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Landrieu voices support for stifling economy, helping special interests

Usually, when Louisiana gets ranked last, or close to it, it’s a cause for concern. But there has come an instance where being ranked last in a so-called quality of life indicator is a good thing for the state – but you couldn’t tell from the actions of the state’s senior senator.

This is the last place finish that Louisiana gets in the University of Massachusetts’ Political Economy Research Institute Work Environment Index, in its most recent report. In essence, supposedly Louisiana is the worst state for workers.

But just a few minutes perusal of information about the Institute and the report shows the basis on which it was formulated rests on a hopelessly ignorant view of the economic world. For example, it focuses a major part of its work on the mythical “living wage” concept, the idea behind raising the minimum wage in fact will hurt, not benefit, workers. For a host of reasons, valid economic thought demonstrates that the marketplace will set the appropriate wage level and that artificially inflating it brings suffering to both employers and employees.

This bias carries through in the ideology behind the report. It emphasizes an invalid construct, “workplace fairness.” It assumes that unionization and “prevailing wage” laws are good when in fact unionization enriches a few at the expense of many and prevailing wage laws exacerbate the effect. It also incorporates the bogus notion of “comparable worth,” which argues that differences in men’s and women’s salaries are unnatural and a result of discrimination when, in fact, such differences are natural and healthy for both men and women.

The report even tries to argue, weakly as it turns out, that there is a relationship between its index and economic growth. It states that there is a moderately positive relationship between the index and growth (and is loathe to admit there is none between new business startups and employment growth, but tries to cover itself by stating the states high on the overall index “do not experience slower growth, even while overall conditions for workers in these states are better”).

That, of course, is because two-thirds of their index actually does a passable job of validly measuring economic climate, that which refers to job opportunities and (to a lesser extent) job “quality.” This is demonstrated by removing the “workplace fairness” measure and recomputing relationships among the index, all components, and the measures they choose to use for economic health.

As it is, Louisiana moves up 10 places by removing this component. Removing the “job quality” component (leaving only “job opportunity”) increases the state’s ranking still, to 34th. Most notable, however, is that the three separate components are a strange mix to arbitrarily make an index where each is one-third of the combined index. The job opportunity indicator is actually strongly negatively related to job growth (that is, the less opportunity there is, the more job growth – how does that make any sense?) and least valid of the three, the “fairness” indicator, only is weakly related to economic growth and to neither of the other two.

In short, this is what us social scientists would call an rather unreliable measure, compounded by the arbitrariness of making the total index from equal contributions of each of the three parts. (At the risk of boring you, a reliability test gives a Cronbach’s alpha of .13 – a very unreliable index by the numbers). In other words, garbage in, garbage out – this questionable measure created by this biased group doesn’t really tell us anything.

So, by this, we really cannot argue that Louisiana is the “worst” place for workers. Indeed, face validity would tell us it’s pretty good – right to work provisions (meaning workers cannot be forced into union membership) in the state give greater freedom to workers and lower costs to consumers, among other things. Opposition to this philosophy by the support of Sen. Mary Landrieu of the Davis-Bacon Act shows she would rather protect the interests of a greedy few rather than those of all workers and consumers.

Unfortunately, the recent action by the federal government to terminate the Davis-Bacon waiver in Louisiana in the aftermath of Hurricanes Katrina and Rita adheres more to the failed ideology of this report than the way the world really works. Regrettably, by artificially inflating wages paid to construction workers, it will hinder Louisiana in its reconstruction and economic recovery, while enriching greedy unions and their members now better able to take unfair advantage of the misery left behind by these disasters.

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