Business costs, regulation and economic growth

By: Richard S. Davis
12:00 am
February 26, 2013

Joel Kotkin has an excellent op-ed in today’s Wall Street Journal reviewing the nation’s “four growth corridors.” Sadly, unsurprisingly, the Pacific Northwest is not among them.

…trends point to a U.S. economic future dominated by four growth corridors that are generally less dense, more affordable, and markedly more conservative and pro-business: the Great Plains, the Intermountain West, the Third Coast (spanning the Gulf states from Texas to Florida), and the Southeastern industrial belt.

The shift to lower-cost, business-friendly states has been developing for some time. As I wrote in a column last week, the competiton for jobs and investment is intense. The states in the growth corridors have discovered what it takes to succeed.

The job migration to Texas and the Southeast inspired policy changes in the heartland to attract investment. …early indications are positive.

We can learn from the states that are growing.

The competition involves anything that affects the cost of creating a job. In Olympia, that includes workers’ compensation, paid leave mandates, and the minimum wage. The state’s reddish Senate proposes cutting costs; the blue House resists. Liberal lawmakers have dusted off income tax and capital gains tax proposals.

Yet the sound and fury signifies little, as the chambers launch their missiles expecting them to be shot down somewhere over the rotunda. But we shouldn’t miss this opportunity to improve the general business climate.

Kotkin points out that the growth is not simply low-wage, unskilled employment.

… over the past decade, the number of people with bachelor’s degrees grew by a remarkable 50% in Austin and Charlotte and by over 30% in Tampa, Houston, Dallas and Atlanta—a far greater percentage growth rate than in San Francisco, Los Angeles, Chicago or New York.

There’s a big payoff to state treasuries as well. Texas will run an $8.8 billion surplus this year. Even given the size of the Lone Star state budget, that’s a considerable accomplishment. And one reason so many states want to emulate the state’s pro-growth public policy.

Kotkin’s op-ed is drawn from this study conducted for the Manhattan Institute. RTWT.

Categories: Categories , Current Affairs , Economy.