Red State, Blue State: Kansas & Washington

@TBPInvictus here.

We have interesting experiments going on in the state of Kansas and the city of Seattle. Herewith a brief update on both.

Thanks to the following Tweet, I was made aware of the fact that – as you can see – the state of Kansas, under Sam Brownback’s awesome tax cuts, recorded the third-worst jobs performance in the country over the past year. Data are easily accessible just by clicking through.

It was almost three years ago – July 2012 – that Brownback touted the awesomeness of his economic plans via an op-ed:

In May, the Kansas Legislature passed and I signed the largest tax cut in state history, eliminating state income taxes on small businesses and reducing the tax burden on hardworking Kansans. […]

Our new pro-growth tax policy will be like a shot of adrenaline into the heart of the Kansas economy. It will pave the way to the creation of tens of thousands of new jobs, bring tens of thousands of people to Kansas, and help make our state the best place in America to start and grow a small business. It will leave more than a billion dollars in the hands of Kansans. An expanding economy and growing population will directly benefit our schools and local governments.

In short, it did none of the above. In fact, faced with the dire consequences of Brownback’s Laffer-inspired, misbegotten plans, Kansas schools had to implement early closures:

“It’s crazy times,” Sanders said. “The ideology in this tax experiment has gone too far. It’s almost as if they’re hell-bent on proving their point, no matter the damage it causes.”

Indeed. The beatings will continue until morale improves.

Faced with a fiscal crisis, Brownback has had no choice but to reverse course. Sadly, in doing so, he is placing much of the burden on the ordinary Kansans by raising sales taxes.

Here’s the growth of jobs in Kansas for the last 3 1/2 years, with the months of Brownback’s statement and the most recent reading highlighted.

Screen Shot 2015-06-20 at 3.29.22 PM

That’s an annual growth rate of about 1.15%, which compares poorly to the nation as a whole, which has advanced by about 1.91% annualized over the same period. Not terribly impressive.

And yet, amazingly, supply-side trickle down is somehow still a thing. Where is John Oliver when you need him?

Moving on from Kansas to the Emerald City and a different sort of experiment. Let’s see what the data have to say there about their gradually stepped-up minimum wage. Keep in mind that the increase was voted into law over one year ago, and the first bump was enacted a few months ago. (It’s important to note the timing of the legislation’s approval for the following reason: Market participants (which include restaurateurs) act on information immediately, i.e. as soon as it becomes available. In this case, information about an impending rise in wages was known over one year ago.)

So, how’s it going?

Well, I’ve been continuing the work started by Evan Soltas at his blog in March. Taking his initial six data points, and updating weekly, the Seattle restaurant scene looks like this:

 

seattle naics for jun172015

 

Seems to my eyes that the restaurant business in Seattle has continued to grow fairly briskly despite dire forecasts – and some outright lies – spread throughout the conservative media. As I was told by a contact in the most excellent King County Office of Economic and Financial Analysis, it will likely be rent before wages that slows things down in Seattle.

So, in sum, tax cuts have not led to the promised prosperity in Kansas, and a higher minimum wage has not led to the demise of the restaurant business in Seattle. I don’t expect these facts to make any difference whatsoever in conservatives’ narrative – I wasn’t born yesterday – but they do need to be documented for the record time and again.

 

 

Previously:

Jobless in Seattle? Not Yet, Anyway

Jobless in Seattle? Not Yet, Anyway. Part 2

We Know What’s the Matter With Kansas

A Pizza Place Closes in Seattle

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What's been said:

Discussions found on the web:
  1. Rich in NJ commented on Jun 21

    The problem is that supply-side proponents adhere to their policy preferences irrespective of a demonstrated reality of failure (and often negative polling data), perhaps because there is sufficient short-term ROI for their political benefactors to keep the donations flowing.

  2. DeDude commented on Jun 21

    Great with some data. I would use a linear scale for the NAICS to avoid a false impression of a “level off”.

    No big surprise if the thing you actually do is transferring tax burdens from rich to poor, then you cannot grow. It is all about the consumer so you have to put the money to the consumer class not the rich, if the goal is economic growth. As Reagan and Bush II proved, you can grow the economy with a tax cut and borrow policy, you just can’t do it in a sustainable fashion.

  3. btowers commented on Jun 21

    In fairness though, there are a few other confounding variables involved, right? And we’re comparing a state with a city?

    I don’t actually know the industry break-down of each area, but I’m guessing Seattle has a significantly larger tech industry, right? Tech is doing awfully well right now, and I think they eat a lot of pizza :)

    • constantnormal commented on Jun 22

      Yup, a closer comparison would be Kansas City to Seattle, and the BLS has nicely supplied the data for each:
      http://www.bls.gov/eag/eag.mo_kansascity_msa.htm
      http://www.bls.gov/eag/eag.wa_seattle_msa.htm

      Just looking at unemployment rates for each in 2015:
      month ——- Jan – Feb – Mar – Apr –
      Seattle —— 5.5% 5.4% 4.6% 3.9%
      Kansas City 5.9% 5.9% 5.3% 5.2%

      Now, I am not a trained statistician, but it looks to me like there might be something different going on in these two metro areas, and KC is not exactly devoid of tech, being one of Google’s gigabit fiber cities, and Sprint’s HQ.

      I think the author’s conclusions hold up.

    • Invictus commented on Jun 22

      For the record, this was not about comparing the state of Kansas to the city of Seattle. It was merely by way of updating what’s going on in the two locales pursuant to policy changes.

    • howardoark commented on Jun 22

      Just for the record, Kansas City is in Missouri.

  4. NoKidding commented on Jun 22

    constantnormal’s choice of locations to compare is more relevant.
    Needs more data than UE.
    Also 8.4 percent vs 29.9 percent will lower the ceiling in KC.

  5. econ1 commented on Jun 22

    This is anecdotal, but even anecdotes have their place. We have to watch Illinois as a state with high public benefits and high taxes. It started out a lot better off than Kansas, has had a left leaning government and policies for ages and is dealing with some issues now. It will all be fun to watch (from the sidelines….not expecting many will move there until things get sorted out).

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