quality, energy costs, taxes – influence site-selection decisions. That’s why our analysis looks at RTW in several unique ways.
At the broadest level, it examines “quality” jobs – middle- and high-compensation positions in manufacturing, IT, logistics, research and development, finance, and engineering. (No positions in fast food, convenience stores, landscaping, and retail sales are included.)
A further refinement is made for projects that involve “border crossings” – i.e., when a business headquartered in a non-RTW makes an investment in a RTW state, and vice versa.
Relocations, in which enterprises move entire facilities from one type of state to another, are assessed as well.
Finally, foreign direct investment (FDI) is scrutinized, in order to determine which type of states draws the most jobs from firms based abroad.
In total, 113 border-crossing investments were announced. Ninety-six – 85 percent – shifted from non-RTW to RTW. Job-creation followed suit.
In each of the six months examined, more positions were to be created in RTW states by non-RTW-based firms than vice versa. Fourteen facilities announced journeys from non-RTW to RTW, while just three planned to go the other way.
RTW states garnered 98 percent of relocation-related jobs.
In total, 132 FDI announcements were listed. Seventy-three percent were made in RTW states, which garnered 83 percent of jobs. Of the 12 nations that announced more than one FDI in the period, ten indicated a preference for RTW states.
It’s notable that high-population, non-RTW states such as California, New York, Illinois, Pennsylvania, New Jersey, Washington, and Massachusetts did not rank among top job-creators. Also interesting were stellar performances by two Rust Belt states: Indiana (which became RTW in 2012) and Michigan (which became RTW in 2013). Of the 10 states to receive the most employment, nine were RTW.
The reality of jobs growing faster in RTW states has been established for decades. But the foundation’s research shows that banning compulsory unionism does not foster a “race to the bottom.” To the contrary, worker freedom is correlated with employment in well-compensated industries.
Furthermore, firms based in non-RTW states appear to favor expansion in and relocation to RTW states. And RTW states substantially outperform their non-RTW competitors in FDI.
It is not a panacea, but a New Mexico right-to-work law would make the Land of Enchantment more attractive to companies looking to find sites for new facilities and/or relocate existing assets. Shifting New Mexico into the RTW camp is a sound, and cost-free, policy investment to address our state’s jobs crisis.
With the 2016 legislative session around the corner, it’s time for the New Mexico Senate to finally vote on right to work.
D. Dowd Muska (email@example.com) is research director of New Mexico’s Rio Grande Foundation, an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.
(Albuquerque) – A new analysis finds that right-to-work (RTW) states excel at creating quality jobs, and if New Mexico’s policymakers want the state to escape its severe economic woes, repealing compulsory unionism is essential.
“Where the (Good) Jobs Are: A New Look at Right to Work and Employment Growth,” authored by Rio Grande Foundation Research Director Dowd Muska, finds that RTW states far outpace their compulsory-union competitors in creating middle- and high-wage employment.
Muska’s research examined job-creation announcements posted on the website of the publication Area Development between January 1, 2015 and June 30, 2015. Positions were in manufacturing, finance, IT, biotech, research & development, business services, and logistics.
“These are the kinds of jobs that would make New Mexico a more prosperous state,” Muska said. “And they’re the kinds of jobs that politicians’ current economic-development strategies are not producing.”
Of the 92,923 jobs examined in the study, 79.2 percent were slated to be created in RTW states – a sum, not surprisingly, far in excess of the 46.8 percent of private-sector jobs found in RTW states. Both domestic and foreign firms prefer RTW states, and companies that relocate their facilities from one type of state to another overwhelmingly prefer to move to locations where labor freedom is respected.
Right-to-work laws, which were first adopted in the 1940s, free employees from paying compulsory dues to union coffers. Site-selection experts quoted in “Where the (Good) Jobs Are” argue that RTW is a requirement for many businesses looking to site, expand, or relocate their operations. The Rio Grande Foundation’s new research confirms their claim.
“Our organization has long argued that RTW is right for New Mexico,” said Rio Grande Foundation President Paul Gessing. “This new research offers more evidence of a trend that’s been underway for many decades: Right-to-work states outperform compulsory-union states.”
While a RTW bill passed New Mexico’s House of Representatives earlier this year, and Governor Susana Martinez pledged to sign the bill, the legislation did not receive a vote in the state’s Senate. RTW supporters are sure to press for the law in future sessions.
Despite (or perhaps because of) the latest bailout, Greece remains deeply-troubled. The crisis has manifested itself due to Europe’s single currency, the Euro. Greece cannot pay its bills, but because of the Euro, it cannot devalue its currency either. So a series of bailouts and “austerity” measures have been imposed.
This is a quick synopsis of the Greek situation, but what are the parallels for New Mexico?
In July of 2011, The Economist magazine noted one interesting parallel when an article “Greek Americans” noted which U.S. states are most reliant on transfers from Washington for fiscal support. According to the article, New Mexico was the most reliant U.S. state in the nation by far.
It is true that unlike Greece, the U.S. has a long-standing single fiscal policy and a culture (200+ years) of unified action. Greece could easily leave or be kicked out of the currency union after only a few decades of unity. That is not likely to happen to New Mexico.
Unfortunately, our state shares the Greek propensity to rely on outsiders for financial support along with a bloated government payroll and underdeveloped private sector.
According to Key Policy Data, New Mexico has the second-most state and local government workers per 100 private sector workers of any state in the nation — more than 25.
The proliferation of government employees has helped to create a bloated and under-funded government employee pension system. According to the Competitive Enterprise Institute, New Mexico’s government employee pension system is in the worst overall shape of any public employee pension system in the nation. This is a serious issue that makes New Mexico’s parallel to Greece quite direct.
What can be done? The Martinez Administration has been working hard to convince legislators to deregulate the New Mexico workforce and restrain the growth of government. These are good things, but New Mexico’s Senate needs to help, not hinder, efforts to spur private sector economic growth.
We need a healthy dose of transparency in terms of how much New Mexico relies on Washington dollars to keep our economy afloat. We know New Mexico is too reliant on Washington, but how reliant?
The federal debt is more than $17 trillion, yet there is no easy way for New Mexico policymakers or the public to answer such basic questions as: How many federal grants do our agencies utilize? How many state employees collect a paycheck that depends, in whole or in part, on a federal subsidy? And most importantly, what would happen if this federal money dried up?
Idaho is one state that has embraced the added transparency that we are calling “financial ready.” Simply put, Gov. Martinez should sign an executive order saying that state agencies need to delineate the federal dollars they receive so that lawmakers can be prepared for the next fiscal crisis from Washington.
We need to know today who will be impacted by the reduction or elimination of federal dollars tomorrow. Will it be seniors who depend on a home food service? Could it be law enforcement agencies who track down child predators using a federal grant? “Financial ready” would also include contingency plans to assist lawmakers in dealing with the unforeseen but rather inevitable consequences of Washington profligacy.
New Mexico has already had a close brush with real consequences from its reliance on Washington. When sequestration went into effect in Washington in 2013, New Mexico’s “payment in lieu of taxes” (PILT) money faced a dire threat. Rural communities unable to tax large swaths of federally-owned land faced a crisis situation.
Thankfully, our Senate delegation was able to get $34 million in PILT funding for New Mexico counties, but the consequences of blindly relying on Washington could have been dire.
Significant reforms to New Mexico’s economy are essential – as is tackling pension reform and funding. When it comes to relying on Washington, we should start with a healthy dose of transparency so policymakers and the public can better understand the full scope of our reliance.
Gessing is the president of the Rio Grande Foundation — 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.
Dr. Matthew Ladner spoke at the Rio Grande Foundation’s “Milton Friedman Day” celebration on New Mexico’s Impending Demographic Challenges and How Policymakers Can Cope. His slides can be accessed here.
Ladner, an optimist by nature, had some sobering words for the event attendees. As Ladner made clear, so many things in our society are improving and our economy is more productive than ever, but our education system has seen growth in employment without similar growth in productivity or improved outputs.
As Ladner notes, there are successful education reform models including the one implemented in New Orleans in the wake of Hurricane Katrina. The entire public school system was turned into charter schools with some significant, positive results:
Reforming and improving the education system, notes Ladner, is all the more important with New Mexico’s elderly population set to explode in the years ahead according to new demographic research by Ladner. According to Ladner. In fact, as Ladner notes New Mexico’s working age will shrink as a percentage of the total population, with the Land of Enchantment projected to have the highest total age dependency ratio in the nation in 2030.
In New Mexico’s case the increase in the total age dependency ratio projects to be entirely due to a near doubling of the elderly population between 2010 and 2030.
Dr. Ladner is Senior Advisor of Policy and Research with the Foundation for Educational Choice. He previously worked with the Rio Grande Foundation to bring the “Florida Model” for education reform to New Mexico.
Dr. Ladner has written numerous studies on school choice, charter schools and special education reform. Most recently, Dr. Ladner authored the groundbreaking, original research Turn and Face the Strain: Age Demographic Change and the Near Future of American Education, outlining the future funding crisis facing America’s K-12 public education funding.
With the 2015 legislative session about to end, it’s a near-certainty that right-to-work (RTW) legislation, which passed the House, will not be voted on in the Senate.
Given New Mexico’s struggling economy and declining population, it’s unfortunate that senators have rejected a powerful, and cost-fee, tool for job creation. Since the start of the year, the Rio Grande Foundation has been tracking announcements of expansions, relocations, and greenfield investments published on Area Development’s website. Founded in 1965, the publication “is considered the leading executive magazine covering corporate site selection and relocation. … Area Development is published quarterly and has 60,000 mailed copies.”
Here are the findings for January:
Here are the findings for February:
In all, 27,389 jobs (80.6 percent) were to be created in RTW states. Only 6,605 jobs (19.4 percent) were planned for non-RTW states.
Notably, many projects involved shifts from non-RTW to RTW states:
* Brad Penn Lubricants moved production from Pennsylvania to Indiana.
* Mercedes-Benz USA relocated its corporate headquarters from New Jersey to Georgia.
* American Stair Corporation moved its operations from Illinois to Indiana.
Contrary to unions’ claims, the positions slated for RTW states are not limited to “McJobs,” but run the gamut, including healthcare, software/IT, manufacturing, finance, engineering, and logistics/warehousing — exactly the kind of opportunities New Mexico needs to reverse its economic woes.
In all, New Mexico’s four RTW neighbors are projected to gain 6,122 jobs, while non-RTW Colorado posted no project announcements.
Some methodological specifics:
* All job estimates — “up to,” “as many as,” “about” — were taken at face value, for RTW and non-RTW states alike.
* If an announcement did not make an employment projection, efforts were made to obtain an estimate from newspaper articles and/or press releases by elected officials and economic-development bureaucracies.
* If no job figure could be found anywhere, the project was not counted, whether it was a RTW or non-RTW state.
(Albuquerque, NM) – New research by New Mexico’s free-market think tank finds that a dollar goes much further in right-to-work (RTW) states.
Legislators in Santa Fe are debating whether to adopt a RTW law for New Mexico. Opponents of the measure charge that residents of right-to-work states are poorer, and that if enacted in The Land of Enchantment, there will be “greater expenditures for subsidized food, housing and health care for newly hired workers who will never make a living wage.”
The Rio Grande Foundation’s research debunks such claims.
The issue brief “Purchasing Power and the Right to Work” finds that once adjusted for the the Bureau of Economic Analysis’s estimate of the cost of living, disposable income, per capita, is equal in the two types of states. Using an alternate calculation developed by the Missouri Economic Research and Information Center, income in RTW states is 8.5 percent higher.
Many ways that life’s basic necessities are costlier in non-RTW states, including:
- The list price of a single-family home is 26.5 percent lower in RTW states.
- Energy is more affordable in RTW states – for example, electricity is a whopping 27.7 percent cheaper.
- Healthcare is more affordable in RTW states, as are eldercare expenses such as home-healthcare aides and assisted living.
- RTW is associated with lighter local-and-state tax burdens and residents of non-RTW states labor more than 10 days longer to pay their annual local, state, and federal tax bill.
“These statistics show that union bosses’ favorite argument against RTW is hollow,” said Dowd Muska, research director with the Rio Grande Foundation and author of the new report. “When adjusted for purchasing power, RTW states are at least as wealthy as their compulsory-unionism competitors – and in all likelihood, wealthier.”
“Contrary to the allegations of Big Labor’s well-funded lobbyists and activists,” concluded Muska, “RTW is not a ticket to impoverishment. Life is good where unions must earn their members’ financial support. Little wonder why so many RTW states have strong economies and growing populations.”
It pleases me to no end that a report published by my organization back in July of 2012 has recently become an object of such criticism and outrage among left-wing critics of “right to work.” It shows that our efforts to put “right to work” at the top of the Legislature’s policy agenda have paid off and that New Mexico may finally be on the verge of adopting some long-overdue reforms that will shake our economy out of its torpor.
Both the union-funded, Washington-based Economic Policy Institute and University of New Mexico sociology professor Tamara Kay made news recently by giving the report an “F-grade” and calling it “kindergarden math.”
To be clear, truly conclusive data are hard to come by in the social sciences. The statistical tool known as regression is useful and it was used in our 2012 report, but the ideal method would be to have two or more experiments running with New Mexico moving forward with or without a “right to work” law in place. After a given period of time you compare notes and draw conclusions. That is impossible in the real world so “proof” is elusive and debates (and name calling, apparently) continue.
But what impact do “right to work” laws have in the real world? For starters, Michigan adopted such a law in March 2013. From that time through November 2014, Michigan saw 4% payroll manufacturing job growth, beating an average of 2.8% in right-to-work states and 0.9% in non-right-to-work states, according to the Bureau of Labor Statistics.
Indiana joined the right-to-work ranks in 2012, and from March 2012 to November 2014 factory payroll employment grew 9.4% compared to 1.2% average growth for states without right-to-work laws. Data are admittedly limited due to the relatively recent adoption of these laws, but so far the results are promising.
Data out of Oklahoma which shares a border with New Mexico and adopted “right to work” back in 2001 are even more promising. In the five years preceding adoption of “right to work” (1996-2000) per-capita personal income in Oklahoma lagged the region (save New Mexico) and the national average.
In the decade following adoption of “right to work,” (2001-2010) Oklahoma led the region with per-capita personal income growth of 36% and beat the national average growth rate of 28% handily.
This does not “prove” that Oklahoma’s “right to work” effort “caused” personal income rates to jump, but our critics such as Professor Kay and EPI claim that “right to work” results in “slower job growth, lower wages, and greater income inequality.” Shouldn’t they be asked to at least make a coherent argument of their own using real-world examples and data?
And to her point on inequality, according to the liberal Center on Budget and Policy Priorities 2012 report “Pulling Apart,” New Mexico faced the greatest income inequality between top and bottom during the late 2000s. I’d like to see our critics blame New Mexico’s, as of yet non-existent, “right to work” law for that one.
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.