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Economic and Social Consequences of State Labor Costs Trends, 1970-2000

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Abstract:

The cost of labor has been a major issue in analyses of the economic impacts of globalization. A measure based on a factor analysis of union membership, manufacturing wages, right-to-work laws, unemployment benefits, and workers’ compensation showed a sharp decline in labor costs in the American states between 1970 and 2000. This paper uses a pooled time-series, cross-sectional analysis to consider the economic and social consequences of declining labor costs. Exposure to the international economy proved to show little relationship to these trends, and this measure of state labor costs was also independent of trends in federal labor costs.

State economic outcomes considered included trends in productivity, employment, and gross state product (GSP) as well as exports and foreign direct investment (FDI). Unemployment was higher and growth in jobs slower in states with higher labor costs, but increases in GSP, personal income, productivity, exports, and FDI were all associated with higher state labor costs.

Social factors considered included trends in poverty rates, crime, family structure, inequality, state taxes and spending, and voter turnout. Regression analysis of state trends since the 1980s found that the negative impacts of declining labor costs on voter turnout, violent crime, and child poverty rates were not outweighed by higher rates of job creation, presumably because so many new jobs are low paid and offer few benefits.
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state politics, labor costs, political economy
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Hansen, Susan. "Economic and Social Consequences of State Labor Costs Trends, 1970-2000" Paper presented at the annual meeting of the American Political Science Association, Marriott Wardman Park, Omni Shoreham, Washington Hilton, Washington, DC, Sep 01, 2005 <Not Available>. 2008-12-12 <http://www.allacademic.com/meta/p40337_index.html>

APA Citation:

Hansen, S. B. , 2005-09-01 "Economic and Social Consequences of State Labor Costs Trends, 1970-2000" Paper presented at the annual meeting of the American Political Science Association, Marriott Wardman Park, Omni Shoreham, Washington Hilton, Washington, DC Online <PDF>. 2008-12-12 from http://www.allacademic.com/meta/p40337_index.html

Publication Type: Conference Paper/Unpublished Manuscript
Review Method: Peer Reviewed
Abstract: The cost of labor has been a major issue in analyses of the economic impacts of globalization. A measure based on a factor analysis of union membership, manufacturing wages, right-to-work laws, unemployment benefits, and workers’ compensation showed a sharp decline in labor costs in the American states between 1970 and 2000. This paper uses a pooled time-series, cross-sectional analysis to consider the economic and social consequences of declining labor costs. Exposure to the international economy proved to show little relationship to these trends, and this measure of state labor costs was also independent of trends in federal labor costs.

State economic outcomes considered included trends in productivity, employment, and gross state product (GSP) as well as exports and foreign direct investment (FDI). Unemployment was higher and growth in jobs slower in states with higher labor costs, but increases in GSP, personal income, productivity, exports, and FDI were all associated with higher state labor costs.

Social factors considered included trends in poverty rates, crime, family structure, inequality, state taxes and spending, and voter turnout. Regression analysis of state trends since the 1980s found that the negative impacts of declining labor costs on voter turnout, violent crime, and child poverty rates were not outweighed by higher rates of job creation, presumably because so many new jobs are low paid and offer few benefits.

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