Posted tagged ‘Terry Branstad’

Let’s be done with Iowa’s fake job number

March 18, 2014

For some time now, the Iowa Policy Project and others have noted a bogus statistic that has been inserted into official jobs data provided by Iowa Workforce Development (IWD).

It just keeps getting better — the fake statistic — because it is designed to work that way.

“Gross Over-the-month Employment Gains” is an extra line that has been added to IWD’s seasonally adjusted, nonfarm jobs spreadsheet, which provides month-by-month data by job sector, back to January 2008.

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Below the standard table of rows and columns is the special line, with numbers reflecting the gains-only count since January 2011, when Governor Branstad took office. Construction up 200 but manufacturing down 400? No problem. Ignore the manufacturing losses and call it a gain of 200. That is exactly how this method treats job counts.

And now there’s a new wrinkle. Previously, IWD only showed what the count looked like for each month, with no overall total. You had to add the numbers yourself.

Beginning with the latest report, the ever-helpful IWD now takes care of that for you, or for whomever would want the meaningless number. With the latest report, IWD makes it a cumulative count.

Our experience with IWD staff is that they are professionals. No doubt they cringe every time that number comes out of the agency — whoever ordered them to compile it.

But no doubt the Governor is pleased. While the number is a total distortion of reality, it shows him close to the pace he would need after three years (120,000) to get to his magic goal of 200,000 jobs in five years. Kind of like winning a basketball game by shutting off the opponent’s side of the scoreboard, but, whatever it takes, right?

So, in case you’re interested, Iowa’s economy has created a net increase of just under 61,000 jobs since the Governor took office — about half of what he’d need to be on pace toward his goal. For a real analysis of Iowa’s job picture, see IPP’s monthly Iowa JobWatch report, or our annual report on The State of Working Iowa.

140318-jobsat36months2Now it’s one thing if the Governor’s campaign wants to peddle silly job numbers under its own letterhead. But it is wrong — flat out wrong — for official data to be presented by IWD with what amounts to a political campaign line for the Governor.

For those of us engaged in nonpartisan research and analysis, the political tainting of IWD reports is a great disappointment. Like us, IWD should be trying to determine and illustrate the actual job picture facing our state, so policy makers can make decisions in that light.

IWD and all state agencies must be neutral players if their mission is to serve all Iowans — not someone’s political agenda.

Owen-2013-57Posted by Mike Owen, Executive Director

The problem with political goals on jobs

July 26, 2013
Mike Owen

Mike Owen

This week we were treated (?) to the latest bizarre count provided by Governor Branstad’s administration on how many jobs he has created.

The Governor is claiming 160,600 jobs already created since he took office, and it’s nowhere close to reality, if for no reason other than the fact that he’s only wanted to count job gains and ignore the losses.* But even then, the number is inflated.

So, class, let’s all take out our abacus and our slide rule and try to come up with the same number. On second thought, let’s not. Let’s get past the politics on job numbers and just count ’em ourselves. A pencil will do.

As you’ll recall, the Governor promoted a goal of creating 200,000 jobs in five years. He took office in January 2011.

We start with 1,475,900 — the number of nonfarm jobs in Iowa in January 2011, according to Iowa Workforce Development. (Find IWD’s spreadsheet here.) The latest data, which are preliminary and might be adjusted, put that number at 1,530,300 as of June 2013. That’s a net increase of 54,400 jobs.

To reach 200,000 jobs by January 2016, the Governor’s goal, Iowa would have to add 4,700 jobs per month for the next 31 months.

130719-NF-goalsIPP’s latest JobWatch report shows we have not kept that kind of pace in Iowa over the last decade. In 2013 the average net gain has been 2,400 a month, which is higher than usual.

Why not get rid of the political goal and focus on a realistic economic goal: the job growth we would need to bring down unemployment and keep pace with the growth of the labor market. As of June, we are still 55,100 jobs short of this basic threshold. But that’s a more manageable number than the 145,600 left to meet the Governor’s goal, and probably a more meaningful one.

Governors and state legislators have only so much impact on the overall health of a state economy to influence its job performance; there are much greater forces at work.

In the end, the issue for Iowa families is not as much a Governor’s goal as it is whether the economy is producing the number — and quality — of jobs necessary to maintain and improve all Iowans’ standard of living.

But we didn’t raise the issue about the job count. Others have. So as long as Iowans are going to be looking at it, we’ll help them to monitor it accurately.

* The Governor’s count of jobs already produced, 160,600, is far above even the number you’d accurately compute if you avoided counting job losses. Iowa Workforce Development has added a line on its nonfarm jobs spreadsheet leaving out the job losses and counting only gross jobs added, month by month, since January 2011. For what it’s worth, that number is 112,700 — about 48,000 behind what the Governor’s office was claiming Wednesday, and more than twice the actual net increase of 54,400.

Posted by Mike Owen, Executive Director

Hyperbole Alert: The drumbeat to cut corporate taxes in Iowa

July 24, 2013
Mike Owen

Mike Owen

TWELVE PERCENT!

The figure practically screams at you, even when it’s not in all caps, when the conversation comes to corporate tax rates in Iowa.

Here’s the thing: It’s not a real number. Not really.

That is what is known as Iowa’s “top marginal rate” on corporate income tax. And it’s not a real number because it simply does not — cannot — reflect what a business pays on all its profits. Yet that is the implication when people (especially politicians) or corporations complain about it.

A top Iowa columnist, Todd Dorman of the Cedar Rapids Gazette, this week discussed the political battles over Iowa’s latest gigantic subsidies to Egyptian fertilizer company Orascom. In his piece he expressed a note of concern about the hyperbole in those battles. Then, he turned the discussion to Governor Branstad’s desire for cuts in corporate income taxes.

It is in that discussion where the hyperbole typically has been the strongest in Iowa. We are often told — as Dorman noted — that Iowa’s top corporate income tax rate is the nation’s highest. Note the emphasis added on “top.” More on that in a moment. Dorman also noted, accurately, that Iowa “has four brackets and a tangle of special interest credits.”

Because of the latter, any serious concern for our corporate friends should evaporate. Because they’re really being taken care of quite nicely, thank you, by their friends in the General Assembly and the Governor’s Office.

Now, about that “top rate.” It applies only to Iowa-taxable corporate profits above $250,000. Iowa doesn’t tax any profits from sales outside the state, so the rate doesn’t apply at all there, which for many businesses is a significant share of profits. For all taxable profits below $250,000, rates are lower — 6 percent on the first $25,000, 8 percent on the next $75,000 and 10 percent on the next $150,000.

Before these rates kick in, the business gets to deduct half its federal income tax from taxable income, and may have other deductions or ways to shelter income from state tax.

Then, after the rates are computed and the taxes determined, the tax credits enter the picture — and state revenues exit. The state just expanded the potential for those credits by $50 million, raising the cap on a select group of credits. In the case of the Research Activities Credit, these credits not only erase all tax liability, but offer state checks for the remaining amount of the credit. Through that program in 2012, Iowa paid out almost $33 million to 130 firms that paid no income tax, because those companies had more credits than tax liability.

And you can bet the corporate execs and their accountants fully understand all these nooks and crannies in our tax code. But if you want to give them a free million or so, they’ll take it. They are smart folks, and they have proven themselves to be more skilled negotiators than Iowa’s economic development moguls.

Want to talk reform? Then recognize the real problems — that we receive less in corporate tax than we used to, and that a lot of corporate tax is not collected because of the swiss-cheese nature of our tax code. That gives us all something to talk about.

Just be ready for the hyperbole from those who don’t want to change that part of our system.

Posted by Mike Owen, Executive Director


For more information about Iowa business taxes, see these Iowa Fiscal Partnership reports:
— “Reducing Iowa Commercial Property Taxes,” by Heather Milway and Peter Fisher, April 24, 2013.
— “Amid Plans to Relax Limits, Business Tax Credits Grow,” by Heather Gibney, April 16, 2013.
— “Corporate Taxes and State Economic Growth,” by Peter Fisher, revised April 2013.
— “A $40 Million Budget Hole: Persistent and Growing,” IFP backgrounder, February 25, 2013.
— “Tax Credit Reform Glass Half-Full? Maybe Some Moisture,” IFP backgrounder, revised March 23, 2010.
— “Single Factor to Consider,” IFP backgrounder, April 2, 2008.

Smokey and the Jobs

July 5, 2013

The controversy over speeding by the Governor’s SUV prompted one columnist [1] to tinker with the lyrics for the theme song from Smokey and the Bandit (the Burt Reynolds film in which a couple of lead-footed drivers set out on a multistate beer run through the South beating the law at every turn): “Gov. Terry Branstad’s SUV was apparently westbound and down, loaded up and truckin.’”

This naturally leads to a discussion about the Governor’s job goals, because of the next lines from the same song: “We gonna do what they say can’t be done. We’ve got a long way to go, and a short time to get there….”

Governor Branstad set out to produce 200,000 jobs in five years, a lofty goal and one all Iowans should want to see happen. But to do that, we need to average a net increase of about 3,300 jobs a month for that whole span. A pace like that has never come easily in Iowa. In the last two decades we have reached it only once, in 1994, over an entire calendar year.

And, through the first 28 months of his term, tracking we do for IPP’s monthly JobWatch shows we have a net gain of 48,000 jobs — a pace of 1,700 new jobs per month. That leaves 32 months at a pace of 4,800 jobs per month to gain the remaining 152,000. So the Governor has set an aggressive goal for one year, let alone five.

As the graph below indicates, the Iowa economy has just about caught up with both the state’s peak level of jobs and peak before the 2007-09 recession, while falling well short not only of the Governor’s goal but also the number of jobs needed to keep up with population growth.

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Another 152,000 jobs over 32 months?

We’re not going to say it can’t be done. But we’ve got a long way to go, and a short time to get there.

Posted by Mike Owen, Executive Director

[1] Todd Dorman, The Gazette, Cedar Rapids, “Smokey and the Branstad,” updated July 3, 2013 — http://thegazette.com/2013/07/03/smokey-and-the-branstad/

EITC boost would help families who need it — and economy

January 17, 2013
Heather Gibney, Research Associate

Heather Gibney

If you imagine a packed Kinnick Stadium on game day you have an idea of how many Iowans were kept out of poverty from 2009 to 2011 thanks to two refundable tax credits.

A new state-by-state analysis from the Brookings Institution finds that the federal Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) kept 71,123 Iowans out of poverty, over half of them children.

The Governor’s Condition of the State speech Tuesday missed an opportunity to discuss the value of Iowa’s own Earned Income Tax Credit (EITC) to Iowa families and prospects for an expansion — something he has twice vetoed on grounds that he wanted more comprehensive tax reforms.

The Brookings analysis uses a new way of looking at poverty: the Supplemental Poverty Measure, an updated approach to the calculation of whether an Americans household is in poverty. So it’s a valuable look that we haven’t seen for state-level figures.

The EITC is designed to encourage work when low-income jobs don’t provide enough for a family to make ends meet. So, as a family earns more income, they become eligible for a larger credit; as their income approaches self-sufficiency the EITC gradually phases out.[1]

At the state level, Iowa families who are eligible for the federal EITC also qualify for the state EITC, which is set at 7 percent of the federal credit. Proposals in the past would take that higher, to 10 percent or even 20 percent. It can be an important break for lower-income working families because Iowa already taxes the income of many who don’t earn enough to pay federal income tax. Currently, a married couple with two incomes and two children who qualifies for the federal EITC doesn’t have to start paying federal income taxes until their incomes reach $45,400. That same family would have to pay Iowa income taxes when their incomes reached $22,600.[2]

The EITC is the the nation’s largest and most successful anti-poverty program, largely because it encourages and rewards working families. With Iowa’s 85th General Assembly under way, discussions about raising Iowa’s EITC above 7 percent may once again emerge after lawmakers failed to reach an agreement last year.

An EITC increase would raise the threshold at which Iowa families start to owe income taxes — putting more money into the pockets of those who need it the most and encouraging them to spend that money in their local communities.

Posted by Heather Gibney, Research Associate


Digging a little deeper on Iowa jobs

January 16, 2013
Colin Gordon

Colin Gordon

Governor Branstad’s claim that Iowa’s economy has created 100,000 jobs in two years is nonsense. We make this case in this morning’s Des Moines Register, pointing out that the Governor’s measure counts (and miscounts at that) only one side of the ledger. The actual jobs record since January 2011 is a net of 18,700 nonfarm jobs.

Here are a couple of graphs to underscore this point. The first traces the trajectory of job creation in Iowa, the West North Central States, the entire Midwest, and the country as a whole. These are plotted with a common starting point: December 2007 (the start of the recession) is set at “100” for each measure, so that each line shows the percentage change in employment over time. The Branstad Administration (since January 2011) is shaded in yellow.

What jumps out here is a simple fact. There is nothing exceptional about the Iowa experience. Our job numbers closely track national and regional trends, although — as with the rest of the West North Central Region — insulation from the housing crash and high commodity prices cushioned us from the full impact of the recession. And the rate at which we are adding jobs (much too slowly) is virtually identical to that of the region and the nation.

Figure 1. Iowa Job Trends Follow Regional and National Trends

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What about the actual job creation record in Iowa? Figure 2 below plots the month-by-month gains (and losses) in nonfarm jobs since December 2007. Again, the period since January 2011 — the focus of the Governor’s claims — is shaded in yellow. Over that 22-month span, we gained jobs in 14 months and lost jobs in the other eight—for a net gain of 18,700 jobs, or about 850 jobs per month. There is nothing exceptional about this. Indeed, in the year preceding the current administration (January 2010 to January 2011) we added about 13,000 nonfarm jobs — over 1,000 per month.

Figure 2. Iowa Jobs Both Gain and Fall Over Last Two Years

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Posted by Colin Gordon, Senior Research Associate

Scrap the political math

January 16, 2013

At the Iowa Policy Project, we are pretty careful about the way we count. The way we use numbers reflects on our credibility as an independent, nonpartisan resource for all Iowans, no matter their political stripe. It is important for our state’s political debates to be fought on a foundation of facts, so that our leaders can better debate the issues on their merits, rather than political spin. That is why we’re here at the Iowa Policy Project.

We also have counted since our earliest days on the work of Colin Gordon, a professor of history at the University of Iowa and IPP’s senior research consultant. Colin is author of our annual State of Working Iowa report — he offered an innovative twist on it this year with interactive graphs that you can try out for yourself at www.stateofworkingiowa.org — and like the rest of us at IPP, he was disturbed to see Iowa job data being distorted in recent days by, of all sources, the Governor’s Office. The Governor in his Condition of the State address Tuesday used an inflated number to tout progress on Iowa jobs. He is choosing to count only jobs gained, not those lost. This is political math, not real math.

Gordon wrote about it today in The Des Moines Register. In the piece, Gordon notes that using the Governor’s approach to math, Iowa could have a $6 billion surplus. “Why not just count the revenues?” he asked. Excerpt:

And, of course, the governor’s political opponents could offer up a number of “gross jobs lost” since January 2011 — a measure (about 56,000 lost jobs) that would be just as impressive, and just as silly. …

In the bigger picture, these job numbers are not even shaped much by state policy, by what governors do or do not do. Jobs are won or lost by national economic conditions. States can try to pirate jobs or investment from other states, but the only sustained impact of state policy is on the quality of state jobs. Higher labor standards and better investments in education are places to make that impact.

Iowa’s leaders can move these discussions forward constructively, but that starts with ending the politicization of basic economic data, as the governor’s staff has done with numbers on job growth.

Posted by Mike Owen

Who would take Governor’s deal?

July 4, 2012
Mike Owen

Mike Owen

There’s a little gamesmanship about public-worker benefits this week that is avoiding a critical question: How will the state compensate workers for giving up negotiated health benefits?

Governor Branstad on Monday repeated his plans to push for a 20 percent premium contribution by state employees in the next contract, putting out a pledge to pay that amount himself right now. For the Governor it’s $224 per month.

IPP’s Andrew Cannon has done a good job of exposing the fact that public worker health benefits in Iowa, while more generous than those offered in the private sector, don’t make up for lower pay in comparable positions or positions requiring comparable qualifications/education. On balance, there is a penalty for working in the public sector.

Governor Branstad doesn’t talk about the wages/salary side. He is ignoring the fact that, unlike his pay and that of state legislators, state employees’ benefits in place are a result of bargaining — a point acknowledged far too little, but thankfully was cited this week by the Muscatine Journal’s Steve Jameson. State employees agreed on the pay levels they receive in the context of other benefitsthey al so receive.

Oddly, when the Governor says state workers should pay $1,000 toward their health insurance, he is peddling it all as savings to the state. Actually, we should expect salaries to go up to compensate for lost benefits.

Also, why are state employees the Governor’s target? Revenues are up, and the Governor is happily giving away millions to companies that don’t pay income tax, and leaving corporate tax loopholes open as well. So explain again, please: Why should state workers take a $1,000 pay cut?

Who would take that deal?

By Mike Owen, Assistant Director


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