Jobs and State & Local Government Spending Linked
This is Part IV of an ESPC analysis of state tax policies and policy proposals and their potential effect on the Wyoming economy
By Sarah Gorin
ESPC researcher
State legislators head into the 2010 budget session on February 8 facing what many of them have never experienced: drastically reduced state revenues due to the downturn in mineral prices.
Governor Freudenthal already implemented a 10% across-the-board budget reduction for fiscal year 2010 (which started last July 1), and has proposed a budget for 2011-2012 at about the 2010 level except for less state support to local governments.
Many people have suggested that if revenues are down, state and local governments should simply spend less, just like a household would do. But a household wouldn’t just spend less; it would also look for more income. A more balanced approach is needed.
Further, those who think the government checkbook should be slammed shut are missing an essential economic reality: that the link between the economic activity of state and local governments and the rest of the economy is particularly pronounced in Wyoming. Employment provided directly by state and local governments (including school districts) is an integral part of local economies, as you can see on this chart showing public sector employment by county.
The table, which shows that the share of jobs provided by state and local governments
ranges from 11% of total employment in Teton County to 50% in Niobrara County, tells only part of the story. A significant number of private sector jobs also depend on government spending for highways, water development, school facilities, and so on. This is encouraged by government programs such as the Wyoming Business Council’s “GRO-Biz” program aimed at helping businesses gain government contracts.
Government programs and services always should be provided in the most efficient manner possible. However, Wyoming decisionmakers also should be aware that because of the interconnected nature of our state’s economy, cutbacks in government spending also will hurt non-governmental employers. If five community college teachers are laid off, that’s five fewer people who are going to dine out at a Main Street restaurant.
Wyoming’s budget should make things better, not worse.
Saturday, January 30, 2010
Friday, January 8, 2010
Wyo's Manufacturing Tax Exemption and Gender Wage Disparity
Reports on tax break finds pay gap
This is Part III of an ESPC analysis of state tax policies and policy proposals and their potential effect on the Wyoming economy
By Sarah Gorin
ESPC researcher
Wyoming ranks consistently at or near the top in “gender wage gap,” the difference in wages paid to men and women. A study commissioned by the Wyoming Legislature in 2003 examined factors contributing to Wyoming’s gender wage gap, including:
1. A concentration of women in part-time work, either by choice or due to lack of necessary support services such as adequate child care;
2. Relatively low wage levels in female-dominated occupations, such as teaching and nursing;
3. High wages in male-dominated occupations such as mining and construction, which are major players in Wyoming’s economy.
In 2004, the Wyoming Legislature enacted a sales and use tax exemption for purchases of manufacturing equipment. Wyoming’s manufacturing sector is relatively small, and economic development proponents argued that a tax exemption similar to ones offered in other states would give Wyoming “another tool in the toolbox” to attract manufacturers to our state.
The Equality State Policy Center opposed the tax exemption, arguing in turn that tax exemptions do not drive location decisions, and that other states’ tax structures enable them to potentially recoup revenues lost from a sales tax exemption.
For example, in a state with personal and corporate income taxes, there is the possibility of replacing the revenues lost from a sales tax exemption on manufacturing equipment – if indeed the exemption attracts a manufacturer – because the company and employees will then pay income taxes.
Wyoming could recoup lost revenues only from property and sales taxes paid by the manufacturing company and its employees, which might or might not make up the difference.
In addition, some other states have enacted “clawbacks,” where state tax exemptions or other incentives are stopped and even recovered from businesses which fail to produce promised jobs and tax revenues.
Although the ESPC was not successful in stopping the exemption for purchases of manufacturing equipment, we successfully advocated for an amendment requiring reporting on the results of the tax exemption. And because gender wage gap was very much on everyone’s minds at the time, the reporting requirements included reporting wages paid to men and to women.
The reporting proved problematic as a first-time effort, since there were no baseline data to compare to, and there was no structure in place to identify manufacturers who might avail themselves of the tax exemption. However, the Department of Revenue worked diligently and began producing reports that showed wages paid to men and women (full- and part-time), and benefits offered to employees in the manufacturing sector.
The ESPC recently compiled all the reports and the results were rather interesting (see spreadsheet here of the last two years, which have comparable data).
The shaded boxes show where there are significant wage gaps between men and women in the same broad job category within the manufacturing sector.
Caveat: these data are compiled from employer surveys, and the employers chose individually how to list their data in the six categories offered by the Department of Revenue. The data are not tied to national manufacturing codes and unfortunately cannot be compared to regional or national data on manufacturing wages.
Nevertheless, the data do raise red flags that beg further investigation. For example, when 423 full-time female employees in the administrative/clerical category in FY 2008 earn, on average, nearly $7/hour less than 157 male employees in the same category, it stretches the imagination to believe that all 423 of those females are that much less qualified than the 157 males to justify making 70% of the males’ wages.
Approximately $32 million in revenues have been lost due to the tax exemption for purchases of manufacturing equipment (through FY 2008). The tax exemption is set to expire at the end of 2010, and several business organizations are lobbying to extend it. We at the ESPC think some questions need to be answered first.
Next:
Part IV, The Jobs Budget
This is Part III of an ESPC analysis of state tax policies and policy proposals and their potential effect on the Wyoming economy
By Sarah Gorin
ESPC researcher
Wyoming ranks consistently at or near the top in “gender wage gap,” the difference in wages paid to men and women. A study commissioned by the Wyoming Legislature in 2003 examined factors contributing to Wyoming’s gender wage gap, including:
1. A concentration of women in part-time work, either by choice or due to lack of necessary support services such as adequate child care;
2. Relatively low wage levels in female-dominated occupations, such as teaching and nursing;
3. High wages in male-dominated occupations such as mining and construction, which are major players in Wyoming’s economy.
In 2004, the Wyoming Legislature enacted a sales and use tax exemption for purchases of manufacturing equipment. Wyoming’s manufacturing sector is relatively small, and economic development proponents argued that a tax exemption similar to ones offered in other states would give Wyoming “another tool in the toolbox” to attract manufacturers to our state.
The Equality State Policy Center opposed the tax exemption, arguing in turn that tax exemptions do not drive location decisions, and that other states’ tax structures enable them to potentially recoup revenues lost from a sales tax exemption.
For example, in a state with personal and corporate income taxes, there is the possibility of replacing the revenues lost from a sales tax exemption on manufacturing equipment – if indeed the exemption attracts a manufacturer – because the company and employees will then pay income taxes.
Wyoming could recoup lost revenues only from property and sales taxes paid by the manufacturing company and its employees, which might or might not make up the difference.
In addition, some other states have enacted “clawbacks,” where state tax exemptions or other incentives are stopped and even recovered from businesses which fail to produce promised jobs and tax revenues.
Although the ESPC was not successful in stopping the exemption for purchases of manufacturing equipment, we successfully advocated for an amendment requiring reporting on the results of the tax exemption. And because gender wage gap was very much on everyone’s minds at the time, the reporting requirements included reporting wages paid to men and to women.
The reporting proved problematic as a first-time effort, since there were no baseline data to compare to, and there was no structure in place to identify manufacturers who might avail themselves of the tax exemption. However, the Department of Revenue worked diligently and began producing reports that showed wages paid to men and women (full- and part-time), and benefits offered to employees in the manufacturing sector.
The ESPC recently compiled all the reports and the results were rather interesting (see spreadsheet here of the last two years, which have comparable data).
The shaded boxes show where there are significant wage gaps between men and women in the same broad job category within the manufacturing sector.
Caveat: these data are compiled from employer surveys, and the employers chose individually how to list their data in the six categories offered by the Department of Revenue. The data are not tied to national manufacturing codes and unfortunately cannot be compared to regional or national data on manufacturing wages.
Nevertheless, the data do raise red flags that beg further investigation. For example, when 423 full-time female employees in the administrative/clerical category in FY 2008 earn, on average, nearly $7/hour less than 157 male employees in the same category, it stretches the imagination to believe that all 423 of those females are that much less qualified than the 157 males to justify making 70% of the males’ wages.
Approximately $32 million in revenues have been lost due to the tax exemption for purchases of manufacturing equipment (through FY 2008). The tax exemption is set to expire at the end of 2010, and several business organizations are lobbying to extend it. We at the ESPC think some questions need to be answered first.
Next:
Part IV, The Jobs Budget
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