Economic Opportunity For Millennials Starts With Sound State Policy
At a time of lackluster national economic performance and a federal policy environment that is increasingly gridlocked and hostile to job creation, it’s no secret to millennials that young people are bearing the brunt of the recent economic recession.
The facts are grim: 45% of the U.S.’s unemployed are under the age of 34, 41% of recent grads are working in a job that doesn’t require a college degree (in addition to the 11% who were unemployed), and 26.2% of Americans between 25 and 34 are not working currently, a figure putting the U.S. among the highest in the developed world.
State policymakers who aspire to move their state into one of the top five spots in this national economic outlook index (this year comprising Utah, North Dakota, South Dakota, Wyoming and Virginia, respectively), and away from the bottom five slots (comprised of Minnesota, California, Illinois, New York and Vermont), should look to embrace free market, low tax, limited government principles described in Rich States, Poor States. Like past editions, the report compiles and updates the results from the natural experiment of public policy federalism and provides a clear account of how the nation’s top performing state economies have achieved astonishing levels of economic growth.
A careful study of economic theory combined with the historical record reveals that states that maintain a low cost of doing business will enjoy a stronger business climate and encourage a more vibrant spirit of entrepreneurship, which creates more jobs and higher wage growth. The 15 equally weighted policy variables used in the Rich States, Poor States Economic Outlook Index — including various tax rates, regulatory burdens, and labor policies — have shown over time to be among the most influential variables for state growth.
The report also reveals that over a 10-year time period, the nine states with the lowest income tax rates have significantly outperformed the nine states with the highest income taxes in population, job and revenue growth. More broadly, research by economists Dr. Eric Fruits and Dr. Randall Pozdena details the strong, positive correlation between past editions of Rich States, Poor States’ ALEC-Laffer State Economic State Competitiveness Index and state economic health. In short, Rich States, Poor Statescontinues to serve as a reliable guide for determining each state’s economic outlook.
These differences in public policy have dramatic impacts on milliennials. States like Texas, Florida, and Utah are digging out of the economic hole created by the great recession and putting their citizens in the driver’s seat of their own economic destiny. For millennials, economic opportunity means the opportunity to move out of mom and dad’s house, start digging out from under the burden of student loans, and get that crucial strong start to a career instead of being stuck as a perpetual intern or pushed into other low-skilled work. Moreover, for those who grew up in a state they love and have the desire to stay near family and friends, a lack of opportunity means leaving home for a new state that has embraced public policies that afford them the basic opportunity to achieve their potential and the dignity of earned success. On this point, it’s worth noting that in the top 10 states in the Rich States, Poor States index, 2.6 million American have migrated to within their borders. Meanwhile, the bottom 10 states in Rich States, Poor Stateshave seen 3.7 million Americans leave for greener pastures.
Used by state lawmakers in each and every state across America since the first edition in 2008, Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index, continues to chronicle the good, bad and ugly of economic policy in the 50 states. Rich States, Poor States is not simply a guide to business competitiveness, but a guide to human development and a path forward for those that have been disenfranchised from their economic potential due to poor public policies. For millennials and the state lawmakers who represent them, the stakes for sound state public policy couldn’t be higher.
Will Freeland is a research analyst at the American Legislative Exchange Council’s Center for State Fiscal Reform