States that Follow ALEC’s Recommendations Fare Worse
States with minimal public services, tax systems that favor the rich, and weak or non-existent unions fared worse economically during the recession compared to other states, according to a new report. States that followed recommendations made by the conservative American Legislative Exchange Council (ALEC) were more likely to experience increased poverty rates and falling income. And ALEC’s Outlook Ranking, which forecasts state economic growth, “fails to predict economic performance,” according to the report.
Each year, ALEC ranks states according to their economic outlook, with the best rankings going to states with minimal government services, legislation that restricts the rights of workers to organize in unions, severe tax and spending limits, no individual or corporate income tax, no state inheritance tax, and no state minimum wage. (This year, Wisconsin ranks 32nd in ALEC’s Outlook Ranking.)
The problem is that ALEC’s Outlook Ranking does a very poor job of predicting a state’s actual economic performance, according to the report. The Iowa Policy Project reviewed past state rankings and found that the better a state did on ALEC’s ranking in 2007, the bigger the increase in poverty and the bigger the decrease in median family income in subsequent years. For other indicators of economic performance, such as growth in GDP and job growth, there was no relationship between ALEC’s ranking and state performance.
In other words, reducing investment in our communities, increasing taxes on working families, and tying the hands of legislators responsible for making tough budget decisions is not a formula for growth. States that follow this path risk economic stagnation.