“The issue is not truth in sentencing, but certainty and transparency in sentencing. Our system needs to change.” — J. Michael Brown, Secretary of the Justice and Public Safety Cabinet
Ironic, isn’t it, that during the very week fiscal courts in three Kentucky counties passed the first countywide right-to-work ordinances in the commonwealth and the country, a government mandated minimum-wage increase was the policy du jour in Kentucky’s largest city and its primary economic engine.
No doubt the rumblings in recent days that the Louisville Metro Council will reach a “compromise” and raise the minimum wage to $8.75 instead of the $10.10 that the council’s liberal members clamored for will be hailed as some kind of legislative middle ground.
It is no such thing.
This policy will instead harm the very people it’s intended to help. If the mayor had any political courage, he would say that loudly with a veto. Certainly, no one should think he’s some kind of great negotiator.
This is a bad deal for everyone except for the council’s populists who no doubt will use this for political gain in their next election.
But I’m sure part of their campaign’s talking points won’t include anything about how the measure will cause the city to lose even more of its ability to compete with Indiana – which is right across the river, or about how that by raising the minimum wage, the bottom rung of the employment ladder will be cut off for young, inexperienced workers from low-income homes who desperately need an opportunity to break into the workforce and get a start.
It will, however, bring glee to the labor unions who fund the political campaigns of its supporters. Unions thrive on minimum-wage increases because they drive up wages for workers on higher rungs of that same employment ladder.
While $8.75 is better than $10.10 in terms of harming fewer people – as those who provide at least $9 worth of productivity to their employers will likely get to keep their jobs – I’ve become aware of an attempt by some on the council to attempt adding an automatic cost-of-living adjustment (COLA) to the higher minimum wage, further harming the city’s economic competitiveness and creating even greater uncertainty for the business community.
Adding a COLA to a minimum-wage increase is economic idiocy and political cowardice. A COLA offers the potential of driving up wages significantly every few years without its supporters being forced to deal with a vote and at least be accountable for each such increase.
It’s unsound policy for several reasons:
An alternative index, the Personal Consumption Expenditures deflator (PCE), meanwhile, consistently produces lower inflationary numbers. Using the PCE to adjust for inflation equates that to $8.28 per hour in 2013 dollars, while the CPI equates it to $10.56 per hour in today’s money. Critics also point to these other biases in CPI calculation:
Comparing CPI and PCE calculations, it appears that the CPI artificially inflates cost adjustments by about 1 percent per year. Though small initially, the impact of this inflation compounded over decades offers the potential of seriously distorting earnings.
Indexing the minimum wage to CPI relies on a self-fulfilling circular logic:
Instead of helping workers adjust to a region’s cost of living, implementing a COLA on the minimum wage actually makes the region less affordable.
Rather than just giving low-wage workers a fair shake as proponents suggest, COLAs actually create unprecedented minimum-wage levels that price businesses from the labor market and price consumers out of the market for goods and services. Much like many other well-intentioned minimum-wage increases around the country, these COLAs ultimately hurt the very people that they were designed to help.
Meanwhile, in our very own commonwealth, Fulton, Warren and Simpson Counties are on their way to being the first three right-to-work counties in the nation. Bowling Green, the economic center for Warren County, currently has 5 percent unemployment, which is about 1 percent lower than the nation overall and one of the lowest rates in the Bluegrass State.
Contrast that performance with Pine Bluff, Arkansas, which has a COLA imbedded into its minimum-wage law and an 8.7 percent unemployment rate to go along with it. Others with a COLA show similar performances, including Arizona (6.6 percent unemployment), Syracuse, New York (7.2 percent), Sacramento, California (8.1 percent), Rochester, New York (7.8 percent) and Oakland, California (8.8 percent).
The inability by some legislative bodies to implement common sense, pro-growth policies is having long-term negative impacts on these regions’ competitiveness and economic viability. There’s no reason to believe Jefferson County won’t follow the same path.
A majority of Louisville Metro Council members seem hell-bent on passing some kind of minimum-wage increase; the least they could do is help the city by placing the idea of an embedded COLA in economic purgatory for now.
No-one is watching for fraud in Kentucky’s school districts???!!!
A huge brouhaha is unfolding in Shelby County as discussions continue to swirl around the embezzlement of about $600,000 of Shelby County School District funds by a former district finance person. The latest shot, reported by the Shelby County News-Sentinel in “Board questions auditor over fraud,” reveals something that could be a major, statewide problem.
Here’s what happened. When asked why the required annual audits of Shelby County’s funding had not identified the thefts, which reportedly occurred for multiple years, the current audit firm said:
“’Well basically that’s because we were not engaged to do so. We were engaged to do a financial audit, which is required in order to receive the KDE funding, your federal funding. If you read through our contract that we have with you – the contract’s approved by the state – it specifically mentions in there that we’re not here to detect fraud.’”
So, there it is. Kentucky taxpayers are spending literally billions each year on our public school system and it appears that no-one is responsible for checking on a routine basis to see if any of that money is being illegally diverted.
To be sure, there have been some spectacular discoveries by the Kentucky Auditor of Public Accounts
Adam Edelen in other districts like Dayton Independent and Mason County, but these only happened when local whistle blowers tipped his office about problems. The Kentucky auditor isn’t funded and isn’t responsible to ride herd on the public schools.
I thought each district’s required annual audits were supposed to do that.
Apparently, no-one is doing that.
This isn’t going to fly. The latest Annual Financial Revenues and Expenditures Report for 2012-13 from the Kentucky Department of Education shows in that school year the total amount of taxpayer money funneled through Kentucky’s school districts was $7,880,001,383. That’s just too much temptation for the greedy. And, we are not talking about charter schools here. This fraud and waste is going undetected in traditional public schools right here in Kentucky. It’s time to do a better job protecting the students and the taxpayers.
“Common Core is set of national curriculum standards that the federal government strong-armed states into adopting. The standards erode local autonomy over education policy and are extremely costly to implement. They have also produced plenty of confused teachers, parents, and children …” –Robby Soave, Hit & Run blog (Reason)
Bluegrass Institute president Jim Waters made the following statement to the Warren County Fiscal Court just prior to Thursday’s historic 6-1 vote approving the nation’s first countywide right-to-work ordinance:
Good morning ladies and gentlemen.
I am very pleased to be here as the president of the Bluegrass Institute for Public Policy Solutions – which began just a couple of blocks from here – over on Fountain Square in September of 2003.
The Bluegrass Institute is a state-based public policy think tank dedicated to offering free-market solutions to Kentucky’s greatest challenges. Our policy solutions are based on the principles of economic prosperity, individual liberty, personal responsibility and a respect for the lives and properties of others.
As a 501c3 nonprofit, nonpartisan, research-and-education organization, our mission is to offer and support economically sound, long-term common-sense policies that will benefit all Kentuckians while avoiding policy decisions based on emotion and designed to achieve short-term effects while benefiting only a few.
In our 11-year history, the Bluegrass Institute has achieved a strong reputation of taking positions based on ideas and policies rather than politics. We do not take positions on issues based on political partisanship. Rather, our policy positions are based on credible data, dispassionate observation and just plain ol’ Kentucky common sense.
Looking at the issue that way, it’ s no wonder that based on a poll released by the Institute this past summer, 80 percent of Kentuckians answered “absolutely” to this single question: “Should employees have the right to decide, without force or penalty, whether to join or leave a labor union?”
I’m not really surprised, considering that 40 percent of Kentuckians live in counties that border another state, and they see every day the results of unfriendly business policies – including the lack of a right-to-work law.
Americans fundamentally believe in liberty, which means you shouldn’t be forced to join a union and pay dues just to get – or keep – a job.
Workers in 24 other states already enjoy such freedom. However, 95,000 Kentuckians in the private-sector workforce are still forced to join up and pay as much as 2 percent of their paychecks in dues.
While a statewide right-to-work law has a higher mountain to climb in Frankfort after November’s mid-term elections in which some key races were won by opponents of such freedom, there’s more than one path to greater individual freedom and increased prosperity across the commonwealth. And that journey could begin at a county courthouse near you.
A hidden highlight discovered in Kentucky law is called the “County Home Rule” passed by the General Assembly in 1978 that:
The law described in KRS 67.083 contains language providing local county governments “with the necessary latitude and flexibility to provide and finance various governmental services” within certain areas, including the “regulation of commerce for the protection and convenience of the public;” and “promotion of economic development of the county, directly or in cooperation with public or private agencies.”
Right-to-work fits the “County Home Rule” like the Wildcats fit in Rupp Arena. It protects workers from losing their jobs for refusing to become members of labor unions or pay dues while also serving as a county’s very own “open for business” sign in a state that’s generally not.
My research has yet to turn up a single county in America that has passed its own right-to-work law in any state lacking such a statute. Maybe Kentucky could be first, for a change.
Evidence that counties passing such an ordinance stand to benefit greatly is at least as convincing as the available proof that the UK Wildcats have the No. 1 college basketball team in the country.
In research cited by the National Institute for Labor Relations Research, Tennessee’s three most-populated counties bordering Kentucky – Montgomery, Robertson and Sumner counties – showed nearly 16 percent growth in private-sector employment between 2002 and 2012 in the Volunteer State, which protects workers with a right-to-work policy. Meanwhile, employment in the three most-populated Bluegrass State counties along the same Kentucky-Tennessee border – Calloway, Christian and Graves counties – grew by less than 4 percent during that entire decade.
If what’s happened in right-to-work states is any indication of what could transpire in Kentucky counties with such a policy, growth in manufacturing, incomes and population would all be significantly greater than in non-right-to-work counties while welfare rates would drop. And all this just from allowing each individual worker to say “yes” or “no” to union membership without losing their jobs.
County leaders might also find some encouragement in knowing just how popular statewide such freedoms and protections are for individual workers.
Poll after poll – including a Bluegrass Institute poll last summer showing 80 percent approval statewide for right-to-work – indicate overwhelming understanding of and support for such a policy.
Most Kentucky judge-executives and magistrates likely don’t realize that they don’t have to wait on Frankfort to do something about the economic disadvantage their counties have been placed in while too many state politicians play political patsies with our economic future.
If enough counties were to pass their own right-to-work law, Frankfort would have no choice but to acquiesce as counties without such an advantage would be losing economic-development opportunities – not just to contiguous states, but to neighboring counties in their own state.
Kentucky law allows right-to-work policies to begin at county courthouses.
What are we waiting for?
The Bluegrass Institute for Public Policy Solutions works with Kentuckians, pro-liberty coalitions, grassroots organizations and business owners to advance freedom and prosperity by promoting free-market capitalism, individual liberty and transparent government. Join Us