The State of Working Louisiana
Mon September 9, 2013
Report: Wages Stagnant, Unemployment on the Rise in La.
A recent study by the Louisiana Budget Project gives a snapshot of the state’s economy from the perspective of the workers themselves.
The report, entitled The State of Working Louisiana, found that unemployment in the state is creeping upward and that although worker productivity is at an all-time high, wages are stagnant and have shown a net increase of only 1 percent over the last 30 years.
According to the report, part of the reason wages are falling is because manufacturing is down 10 percent since the recession. David Gray, an author of the study, said the manufacturing sector took a huge hit following the Great Recession and the gains seen today in manufacturing haven’t been enough to completely replace all the losses experienced since 2007.
"As we look into the future and look at our future projections, manufacturing will grow but the largest areas of growth are going to be, unfortunately, in low-wage industries such as retail and tourism," said Gray. "And so it’s those trends that are keeping overall wages in Louisiana low."
Louisiana Economic Development Secretary Stephen Moret doesn't dispute LPB's numbers, but in responses to the report published in The Advocate and Times-Picayune/NOLA.com he seems to have quite a different understanding of them.
Gray thinks these number stories can be reconciled but the unfortunate reality is Louisiana needs to create a lot more jobs to keep the unemployment rate low. The report says Louisiana is still 150,000 jobs shy of where it needs to be in order to return to our pre-hurricane unemployment rates. Gray said that means that we need to create 4,000 jobs every month for the next three years to catch up.
"Unfortunately, we’ve only been able to create about 2,000 jobs every month. It’s not as much that we aren’t creating jobs, it’s that we aren’t creating jobs fast enough," said Gray.
Additionally, more Louisianians are migrating back to the state or migrating to Louisiana, drawn by the entrepreneurial climate in New Orleans and Baton Rouge and Lafayette.
"So as a result of the growth of your working age population, we’re starting to experience issues with high rates of unemployment," said Gray.
Prescriptions for Change
At end of the report, the Louisiana Budget Project offers up suggestions to help Louisiana with its economic woes. Although the organization is typically against tax credits, Gray said they do recommend increasing a few because some credits are particularly effective at lifting people out of poverty. A couple they talk about in the report are the earned income tax credit and child readiness tax credits.
Gray said the earned income tax credit has been proven to not only lift families up out of poverty but also give them a better chance at educational attainment and better access to healthy foods.
"There’s a whole host of social and economic consequences that come along with increasing that credit that have a real impact on low-wage workers," said Gray. "The child readiness tax credit is kind of along a similar line. Studies have shown time and time again, that the great level of your educational attainment the more money you can expect to make."
Gray said if these problems are allowed to fester, Louisiana will have many more "lost decades", where workers become more productive but their income and earnings doesn't reflect that increase in productivity.
"So it’s critical for the health of our economy and for the lives of our workers that they’re properly compensated for the work they perform," Gray said.
**The Louisiana Budget is a non-profit research and advocacy group that analyzes state budget issues with a focus on the effects to low-to-moderate income families.