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Media Trackers Montana: 50 State Legislators Discuss Free Markets at Montana Policy Institute Forum

A total of 50 state legislators and approximately 130 people met this weekend to discuss free market principles for Montana.

The two-day event was hosted by the Montana Policy Institute (MPI) and focused on gearing up both state legislators and the general public for the upcoming 2013 legislature. The forum featured discussions and presentations on important issues for the upcoming legislature and was highlighted with a presentation by Wall Street Journal Editorial Board Member and Senior Economics Writer Stephen Moore.

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Public vs. Private Sector Compensation in Montana (2012)

By Glenn Oppel, MPI Policy Director

Click here for full study. (PDF – 4MB)

The State Human Resources Division (Division) of the Montana Department of Administration plays a key role in the adoption of a pay plan for state employees in Montana. It is for all intents and purposes the sole source of data on compensation used by policymakers and agency managers. Unfortunately, the data the Division produces is based on a flawed methodology and limited data.

The Division conducts a salary survey of Montana and surrounding states on a biennial basis to arrive at a private sector comparison for occupations and offices in state government. With the most recent survey, the Division determined that on average a majority of the public sector occupations studied have earnings that are 13.3 percent below what they call the “market midpoint.” The Division’s methodology is open to criticism on a number of points:

• Many positions in the public sector have no private-sector equivalent. Correctional officers and fire fighters, for instance, have no direct private sector equivalent. Comparing occupations like these to a “market midpoint” yields very little useful information.

• Comparing earnings among occupations does not account for the differences in age, education, and experience for the employees who work in these occupations.

• The Division’s analysis doesn’t include the value of employee benefits — health insurance, paid leave, pension, etc. — which make up a considerable portion of public employee compensation.

This new analysis from the Montana Policy Institute compares employees of similar personal and professional characteristics in both the public and private sectors of Montana. Instead of comparing pay in broad occupational categories, this report uses regression analysis to compare public and private employees of similar work experience, education, gender, race, and disability status. It also analyzes total compensation (which the state fails to do), including take-home pay as well as fringe benefits.

This report details the methodology and finds that public employees in Montana actually earn over 15 percent more than comparable employees in the state’s private sector.

Enough Already! – What Really Worries Americans

Think your friends and neighbors are biting on the “income inequality” bait? Guess again. It’s jobs and the economy that most people care about. Not the loud obnoxious people, but most.

Enough Already! – Changes in the Employment Sector (Shown in Charts)

Another couple of charts from the Mercatus Center show changes in employment by sector. Not surprisingly, government sector jobs are safer during downturns while those who pay the bills look for work. But public employees trade greater job security for lower pay, right? The second chart answers that question. These are federal employment numbers and the differences are not as stark for Montana, but the trends are the same.

And of course this results in greater government spending. Here’s how that translates per household:

Enough Already! – Long-term Trend: Wage Redistribution Increases

This chart by the Mercatus Center examines the change in composition of personal income in the U.S. since 1929. It’s no coincidence that proprietors’ income goes down as government transfers go up. That’s who’s paying the bill.

Enough Already! – Top 5 Federal Stimulus-Funded Job Creators

This chart by the Mercatus Center compares the top five federal stimulus-funded job creators. Data are from the most recent quarter of recipient reported data from Recovery.gov, the reporting period ended June 30, 2010.

Cap-and-Trade Would Cut Thousands of Montana Jobs

Bozeman, Mont. — If pending federal climate change legislation is enacted, Montana would stand to lose between 4,964 and 6,761 jobs by 2030, according to a study released today by the Montana Policy Institute (MPI) and the American Council for Capital Formation (ACCF).

The primary cause of job losses is lower industrial output due to higher energy prices, the high cost of complying with emissions cuts required by the legislation, and greater competition from overseas manufacturers. Among the hardest hit would be manufacturing jobs.

“As Congress considers far-reaching energy legislation that would impose an aggressive ‘cap-and-trade’ system, it’s important for us to examine what this means for Montana families and businesses,” said Carl Graham, president of the MPI. “It’s clear from these findings that the impact would be devastating for our economy – slashing jobs and reversing all the progress we’ve made, especially in the development of our state’s natural resources.”

The economic impact of this legislation on Montana is not isolated to jobs.

• By 2030, the average Montana family can expect the price of electricity to increase by up to 61 percent, gasoline 27 percent and natural gas 78 percent. Low income families and the elderly, who spend a disproportionate amount of their income on energy, will be especially hurt. Disposable income in Montana would fall by $414 to $764 in 2030.

• Under this legislation, Montana would experience a sharp decrease in manufacturing output, especially in nonmetallic mineral product manufacturing and primary metal manufacturing, important sectors for the Montana economy. The higher energy prices, fewer jobs and loss of industrial output under this legislation are estimated to reduce Montana’s gross state product (GSP) by as much as $900 million to $1.2 billion in 2030.

• State tax revenues would be reduced by as much as $65 million by 2030, forcing Montana policymakers to make hard choices about how to fund basic services, such as law enforcement, hospitals and schools.

Despite the current recession, recent employment figures demonstrate a promising trend. In the past ten years, employment in the Montana mining industry has grown 68.4 percent. In 2008, while the U.S. unemployment rate rose, Montana’s employment grew at a rate of 1.7 percent, and our state’s economy grew at a rate of 1.8 percent. If pending energy legislation were enacted, this continued growth would be impossible.

“Previous research about the impacts of this legislation on the national level found significant loss to gross domestic product. Montana, a state whose economy is tied to manufacturing and energy development, is particularly vulnerable to adverse impacts from this federal energy legislation,” said Margo Thorning, Ph.D., senior vice president and chief economist of the ACCF, who recently testified on Capitol Hill. “If pending federal energy legislation is enacted, the Montana economy will significantly decline and thousands of jobs will be lost.”

About the Study

The ACCF and the National Association of Manufacturers (NAM) recently conducted a macroeconomic study examining the impacts of this legislation on the U.S. economy. This study is a deeper examination of those initial findings specific to Montana. This analysis was undertaken using a version of the National Energy Modeling System (NEMS), the same tool used by the United States Energy Information Administration for its energy forecasting and policy analysis.

The study authors also explored both high- and low-cost scenarios to account for a wide range of assumptions regarding the likely cost and availability of new technologies, energy efficiency and renewable electricity standards, and domestic and international offsets.

This research examines the impact of H.R. 2454, known as Waxman-Markey, on Montana’s economy. Because the Senate version, (S. 1733) known as Kerry-Boxer, requires further emissions reductions, the economic impacts addressed in this research would be higher if that legislation were enacted.

This study is a joint project of the Montana Policy Institute (MPI) and the American Council for Capital Formation (ACCF).

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ACCF is a Washington, D.C.-based group which provides sound research to U.S. and international policymakers, the media and public. ACCF advocates for economic, regulatory and environmental policies that promote capital formation, economic growth and a higher standard of living for all.

The Montana Policy Institute is a nonpartisan policy research organization that equips Montana citizens and decision makers to better evaluate state public policy options from the perspective of free markets, limited government, individual rights and individual responsibility. To find out more visit us on the web at www.mtpolicy.org.

Contact:

Carl Graham

President

Montana Policy Institute

Phone : (406) 219-0508 Montana Policy Institute

67 W Kagy Blvd Ste. B

Bozeman, MT 59715

info@montanapolicy.org

Press Releas

Montanans Are the Losers Under Cap-and-Trade

We’re hearing a lot about jobs lately and how important it is to “save or create” them. That’s all well and good, but many of those who on one hand wax eloquent about ways to reward businesses for hiring people are on the other hand feverishly pressing for programs that will make hiring more difficult and expensive. The “cap-and-trade” measures currently rattling around in Washington are great cases in point.

Congress is now debating far-reaching energy legislation that would impose an aggressive cap-and-trade system on greenhouse gas emissions (GHG) and mandate high levels of energy efficiency and renewable energy production. You might be hearing that this legislation is dead in the Senate, but nothing could be further from the truth. Big banks, big business, and other special interests have too much riding on this new financial scheme for it to go quietly into the night. And as usual, the rest of us would foot the bill.

As an example, a study released on February 11th by the Montana Policy Institute (MPI) and the American Council for Capital Formation (ACCF) shows that Montana would stand to lose between 4,964 and 6,761 jobs by 2030 under cap-and-trade. And that’s just the start.

Most jobs would be lost due to lower industrial output because of higher energy prices, the high cost of complying with emissions cuts required by the legislation, and greater competition from overseas manufacturers without the same pressures. Among the hardest hit would be manufacturing jobs—the heart of our state’s economy – and those at the lower end of the wage spectrum.

As Congress debates our energy future, we need to understand what Washington special interests are trying to do to our economy, our jobs and our future. It’s clear from these findings that Montana has nothing to gain—in fact, too much to lose—from cap-and-trade legislation, and that the economic impact of this legislation on Montana is enormous and not isolated to lost jobs.

• By 2030, the average Montana family can expect the price of electricity to increase by up to 61 percent, gasoline 27 percent and natural gas 78 percent. Low income families and the elderly, who spend a disproportionate amount of their income on energy, will be especially hurt.

• Montana would experience a sharp decrease in manufacturing output. The higher energy prices, fewer jobs and loss of industrial output under this legislation are estimated to reduce Montana’s gross state product (GSP) by between $900 million and $1.2 billion in 2030. Coal production alone could decrease by 96 percent. The impacts of artificially higher fuel, feed, and chemical prices on our farming families will force hard choices for them as well.

• State tax revenues would be reduced by as much as $65 million by 2030, forcing Montana policymakers to make hard choices about how to fund basic services, such as law enforcement, hospitals and schools, even as their costs increase with higher energy prices.

Despite the current recession, recent employment figures demonstrate a promising trend. In 2008, while the U.S. unemployment rate rose, Montana’s employment actually grew at a rate of 1.7 percent, and our state’s economy grew at a rate of 1.8 percent.

But much of this growth is tied to mining and the development of our natural resources, areas hard hit by cap-and-trade legislation. In the past ten years, employment in the Montana mining industry has grown 68.4 percent and is now responsible for 16,220 Montana jobs. A recent study by Pricewaterhouse Coopers credited the oil and natural gas industry for 34,210 jobs and a $3.3 billion contribution to the state’s economy. If cap-and-trade legislation is enacted, this growth would be reversed as jobs and production move overseas.

We all want a clean environment. Most of us live in Montana because we love our Big Sky and the beautiful land beneath it. But those shrill voices demanding that we trade our economic well being for a clean environment are trying to drive us into a false choice. Exporting our jobs to cheap overseas labor and our energy production to dirty overseas power plants will not help the environment or reduce greenhouse gases. There are alternatives to cap-and-trade, and a politician’s willingness to look at them can be a litmus test indicating whose interests he or she is really serving.

 

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Carl Graham is president of the Montana Policy Institute, a nonpartisan policy research organization that equips Montana citizens and decision makers to better evaluate state public policy options from the perspective of free markets, limited government, individual rights and individual responsibility.

 

Cap and Trade

Cap and Trade

By Rep. Bob Lake

 

There’s little doubt that the Waxman-Markey cap and trade bill will have a negative impact on our economy. Economists on both sides of the issue agree that it will, the question they’re debating is by what degree. It’s amazing to me that in one of the economically-weakest points in our country’s history, Congress would be contemplating passing legislation that all agree would make things worse.

The experts are projecting losses to our GDP and job growth and at the same time higher prices for consumers for gasoline, electricity, and consumer goods. The double-whammy of declines in jobs and higher prices for consumers can only serve to make our economic situation worse and slow our recovery.

What are the impacts we can expect here in Montana? Considering that our second-biggest industry in much of the state is energy-production and our largest industry, agriculture, depends on significant energy inputs, it could be disastrous.

As I’ve been watching this proposals’ progress, which will now be considered by the US Senate, one of the things I’ve been contemplating is what impact it could have on our state tax revenues. Most people recognize that in recent years we’ve been in a relatively rosy budgetary situation, with at one point having a 1.4 billion budget surplus.

A large factor in our growth has been a healthy influx of tax revenues from the increased oil and gas activity in eastern Montana. We’ve had increases directly from the oil and gas severance taxes and property taxes but also indirectly in the form of income taxes from all the new, high-paying jobs in the oil fields of Eastern Montana. Our state also has significant revenues from coal production (though not nearly what the state of Wyoming realizes).

I fear that a lot of those tax revenues will dry up in very short order under a cap and trade scenario.

A bigger challenge we face is that the influx of tax revenue we’ve had in recent years has fueled an unprecedented growth in state government. The new funding that has been added to state government during the good times now become ongoing obligations we somehow need to fund in future years. That leaves two options: increase taxes to offset a reduction in energy-related taxes or start cutting government services.

If we increase taxes, we’re turning that double-whammy (reduced job growth and higher consumer prices) into a triple-whammy by adding a potential increased tax burden on homeowners or income taxpayers. If we reduce services the needy will suffer and the triple turns into a quad.

As for agriculture our #1 industry, cap and trade is going to hit small producers (which make up the vast majority of Montana operators) inordinately hard. Most ag businesses have very little opportunity to pass on their increased energy input costs on to consumers. Cap and trade will make fuel, fertilizer, and feed costs all increase at the mercy of the market. Inevitably, we will all be forced to pay more for our food because of these higher costs.

We all know the thin margins most ag operations already operate on. Cap and trade could be the proverbial straw that breaks the camels’ back for a lot of family farms and ranches.

Don’t get me wrong, there are benefit’s to reducing our nation’s carbon emissions. Reducing those emissions comes with a cost, and right now Montana is in a position to be hit harder than most other states based on the current legislation already passed by the House and on its way to the Senate.

There are other options available. I urge Senator Baucus and Senator Tester to work to develop a better bill that will actually improve conditions in Montana. The Waxman-Markey bill certainly does not.