Tuesday, September 16

Tuesday, September 16

Income inequality harms state revenues; States that raised minimum wage did not see job loss; Money needed for early-childhood reforms; States that cut incarceration rates still saw a drop in crime; Number of the Day

Income inequality harms state revenues
Shrinking the income gap between the wealthiest Louisianans and people living on the brink could help lawmakers improve investments in education, healthcare, and other services that support quality job creation and build a stronger economy. That’s the takeaway from a new study by Standard & Poor, which found that large income inequality can undermine states’ abilities to raise revenues that pay for vital public services:

Compared with local governments, which rely to a greater extent on property taxes, states generate the bulk of their revenue from taxes levied on current economic activity, namely personal income and consumption. Therefore, when the economy operates below its potential, state tax revenues tend to suffer. Insofar as income inequality contributes to economic output falling short of potential, it undermines the growth of states’ tax bases… When we tested the relationship by tax structure, we found the negative effect was stronger and only statistically significant in the sales tax-reliant states

Several Louisiana cities are among the most unequal in the nation, according to Bloomberg. New Orleans ranked second to Atlanta, and Baton Rouge and Lafayette ranked 32nd and 34th, respectively.

States that raised minimum wage did not see job loss
New data suggests that raising the minimum wage is not the job-killer that critics suggest. Quite the opposite. As the New Republic reports, a recent look at state wage and job trends by Jared Bernstein from the Center on Budget and Policy Priorities found “that job growth was higher in states that raised their minimum wages than it was in those that didn’t (1.8 percent versus 1.5 percent).”

The major contributor for the creation of new jobs in the states that raised their minimum wages was likely increased spending by workers, which produced an additional $619 million in new economic activity in those states. This shows that making small investments to help struggling families produces stronger state and local economies for everyone.

John White: Money needed for early childhood reforms
The Louisiana Department of Education laid out its vision Monday for a revamped system of early childhood education, and acknowledged what advocates have been saying for years: More money is needed to create a system where every Louisiana child has access to high-quality education before entering kindergarten.

“We do need more money if we are going to do some of these things,” (Superintendent of Education John) White told a jammed auditorium of child care providers and others.

The extra dollars would be used to train teachers, improve child-care centers and provide aid to low-income families that can’t afford quality child care. State support for child-care assistance has dropped by more than 60 percent in recent years. Wringing new money out of the Legislature could prove challenging, as the state faces a $1.2 billion budget shortfall in 2015-16.

ICYMI: States that cut incarceration rates still had a drop in crime
New evidence suggests that tougher jail sentences and higher prison populations don’t automatically equate to less crime. Researchers with The Pew Charitable Trusts reviewed FBI and Bureau of Justice Statistics data from 1994 to 2012 to determine whether increases in local prison populations predict decreased crime. As The Washington Post summarizes,

Nationwide, the crime rate declined by 40 percent during this time, as the imprisonment rate rose by 24 percent. Notably, though, some of the states with the steepest declines in crime — New York, New Jersey, California, Maryland — actually decreased their imprisonment rates… If anything, this picture suggests a narrative that runs counter to the common view that more prisoners lead to less crime: To the extent that there is any trend here, it’s actually that states incarcerating more people have seen smaller decreases in crime.

Louisiana, of course, incarcerates a higher percentage of its citizens than any government in the world.

Number of the Day

751,000 — Number of Louisianians living without health insurance in 2013, statistically unchanged from previous year. (Source: U.S. Census Bureau)