Conservatives have a theory, a theory that has become the foundational myth of their movement. It holds that the best path to economic growth is to slash taxes, cut government, create a regulatory environment that favors business and ensure that the workforce isn’t “spoiled” by a safety net that becomes a hammock, as they like to say.
Do all that, and business will prosper, incomes will rise, people will have jobs and poverty will ease.
Since taking the reins of state government in January 2003, Georgia Republicans have implemented every bit of that agenda. They have slashed unemployment benefits and welfare benefits, and pay the lowest Medicaid reimbursements in the country. They have made us 49th per capita in transportation spending, and the business magazines love us for our “pro-business” environment.
And oh yeah, taxes have been slashed and slashed again. In 2003, Georgia ranked 29th in state and local tax revenue per capita, and was second behind only Virginia among the 12 southeastern states. Today it ranks 44th nationally, and eighth of 12 in the Southeast. We may have the third-lowest high-school graduation rate in the nation, and we can’t afford to keep our school doors open for 180 days a year, but darn if we don’t have low taxes.
So the experiment has been run for 11 years now. And by any meaningful measure, it has been a failure.
Let’s start with the basics: poverty. In 2002, 12.1 percent of Georgians lived in poverty. By 2012, that number had risen to 18.1 percent, a jump of 50 percent. Some of that must be attributed to the Great Recession, which has hit not just the nation but the entire globe. But compare our performance to that of the rest of the country: In 2002, Georgia had the nation’s 20th highest poverty rate. Today we have the 7th highest poverty rate. There is no way that can be defined as success or even as holding our own.
OK, how about the middle class? The best way to gauge what’s happening there is to look at what economists call median household income. The mythical “median household” stands at the exact middle of the income range in Georgia, with half of the households in the state making more, and half making less.
In 2002, that median household made $54,803, adjusted for inflation. Today it makes $48,121, a decline of more than 12 percent and more than $6,600 a year in buying power. Have the Great Recession and growing economic inequality played roles in that decline? Absolutely. But again, compare our performance nationally: In 2002, Georgia ranked 15th in median household income; today we rank 33rd. Median household income has declined twice as fast in Georgia as it has nationwide.
Again, that cannot be defined as success.
Another way to gauge success or failure is to look at jobs. In January 2003, our unemployment rate stood at 4.9 percent, while today it’s 7.7 percent. Again, the Great Recession has a lot to do with that increase. But again, look at our performance compared to other states. When Sonny Perdue took the oath as governor in 2003, we had the 15th lowest unemployment rate in the country; today, after more than a decade of GOP rule, we have the 46th lowest unemployment rate in the country.
And the closer you look at those numbers, the uglier they get.
Critics of President Barack Obama often point out that the national unemployment rate has declined from its peak of 10 percent to the current 7 percent in part because so many discouraged workers have left the labor force and are no longer included in official unemployment numbers.
However, the labor participation rate in Georgia has fallen much more sharply than it has nationwide. It dropped from 68.3 percent in January 2003, when we ranked 21st, to 62.4 percent in November 2013, which ranks us 31st. We have the worst of both worlds — a high unemployment rate AND a large number of people leaving the workforce.
Finally, what about productivity? Even if incomes are down, poverty is up and jobs are scarce, improving productivity could at least give us hope that things will improve.
Sorry. In 2002, Georgia produced $39,688 in goods and services per capita, ranking us 18th. By 2012, it had fallen to $37,702, and our ranking in GDP per capita fell to 33rd.
And without changes in policy, these downward trends show every sign of continuing.