Caution issued on new (old) ALEC report

FOR IMMEDIATE RELEASE WEDNESDAY, JANUARY 20, 2016
CONTACT: Mike Owen or Peter Fisher, (319) 338-0773, pfisher@iowapolicyproject.org

“Rich States, Poor states,” a poor past predictor, being readied for re-release

IOWA CITY, Iowa — As the American Legislative Exchange Council (ALEC) prepares to roll out an updated edition of its annual ranking of states’ business climates, independent researchers are warning: “Beware!”

Basic RGB“ALEC’s Rich States, Poor States report has a poor track record predicting states’ economic growth,” said Dr. Peter Fisher, an economist and research director of the nonpartisan Iowa Policy Project (IPP).

“This does not stand up to independent scrutiny. It is a set of policy prescriptions presented in support of ALEC’s political agenda.”

Past versions of the report have been funded by far-right foundations, including Koch-controlled foundations, the Bradley Foundation, and Searle Freedom Trust.

The updated 8th edition being released Thursday (Jan. 21) contains new commentary in addition to the same state rankings released last April.

Fisher is the author of a newly launched website, Grading the States — gradingstates.org — which dissects several state business climate rankings, including ALEC’s Rich States, Poor States.

The website and previous reports by Fisher have exposed misinformed conclusions and poor methodology of past versions of ALEC’s annual Rich States, Poor States reports.

“These so-called business climate studies have been repeatedly discredited since the 1980s,” said Greg LeRoy, executive director of Good Jobs First. “Public officials should disregard these politicized grab-bags of data for what they really are.”

The centerpiece of the ALEC report has been the Economic Outlook Ranking, which ranks states on their conformity to ALEC’s preferred policies of low taxes on business, shrunken government services, and wage suppression.

Fisher’s analysis of ALEC’s 8th edition rankings in April 2015 again found no relationship between a state’s Economic Outlook Ranking in 2007 and its economic growth in the ensuing seven years. States that supposedly had a better “economic outlook” saw no more growth in jobs or income than the states ALEC ranked lower. Moreover, ALEC’s 20 “best” states have lower per capita income, lower median family income, and a lower median annual wage than its 20 “worst” states.

“The lessons here are important: Tax cuts result in lost services and lower opportunity— not the results ALEC has predicted with their rankings reflecting the group’s corporate-friendly agenda,” Fisher said.

“Any state legislator considering ALEC’s policy recipes should know that they fail when tested against actual economic results,” Fisher warned. “Rich States, Poor States is actually a cookbook for economic inequality, declining incomes, and undermining public infrastructure and education that really matter for long-term economic growth.”

“Our policy makers need to stick to the basics and recognize that public services benefit employers and citizens alike,” Fisher concluded. “ALEC’s former poster child, Kansas, is a cautionary tale here.” (See box)

The Iowa Policy Project is a nonpartisan, nonprofit public policy analysis organization based in Iowa City. For more information, see www.iowapolicyproject.org.

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