The Wall Street Journal has a great editorial today comparing the economic policies and fortunes of Ohio and Texas. Ohio currently ranks 47th out of 50 in economic competitiveness according to the American Legislative Exchange Council. It is a “closed shop” state, which means workers can be forced to join a union whether they wish to or not. They have the third highest corporate tax rate and sixth highest income tax. As a result Ohio has lost 200,000 manufacturing jobs since 2000 and their 2007 unemployment rate was 6%.
By contrast Texas has no income tax. It is a “right to work” which means it has laws that make union organizing more difficult. When GM announced plans for a new plant to build hybrid cars they chose Texas. Texas has gained 36,000 manufacturing jobs since 2004 and their 2007 unemployment rate was 4.5%
So John Edwards was right after all: there are two Americas … just not the two he thought there were. On the one hand, are states like Ohio that suffer under high taxes and cumbersome work rules that make capital investments and entrepreneurship difficult. On the other hand, you have stats like Texas that keep taxes low, unions week, and regulation to an absolute minimum. To stay competitive in the 21st century, America is going to have to emulate Texas at the federal level if it does not want to bleed jobs like Ohio.