ALEC’s so-called “pro-business” policies actually stunt economic growth

From Executive Director Lori Compas:

I’m intrigued by this recent LA Times article.

As you might know, ALEC (the American Legislative Exchange Council) rates states annually based on how “business-friendly” it perceives each state’s policies to be.


Surprise! ALEC’s so-called “pro-business” states are performing worse than the national average. Graph by Menzie Chinn, University of Wisconsin.

But it’s important to note that there are basically two types of businesses: one type of business wants to attract highly educated people like computer programmers, engineers, and other skilled professionals. In order to attract highly skilled employees, these employers know they need to offer competitive salaries and a great quality of life — good schools and universities, recreational opportunities, clean air and water, broadband access, and modern transportation infrastructure. The other type of business wants to attract low-wage workers for low-skilled jobs. These employers want low wages, low taxes, and “small government” (which is really codespeak for fewer regulations and less oversight).

ALEC supports the latter approach, giving states high ratings for pursuing right-to-work legislation, tax cuts, and deregulation, among other things.

So how do ALEC’s rankings work out over time? Read all about it. Basically, the states in this study that were given high rankings by ALEC a few years ago are performing worse than the national average. States that ALEC marked as being bad for business are performing much better.

As Hiltzik states, these so-called “pro-business policies don’t really contribute to economic growth. They just make the rich richer, which is not the same thing at all.”

We have been beating this drum for more than a year now. We will continue to beat it.