Repealing Wage Protection Laws Does Not Protect Tax Payers

 (AP Photo/Michael Conroy)

Indiana Legislature

Indiana is set to repeal laws that have been in place for nearly 80 years that set pay standards for people working on state projects.  Indiana’s House speaker, Republican Brian C. Basma, explains that the change reflects a new era when “There’s more concern about efficiency and taxpayer protection than there was 20 years ago.”

This, of course, is typical of the conservative mind set and its inability to grasp complex and sophisticated issues.  It also raises the question, which “tax payers” does legislation like this protect?

The New York Times features the story of Henry Burks, a 57 year-old union electrician who will be bear the weight of this new priority for “efficiency” and “taxpayer protection.”  Mr. Burks explains that he has postponed plans to make improvements around his house and expects he will not be able to help his adult children cover college costs.  (That, by the way, is another issue.  The fact that adult children rely on parents to make ends meet says a lot about the costs and responsibilities of American higher education today.  And maybe something about American parents and their adult children.  Another topic for another time.)

Let’s start with Henry Burks and apply some “trickle down” analysis here.  Let’s say Mr. Burks does not build the new deck he had planned.  That is thousands of dollars not circulating in the local economy.  There will be no contract to build, no workers hired for the project, and no supplies purchased to complete it.  The people who would have benefited from that project whether directly or indirectly, have one less economic opportunity.  That trickles down to the grocer, the barber, and the like.  Even big business, a priority for the GOP, suffers under this so-called taxpayer protection policy.  After all, there is less money for Walmart, right?

(c) Aaron P. Bernstein, New York Times

Henry Burks, Union Electrician and Indiana Taxpayer

So what good is that?  Well, it isn’t good.  But GOPers can only see through a prism that colors anything related to taxes and government in a dark light.  Government is bad, regardless of the good it might enable.  Speaker Bosma believes the public projects should “have the same benefit of quality competition as the private sector enjoys.”

Private sector workers in Indiana have little protection.  When Bosma says “projects”, therefore, what he really means is the business behind those projects.  In other words, he is talking about the interests of business that hire the workers.  And this raises the next question, one that is more important.  When Bosma suggested that the change in Indiana’s 80-year-old laws were a form of “taxpayer protection”, what did he mean?  Who is the taxpayer?

The priorities here do not favor the worker.  Mr. Burks is looking at cuts which the state justifies in the name of efficiency.  But I will suggest that the interests of Mr. Burks are not protected.  Quite the opposite.  Neither are the interests of other Indiana taxpayers who would benefit from the economic activity Mr. Burks salary helps sustain.

Of course Speaker Bosma uses the rhetoric of efficiency and responsible taxation to reinforce the anti-government priorities of his party.  He’s suggesting that the law will protect taxpayer money, presumably protect it from the waste of pay standards that he would argue artificially maintain artificially high wages.  But this argument fails on a number of levels.

Union Membership in the United States

It is only getting worse…

First, if the state chooses to maintain minimum pay standards, that is not unlike a subsidy.  Of course subsidy is an ugly word, right?  However, Indiana isn’t afraid of subsidies for business.  In fact Indiana promotes them.  So it is fair if one asks again, which taxpayers do Indiana’s Republicans strive to protect?

Second, cutting wages in the name of fiscal responsibility has lost its promise in the current economy.  Wages are sacrificed for profits and it is no different in this example.  When Brian Bosma says he wants public projects to enjoy the same competitiveness that benefits private projects, the project doesn’t “enjoy” anything.  The people behind the projects do.  This isn’t so much about protecting tax dollars as it is reducing project costs.

Tax policy in large part is about politics, not economics.  The new era of different priorities offered by Speaker Bosma is one of economic decline and it is defined by fiscally austere public policy.  We don’t even here the supply side “trickle down” argument anymore.  That failed.  Now we are broke (in large part because of failed trickle down theory) and so the solution from the right is austerity.  Unfortunately, a lot of this austerity favors the interests of those few who still thrive in our economy and not the taxpayer as Bosma implies.

So while it might sound good to say a policy is designed to protect taxpayer money, it is important to follow that argument and ask who really benefits.  In the end, the best protection Indiana can give to the majority of its tax payers are policies that will promote economic activity.  Cutting wages and jobs does not accomplish that.  Sure, a taxpayer might get a tax cut worth a few hundred dollars, but ask Indiana workers what they would rather have.   Would they like a vibrant economy and well-paying jobs or a small break in taxes?  Better protection of taxpayer interests is a policy that invests in the future of taxpayers.  Public policy needs to set priorities that serve the best interests of all taxpayers and not the special interests of “projects.”


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