Bluegrass Beacon: Magazine’s award no reason to pop bubbly

BluegrassBeaconLogoGov. Steve Beshear and Frankfort’s economic-development leaders celebrated a recent award by Site Selection magazine for being the state with the “most new projects per capita” last year.

Any economic progress is commendable – especially considering Kentucky has myriad business-unfriendly policies. But is this award a reason to burst out the bubbly and – as some likely will suggest – delay becoming a right-to-work state like Wisconsin did on March 9 or getting rid of our punitive state income tax?

While the Site Selection article paints a cute picture of snappy economic activity, other sources that are at least as reputable say otherwise:

  • Business Insider ranks Kentucky’s economy No. 44 out of 50.
  • Forbes ranks Kentucky as No. 44 out of 50 in its ranking of “The Best and Worst States for the New Economy” with a score of 48.4 compared to top-ranked Massachusetts’ 94.7 ranking.
  • CNBC ranks Kentucky No. 36 in its state business rankings, much lower than Tennessee to the South (No. 13) and Indiana to the North (No. 18).
  • The Bureau of Economic Analysis reports that while growth occurred in 49 states in 2013, Kentucky’s dismal 1.6 percent growth in gross domestic product (GDP) was below the national average.
  • Art Laffer, a respected economic adviser to President Reagan, ranked Kentucky No. 39 in his “2014 Economic Outlook Rankings.” Only Illinois was ranked lower among Kentucky’s neighboring states.

We know much more about the criteria that all of these credible sources use than we do about the Site Selection rankings.

Forbes’ “Best States for Business and Careers” index, for instance, reveals not only an economic ranking of No. 33 for Kentucky but also how the state placed in various categories.

Kentucky’s overall No. 33 placement was arrived at by combining its ratings in business costs (No. 14) labor supply (No. 46), regulatory environment (No. 24), growth prospects (No. 29) and “quality of life” (No. 34) classifications.

However, a news release from the governor’s office simply states that projects qualifying Kentucky for its Site Selection award had to meet one of three criteria: “involve a capital investment for at least $1 million, create 50 or more jobs or add at least 20,000 square feet of new floor space.”

We don’t really know how many projects fit into each of these categories or how meaningful they are to the commonwealth’s economy. Plus, as Site Selection’s editor-in-chief admitted to the Mackinac Center for Public Policy, his publication’s rankings are still “a function of what states report to us.”

It’s like not fully understanding why the University of Kentucky men’s basketball team is ranked No. 1 in the nation.

Believe me, the whole sports world knows why the Wildcats received every single first-place vote cast in the latest college-basketball poll – not the least of which is the team achieved the first undefeated regular season in nearly 40 years.

Their ranking isn’t a result of what they pick and choose to report. Their performance has been there for the whole world to see. And what a season it’s been.

There’s also plenty to crow about when it comes to potential economic growth in Kentucky.

Since Warren County, for example, passed the nation’s first local right-to-work ordinance less than 90 days ago, 27 new prospects representing 3,667 jobs and $324 million of new investment – numbers that increase almost daily – have expressed interest in coming to southcentral Kentucky.

If even some of those prospects end up coming to Warren County, it will rival the actual impact of the 32 new manufacturing-related projects and the 2,213 announced by the entire commonwealth for all of 2014.

“It’s clear that the county’s right-to-work designation is making a difference,” said Bowling Green Area Chamber of Commerce CEO Ron Bunch.

Clear as bubbly.

Jim Waters is president of the Bluegrass Institute, Kentucky’s free-market think tank. Reach him at jwaters@freedomkentucky.com. Read previously published columns at www.bipps.org.

Minimum Wage Report

The Minimum Wage And Its Effects On Kentucky’s Economy

Executive Summary:  While proposals to raise the minimum-wage failed in Washington and Frankfort in 2014, the debate is expected to continue at both the state and federal levels in 2015. A careful review of the evidence reveals no economic consensus that increasing the minimum-wage leads to increased employment. In fact, mandating a large minimum-wage increase would have a devastating effect on Kentucky’s economy and the employment opportunities of its young people:

  • Larger increases in the minimum-wage cause more job losses than do smaller minimum-wage hikes. Certainly, Louisville Metro Council’s decision to
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    forgo a larger hike in the minimum-wage by raising it to $9 over several years will have a less-harmful effect on employment than a steep immediate increase to $10.10 would.

  • While raising the federal minimum-wage hurts employment generally, it particularly harms it in Kentucky. Past minimum-wage hikes have resulted in an additional .2 percentage-point increase in Kentucky’s unemployment rate relative to the rest of the U.S. The states that see the largest escalation in unemployment from a minimum-wage increase are those with the lowest wages, which is why Kentucky’s unemployment rate spikes relative to the U.S. rate when the federal minimum-wage is increased.
  • In May 2013, the mean hourly wage for the country in the food preparation and serving-related occupations group was $10.38 an hour. Nine percent of U.S. workers were in that occupation compared to 9.4 percent of the Kentucky workforce. Louisville’s average wage in this occupational group was $9.70 an hour compared to just $8.79 for the state at large. An increase in the federal minimum-wage would do little for unemployment in the food-service industry nationally, have a minor effect on unemployment in Louisville but a major negative impact on unemployment in the food-service industry in rural Kentucky where wage rates are below state averages.
  • In August 2014, Kentucky’s unemployment rate stood at 7.1 percent compared to the national average of 6.1 percent. A unilateral increase in the Kentucky state minimum-wage – given the commonwealth’s relatively high unemployment rate during the past few years and low average-wage rate – would have a significantly negative impact on youth, low-skilled, refugee and rural employment in the commonwealth.
  • The average textile-industry worker in Kentucky currently makes $8.94 an hour. Increasing labor costs to $10.10 an hour may be enough to ensure the extinction altogether of that industry in Kentucky as the jobs could be outsourced to lower wage countries over time.

Taking the minimum-wage to $10.10 an hour is unprecedented in U.S. history in terms of real purchasing power. Such an increase in Kentucky’s minimum-wage will result in lower employment rates for the Bluegrass State’s youth and low-skilled workers. Its negative effects will be concentrated in poor, rural counties which already face an uphill battle regarding stubbornly high unemployment rates. Also, fewer jobs for Kentucky’s youth will lead to increased reliance on student loans to finance their dreams of higher education. 

This is not the time for another 40 percent increase in the Kentucky minimum-wage.

Read the full report > The Minimum Wage And Its Effects On Kentucky’s Economy

You can’t be ‘conservative’ and advocate for the Nanny State, too

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Sen. Ralph Alvarado, R-Winchester, claims the private sector can’t be trusted to solve the smoking-ban issue.

LegLogoOnce again, the state’s Smoking Nannies will be trying to convince lawmakers to absorb precious time during this year’s short 30-day session considering legislation that would implement a government-mandated smoking ban on all private property in Kentucky.

There are many problems with such a policy – not the least of which it tramples on local communities who already have already thoroughly debated the issue and made their own smoking-ban decisions.

Some, including Louisville, Lexington, Frankfort and Bowling Green, have decided to ban smoking in all public – including privately-owned – places. While we oppose, on principle, such bans, we would also vehemently resist attempts by state government to override those decisions with some centralized, top-down law.

It’s easier for voters to hold local officials accountable – including at the ballot box – than for them to fight some far-away Frankfort rule.

A previously implemented ban in Campbell County was, for example, overturned after voters threw out magistrates who had supported and passed a ban. Also, the Liberty City Council in December decided to rescind its month-old smoking ban. Several communities have completed rescinded previously passed bans or they have approved bans that contain a bit more common sense, such as exempting bars from such big-government mandates.

The nannies are trying to convince Frankfort to overrule local communities’ authority to determine whether or not to implement a smoking ban – all because some of those communities have refused to tow the nannies’ line on the issue. They don’t agree with some of these local decisions so — like the Obama administration — they keep using the tools of force and intimidation at their disposal in an attempt to fundamentally change Kentucky’s policies.

Even some Senate Republicans like Sens. Julie Raque Adams of Louisville and Ralph Alvarado of Winchester have jumped on the smoking nannies’ bandwagon.

In a recent op-ed on the issue, Alvarado sounds like a liberal Democrat, with whom he shares an affinity for the same ideology on this issue. This Nanny-State ideology is also a favorite of the Lexington Herald-Leader editorial page, which carried Alvarado’s recent op-ed scolding us free-market types for defending private-property rights and individual liberties.

“I believe in limited government, but this critical public health and workplace safety issue has not been solved by the private sector,” Alvarado quips.

Dr. Alvarado’s diagnosis couldn’t be more wrong.

Even a smoking nanny-friendly website listing here of just the restaurants in just three northern Kentucky counties who have voluntarily gone smoke-free without government mandates indicates that we don’t need Frankfort bullying local communities on this issue.

Could those testifying at Ky’s legislative committee hearings be forced to take an oath? Really?

…perhaps what we really need instead is a bill forcing the politicians who sit on legislative committees to take an oath to tell the truth

 

Is Kentucky really one of America’s most corrupt states?

The Heritage Foundation is reporting on a study determining the most corrupt states in America. The study sized up the effect between 1976 and 2008 of public corruption—measured by convictions—on state spending.

It found Mississippi was at the top of the list, but guess which state was No. 9?

From MississippiWatchdog.org:

According to the study, the 10 most-corrupt states could have reduced per capita spending by an average of $1,308 if they had average corruption levels. The study found states in the top 10 tend to focus spending on “bribe-generating” spending and items directly beneficial to public officials such as capital projects, construction, highways, borrowing and total salaries and wages.

A climate of corruption or even a perception of one can lead to serious economic effects. The study cited several sources on how economic activity is depressed in nations riddled with corruption. States are no different, and it creates a vicious cycle.

With economic activity depressed because of corruption, states such as Mississippi are forced to use more subsidies and tax breaks. This encourages companies to engage in more rent-seeking behavior — spending wealth on political lobbying to increase one’s share of wealth without creating wealth. This helps build an even more entrenched climate of corruption with companies constantly seeking to maintain or even add to special privileges not afforded their competitors.

Bluegrass Institute welcomes new Vice President of Policy Initiatives

Bluegrass Institute welcomes new Vice President of Policy Initiatives  

Denis Frankenberger will lead right-to-work campaign

(LOUISVILLE, Ky.) — Louisville entrepreneur and government watchdog Denis Frankenberger has been named the Bluegrass Institute’s Vice President of Policy Initiatives.

Frankenberger is the former president and CEO of Advance Machinery Co. – one of the nation’s largest machine tool dealers and integrators of computer numerically controlled (CNC) machine tools, which was acquired by G.E. Capital.

“I admire and agree with what the Bluegrass Institute stands for and accomplishes,” Frankenberger said. “I look forward to joining the organization’s talented and dedicated team to advance free-market policies that will help turn Kentucky from being a government-dependent state to a mecca of economic growth and true prosperity.”

Bluegrass Institute President Jim Waters praised Frankenberger for his commitment to the principles of liberty and for his tenacity as a private citizen in holding local governments accountable for how taxpayer dollars get spent.

“We are very fortunate to have someone with Denis’s exceptional entrepreneurial success and extensive experience in growing companies and creating jobs in the private sector,” Waters said. “Kentucky taxpayers, businesses and entrepreneurs will benefit greatly from his efforts.”

Frankenberger will lead the institute’s efforts to bring a right-to-work policy to Kentucky.

“While the institute is currently engaged in a number of issues, I believe one of the most important for the commonwealth’s economy is to get the legislature to implement a right-to-work policy,” he said. “Having come from the manufacturing industry, I know how vital this is to major firms that so obviously bypass our state for the very reason that we do not provide right-to-work protections for Kentucky workers.”

For more information, contact Jim Waters at jwaters@freedomkentucky.com or 270-320-4376.

Legalize School Choice campaign: The debates go on

The Bluegrass Institute’s “Free to Learn” debate series kicked off with the opening forum on Dec. 3 at Southern Baptist Seminary’s Heeren Hall.

Craig Meredith, Ph.D., a former Ohio superintendent, and University of Kentucky education professor Wayne Lewis, Ph.D., who also serves on the Kentucky Charter Schools Association board, had a civil, but serious, exchange of views on the value, need and impact of public charter schools.

The event, which is a must-see for anyone wanting to better understand the differing views on public charter schools, was live-streamed and now is available for viewing here on YouTube.

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Linda Duncan, a longtime member of the Jefferson County school board, who initially committed to debate Lewis, rudely backed out at the last minute – right on the cusp of a holiday weekend.

Ducan said she was getting internal pressure – no doubt from the central office of JCPS – a school district where, on average, a 20-point gap in math proficiency rates exists between white and black students at every school level – elementary, middle and high schools.

That district’s rulers didn’t want their subjects appearing on a stage anywhere in the River City with anyone of Lewis’ credibility and stature.

We will soon have details on the second debate in this series.

USA Today Publishes BIPPS: Opposing Cigarette Tax Increases

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Bluegrass Institute President Jim Waters was asked to provide the Opposing View for Thursday’s lead editorial in USA Today.

He makes the case against raising cigarette taxes to reduce smoking rates.

“Education, making smoking less culturally acceptable and appealing to citizens’ personal responsibility have been effective in reducing smoking, particularly among the young,” he writes. “Smoking rates among Kentucky’s teens dropped dramatically during the decade even before Kentucky last raised cigarette taxes in 2009.”

Read the op-ed here.

New Report: Does Kentucky’s ‘Unbridled Learning’ school accountability program leave minorities behind?

 
New Report: Does Kentucky’s ‘Unbridled Learning’ school accountability program leave minorities behind?
 
(LOUISVILLE, Ky.) — A new Bluegrass Institute report reveals evidence that Kentucky’s school accountability program provides inconsistent and sometimes unreliable assessments of school performance.

The report, “Kentucky’s ‘Unbridled Learning,’ Unrigorous School Accountability for African-American Students?,” examines math performance for whites and African-American students in all of Kentucky’s schools. Some of the findings are surprising:

  • Fayette County’s Scapa at Bluegrass’ has an African-American middle school math proficiency rate of 9.1 percent is a rate less than half of the statewide rate for this racial group, and far below the 82.1 percent proficiency rate turned in by the schools’ white students. Yet despite its dismally low African-American math proficiency rate, Scapa at Bluegrass received a superior Unbridled Learning classification of “Distinguished,” ranking the school among the top 10 percent of all schools in Kentucky.

Supposedly, even with overall high scores, Unbridled Learning will tag a school with serious achievement gap problems as a “Focus” school. However, Scapa somehow avoided “Focus” school flagging despite the poor math performance for its African-Americans. This raises concerns that the “Focus” mechanism needs work.

  • Latonia Elementary School in Covington was not only identified as a “Proficient” school, a top 30 percent classification, but it also was shown as a “High Progress School” under Unbridled Learning. That is hard to reconcile with the fact that this school’s African-American math proficiency dropped from an already dismal 8.8 percent in 2012 to 0.0 percent in 2013. Still, Latonia just got praise from Unbridled Learning. It didn’t get a “Focus” flag.
  • Danville High School got a “Proficient” rating from Unbridled Learning, supposedly placing this school’s performance among the top 30 percent in Kentucky. But Danville’s African-American students’ math proficiency tumbled from 33.3 percent last year to a depressing 0.0 percent proficiency rate in 2013. The school still dodged becoming “Focus” school, raising more concerns about what Unbridled Learning tells us about this school.
  • Overall, the report shows three elementary schools, five middle schools and three high schools had 0.0 percent math proficiency rates for their African-American students in 2013. Only five, less than half, of those 11 schools got a “Focus” flag.

“After 23 years of KERA reforms, the idea that Kentucky still has schools turning in single digit, indeed sometimes zero, math proficiency rates is incredibly disappointing,” said Richard Innes, staff education analyst at the Bluegrass Institute and author of the new report. “The fact that Unbridled Learning isn’t identifying those problems is highly problematic.”

Innes called on the Kentucky Department of Education to address such a dramatically low performance by making changes to the Unbridled Learning assessment policy before the next round of results are released after the current school-term ends.

For more information, contact Richard Innes at dinnes@freedomkentucky.com or 859-466-8198 or Bluegrass Institute President Jim Waters at jwaters@freedomkentucky.comor 270-320-4376

Freedom is the best legacy. #GivingTuesday

Celebrate #GivingTuesday with a charitable gift to your favorite cause –

advancing liberty and prosperity in Kentucky!

Freedom is the best legacy.

And thank you for your support all year round!

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