What would we do without the United States Chamber of Commerce to provide endless amusement? Today's installment, a 116-page study purporting to demonstrate "The (Horribly Soul-Crushing and Possibly Treasonous) Impact of (Marxist Command-and-Control) State Employment Policies on Job Growth: A 50 State Review."
OK, so maybe I added a few words to the title. But I don't think I'm being unfair. The gist of the U.S. Chamber of Commerce's study is exactly what you might expect: There are onerous costs to excessive regulation.
Based on a comprehensive survey of the 50 states' labor and employment policies in 2009 conducted by Seyfarth Shaw LLP, Navigant Consulting developed an Employment Regulation Index (ERI) that summarizes the overall level of state labor and employment regulations. Navigant performed an econometric study that demonstrates the impact of state regulatory burdens (as measured by the ERI) on two key economic variables: the unemployment rate and new business formation. The 34 characteristics used to construct the ERI are listed in Table 1. Based on the ERI, the states were then sorted into three tiers indicating their overall level of labor and employment regulation.
The tiers are "good," "fair" and "poor."
Now far be it from me to claim that there are no costs at all to regulation. If California has tough environmental laws and a high minimum wage, and cracks down on all kinds of employer abuses, and a neighboring state, let's say, oh, Arizona, does not, then I'm sure some businesses will prefer to locate themselves in Arizona.
But let's take a closer look at the Chamber's state ratings.
The 15 states rated as "good" -- meaning, low levels of regulation -- by the Chamber are Alabama, Florida, Georgia, Idaho, Kansas, Mississippi, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah and Virginia. The 15 states rated as "poor" are California, Connecticut, Hawaii, Illinois, Maine, Massachusetts, Michigan, Montana, Nevada, New Jersey, New York, Oregon, Pennsylvania, Washington and Wisconsin.
Notice any difference, besides the fact that the vast majority of "good" states voted for McCain in the 2008 presidential election, and the vast majority of "poor" states went for Obama? How about this -- Americans, by an almost 2-to-1 margin, seem to prefer living in excessively regulated states -- 139,270,097 -- than they do in free market capitalist paradises like Alabama or Idaho -- 67,475,959. I haven't crunched all the numbers yet, but I'll also bet you that per capita incomes tend to be higher in the "poor" states as well.
It's hard to avoid the conclusion that civilized states -- the kind of states that people seem to want to live in -- are defined in part by having a lot of regulatory infrastructure. One of the reasons California falls into the "poor" category, according to the Chamber's analysis, is that the state mandates "leave requirements that exceed federal law."
Curious readers can find a list of California's leave "entitlements" here. They are extensive. And perhaps we could have a good argument about whether the most recent addition, paid time off for bone marrow and organ donation, constitutes regulatory overreach. But overall, I personally would rather live in a state that ensured employees could take more time off to care for newborns or ill family members, or to make organ donations, than less. It's just more civilized.
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