2019 Legislative Wrap-up: A Return to Normalcy

2019 Legislative Wrap-up: A Return to Normalcy

After three years filled with special sessions and fiscal brinkmanship, the 2019 legislative session was a welcome break. Instead of debating which programs to cut, legislators made new investments in teachers, young children and infrastructure. But they failed, once again, to give ordinary workers a much-needed pay raise or pass the reforms needed to make Louisiana’s tax structure more robust and competitive. In its annual legislative wrap-up report, LBP lays out the highlights and lowlights of the session:

Louisiana is often called a “poor” state, but in reality we are a rich state with a lot of poor people. The state’s resource- and tourism-based economy works very well for some people, but far too many families have been left behind. The best way to fix that is by investing in people – through higher wages, stronger infrastructure and high-quality educational options at all stages of life. And a strong Louisiana requires a strong safety net to protect people in times of economic hardship. All of these things require an adequate, fair and sustainable tax structure, along with policies that support workers and tear down the racial and economic barriers that have kept too many Louisianans from reaching their full potential.

 

Pay raises for judges, not low-wage workers
For the sixth straight year, Louisiana legislators couldn’t bring themselves to give low-wage workers a pay raise by establishing a state minimum wage above the federal $7.25 an hour, which is below the federal poverty line for a single parent working full time. It was a different story for state judges, who will get a 2.5% salary bump each of the next five years. Senate Bill 27 by Sen. Danny Martiny will cost the state about $1.8 million this year and even more in years to come. It also will “indirectly” hike pay for local politicians in some parishes where their salaries are linked to what judges earn. Sam Karlin from The Advocate reports:

The idea to raise judges’ salaries came out of a 2017 study conducted by economist Loren Scott that found judges’ pay in Louisiana – at the time $169,124 for higher courts, $158,147 for appellate courts and $151,943 for general trial courts – would need a 2.5% yearly boost to keep up with inflation. Judges previously received pay raises of 2.1% each year from 2013 to 2017. There are currently 372 judges in the state – most of them judicial district court judges – who will see their paychecks grow under the new law. Sheriffs, whose salaries are tied to those of district court judges, will also be able to take advantage of the 2.5% pay increase this year.

Twenty-nine states have minimum wage laws that are higher than Louisiana’s, which defaults to the federal minimum. Proposals to increase the state minimum wage to $9 an hour and to allow local governments to establish their own wage floors in response to local conditions were backed by a strong coalition, of which LBP is a proud member, representing the interests of Louisiana’s lowest paid workers.

 

Southern economy is falling behind
The economies of Southern states have traditionally lagged behind the rest of the country on per-capita income and other measures. But by 2009, they had mostly caught up, thanks to rapid industrialization driven by tax incentives and hostility to collective bargaining. But now the bill for those policies is coming due, and the region is falling behind other parts of the country, thanks in part to a collective failure to invest in “human capital.”  Sharon Nunn at the Wall Street Journal reports:

Behind the reversal: The policies that drove the region’s catch-up—relatively low taxes and low wages that attracted factories and blue-collar jobs—have proven inadequate in an expanding economy where the forces of globalization favor cities with concentrations of capital and educated workers.  “Those policies worked before, then they became fundamental constraints on the [South’s] long-term growth,” said Richard Florida, an urbanization expert at the University of Toronto. … In part because of its legacy of racial segregation the region has, relative to others, underinvested in human capital. Thus the South, the only region to have enjoyed such a dramatic rise in the postwar period, is the only one to experience such a retreat in the past decade.

While globalization and automation are affecting the entire country, it is particularly harmful to low-wage workers who predominate in the South.

Many economists say the most effective way for the South to regain its momentum would be to invest more in education, which would over time create a more skilled workforce to attract employers. But Mississippi State University economist Alan Barefield notes that is difficult to reconcile with southern states’ historic desire to keep spending and taxes low.

 

Cash assistance and race
The federal welfare “reform” law of 1996 ended the federal guarantee of cash assistance for poor families and replaced it with a block grant that states can spend as they please under certain parameters. In Louisiana, this has meant that: only 4 out of every 100 families living in poverty receive cash assistance, the lowest level in the nation. Now, a new study in Socio-Economic Review, by Columbia University’s Zachary Palorin, finds that race has a lot to do with how states decide to spend their federal block grant dollars. States with a higher percentage of Black families are less likely to use federal funds for cash assistance. Put another way, the greater a state’s proportion of Black families, the more likely state officials are to try to change the way poor families run their lives, rather than simply help them with basic expenses. Parolin lays out his study’s findings in The Atlantic:

In practice … the diversion of TANF funds away from cash support and toward programs meant to influence family formation has likely exacerbated racial differences in poverty. A clear pattern emerges: A black family in poverty is more likely than a white family to be offered advice via a “Healthy Marriage Initiative” in place of direct cash support. These racial inequities in states’ use of TANF funds turn out to have important consequences for racial differences in child poverty. I find, for example, that closing the racial differences in states’ use of TANF funds would narrow the black-white child-poverty gap by up to 15 percent.

Invest in Louisiana!: A conference to jumpstart positive policy change
The Louisiana Budget Project, working with the Power Coalition for Equity and Justice and other partners, is hosting its first-ever policy conference on Aug. 16 in Baton Rouge. We are thrilled to announce that Clint Smith will be the Keynote Speaker. You can watch his compelling TED talk, “How to Raise a Black Son in America.”

Learn more at the inaugural Invest in Louisiana Policy Conference on Aug. 16 in Baton Rouge. Tickets are available at this link. The price goes up on July 1, so act now.

 

Number of the Day
71.9% – Per-capita income in the South, measured against the Northeast, down from a peak of 79.1%. (Source: The Wall Street Journal)