Economics

This Just in: High Taxes Plus High Unionization Correlates to Joblessness!

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Speaking of state-budget shenanigans, over at the Volokh Conspiracy Jim Lindgren reads the latest Bureau of Labor Statistics numbers and concludes that:

I wish they all couldn't be

3 of the 6 states with the highest unemployment (California, Oregon, and Rhode Island) have both high marginal income tax rates and high union representation. Michigan has high unionization but moderate marginal income tax rates, and the Carolinas have high marginal income taxes, but low unionization rates.

Among the 6 states with the lowest jobless rates, 4 have low unionization rates and no state income tax or modest marginal rates and a fifth (Nebraska) has average income tax rates and low unionization. The exception is Iowa, which has average unionization rates (13%) and high marginal income taxes (8.98%).

I would put less emphasis on my analysis of the LOW unemployment states because they are all in the upper Great Plains. But the HIGH unemployment states are otherwise quite diverse (from the West Coast to New England to the upper Midwest to the Carolinas). What they share are high marginal income taxes or high unionization or both.

As readers of our May cover story (pictured) will also point out, in anger more than sadness, during the relative good times of 2002-2007 state governments doubled their spending, from $1 trillion to $2 trillion (that's 81 percent in adjusted terms). Now they're busy taxing their recession-addled residents in order to fill budget gaps entirely of their own creation. If the figures above (let alone common sense) are any indication, that likely won't end well.

UPDATE: Early commenters are unimpressed with Lindgren's extrapolations.

UPDATE II: L-i-n-d-g-r-e-n. Sorry.