Behind Indiana’s Impressive CEO Ranking

Many of you likely saw the news yesterday about Indiana maintaining its No. 5 overall ranking – and tops in the Midwest – in Chief Executive magazine’s 13th annual Best & Worst States for Business survey. A few things that might have been missed:

  • As the name indicates, these rankings are based on CEO perceptions. It’s good for Indiana to be regarded so highly overall by the group making ultimate business decisions, but it also leads to few changes for most states
  • Texas was No. 1 for the 13th straight year and Florida No. 2 for the fifth year in a row. North Carolina (despite the turmoil over its since-repealed transgender bathroom issue) and South Carolina also topped Indiana
  • At the bottom, California was at No. 50 for the sixth year in a row. New York and Illinois were next in line
  • There has been some movement, however, in the middle. Ohio, now at No. 11, was No. 41 in 2011 and No. 22 just two years ago. On the other end of the spectrum, Louisiana was No. 7 in 2015 and No. 33 this time around
  • Indiana’s individual category rankings included: Workforce quality, No. 8 (although we know there is much work to do in this area); taxes and regulation, No. 14 (we would have expected to be a little higher there); and living environment, No. 16
  • Industry rankings were also part of the survey. Indiana was second in manufacturing and 10th in energy

Larry Gigerich, executive managing director of Fishers-based Ginovus and chair of the Indiana Chamber’s economic development committee, was quoted in the release of the rankings. He said simply, “The top-ranking states have continued to implement public policy supporting economic development to ensure that they remain as leaders.”

Complete rankings are available online.

Waiting … and Waiting on a Highway Funding Fix

30449450Federal highway funding is running low. Nothing new there. The Indiana Chamber, and many others, have called for long-term solutions from Washington instead of short-term fixes that simply extend the uncertainty.

How are states reacting to the current dilemma. According to the Kiplinger Letter:

  • Arkansas, Georgia, Wyoming and Tennessee have postponed 440 projects totaling more than $1.3 billion
  • Iowa, South Dakota and Utah have increased gas taxes. Others that may follow include Georgia, Idaho, Minnesota, Nebraska and South Carolina
  • Seeking funds from advertisers: Virginia sells space on highway rest stop signs to GEICO; Travelers Marketing sponsors highway patrols in Massachusetts
  • Partnering with private investors: Florida is seeking private funds to rebuild portions of Interstate 4; New Jersey, Pennsylvania and Virginia are seeking similar ventures

Kiplinger editors add:

But states can only do so much on their own. Ultimately, Congress must act. Odds favor another temporary fix this fall. A long-term solution will likely wait until 2017. Congress and a new president will have a fresh opportunity to tackle broad tax reform, including a possible hike in federal fuel taxes, which no longer approach what’s needed to pay for highway work.

Not what many want to hear in terms of the time frame.

Poll: Almost One in Four Americans Open to Separating from U.S.

CAlthough Scotland’s movement to secede from the United Kingdom fell a bit short at the ballot box, it appears it’s not just 45% of Scots who have separation on their minds.

And frankly, it’s no secret most Americans aren’t enthusiastic about the federal government these days. Between gridlock, behemoth budgets and trying to solve the health care puzzle, many have grown frustrated. Poll results explained in this Reuters article, however, are still a bit alarming.

Whoever takes the White House in 2016 may have his/her hands full in trying to unify the country. 

Governors Faced with Difficult Medicaid Decision

The Medicaid expansion decision for each state is one of several critical aspects of the Affordable Care Act, which was recently deemed Constitutional by the Supreme Court. Although federal dollars are at stake, it’s not a given that states (including Indiana) will agree to the changes to the program for low-income residents. Stateline offers a strong summary.

Although the lineup is shifting, more than a dozen Republican governors have suggested they might decline to participate in the Medicaid expansion. Governors in Florida, Iowa, Kansas, Louisiana, Nebraska, Texas, South Carolina and Wisconsin have said they will not participate. GOP governors in Alabama, Georgia, Indiana, Mississippi, Nevada and Virginia indicate they are leaning in that direction.

Meanwhile, about a dozen Democratic governors have said their states will opt in. The rest have not declared their intentions.

According to data from the Congressional Budget Office, the federal government would spend $923 billion on a full Medicaid expansion between 2014 and 2022, and states would spend about $73 billion. But nobody is sure how many people will enroll in the Medicaid expansion. According to a 2010 report by the Kaiser Family Foundation, states’ share of the Medicaid expansion could range anywhere from $20 billion to $43 billion in the first five years.

According to Kaiser, most states opting into the expansion likely would have to ramp up their Medicaid spending between 2014 and 2019, but four would spend less (Hawaii, Maine, Massachusetts and Vermont) and several others would have to boost state spending only slightly.

Mississippi’s Medicaid program, for example, cost a total of $4 billion in 2011—the federal government paid $3 billion, and the state paid $1 billion. Expanding that program to everybody at or below 138 percent of the federal poverty line would cost the state as much as $581 million between 2014 and 2019, according to Kaiser’s 2010 study.  That’s a 6.4 percent increase in state spending compared to what Mississippi would spend without an expansion

The day after the Supreme Court ruled the Medicaid expansion was optional, Mississippi Governor Phil Bryant, a Republican, said: “Although I am continuing to review the ruling by the Supreme Court, I would resist any expansion of Medicaid that could result in significant tax increases or dramatic cuts to education, public safety and job creation.”

Effort to Slow NLRB ‘Ambush’ Fails

OK, there wasn’t much chance the amendment was going to pass the U.S. Senate and, if somehow it did, it would have been vetoed by the White House. But it was worth the old college try, as they say, and it did shine the spotlight once again on the runaway actions of the National Labor Relations Board.

The amendment was an attempt to overturn new regulations that dramatically reduce the time between union organization efforts and the actual election in that workplace. In other words, unions will still be able to make their case for why their presence would make sense during their organizing effort, but employers will have precious little time to respond prior to a vote taking place.

Currently, worker votes typically take place 45 to 60 days after a union gathers enough signatures to warrant an election. Under the new regulations, those votes could take place within a matter of a few weeks, or even days.

Indiana senators Richard Lugar and Dan Coats supported the resolution to overturn the NLRB action. The 54-45 vote to disapprove, however, was along party lines with the exception of one vote.

Lawmaker reactions were swift, calling the rule an "ambush" on employers:

Senator Roy Blunt (R-Missouri): "By speeding up union elections and removing important safeguards that ensure a fair election process, this unnecessary rule will restrict job creators’ free speech rights and limit workers’ opportunities to hear both sides of the argument to unionize — an issue critically important to their livelihood.

"It’s unfortunate that we have to spend time undoing this administration’s reckless job-killing policies when leaders on both sides of the aisle should be working together to pass common-sense, pro-growth solutions that will boost job creation and get our economy back on track," Blunt continued.

Mike Enzi (R-Wyoming), Senate Health, Education, Labor and Pensions (HELP) Committee ranking member: “This vote was an important opportunity to send a message to the NLRB that their job is not to tip the scale in favor of one party or another, but to fairly resolve disputes and conduct secret ballot elections."

Lindsey Graham (R-South Carolina): The National Labor Relations Board seems hell bent on changing processes across the board, more for political reasons than for substantive reasons." 

NLRB April 30 Posting Requirement Blocked for Now

The National Labor Relations Board’s posting requirement that was set to take effect on April 30 has been postponed… AGAIN. The U.S. Court of Appeals for the District of Columbia Circuit Tuesday issued an injunction prohibiting enforcement of the rule until an appeal of a lower court’s decision upholding the rule (but voiding some penalties) has been decided. Oral arguments in the case are currently scheduled for September.
 
Tuesday’s ruling follows last Friday’s decision by a federal court in South Carolina that struck down the posting requirement, leading to confusion over what is now required. Implementation of the posting requirement is now on hold until further notice.
 

Double the Taxing ‘Pleasure’ on April 17

There’s something ironic (not pleasant, but ironic) about Tax Freedom Day this year occuring on April 17 — the same day taxes are due. The day, according to the Tax Foundation, is when people finally work long enough to pay their taxes for the year.

The latest Tax Freedom Day took place on May 1, 2000. With the economy booming that year, Americans paid 33% of their total income in taxes. A century earlier was more pleasant with "freedom" arriving on January 22, 1900.

State tax burdens vary the tax timeframe. Indiana residents will "celebrate" on April 14, which ranks 26th nationally. As for the best of 2012:

  • Tennessee, March 31
  • Louisiana and Mississippi, April 1 (no foolin’)
  • South Carolina, April 3
  • South Dakota, April 4

And the worst:

  • Connecticut, May 5
  • New Jersey and New York, May 1
  • Washington, April 24
  • Wyoming and Illinois, April 23

Laffer: Right-to-Work a Beneficial Economic Tool for States

A few Chamber staffers joined hundreds in attendance at today’s Economic Club of Indiana luncheon featuring Arthur B. Laffer, an economist, author and former member of President Reagan’s Economic Advisory Policy Board (though he also asserted that Bill Clinton was "a great president"). When asked about right-to-work legislation, he lauded Indiana’s efforts to become the 23rd right-to-work state. Back in May, he co-wrote an editorial on the issue in the The Wall Street Journal. An excerpt:

The Obama administration’s National Labor Relations Board filed a complaint last month against Boeing to block production of the company’s 787 Dreamliner at a new assembly plant in South Carolina—a "right to-work" state with a law against compulsory union membership. If the NLRB has its way, Dreamliner assembly will return to Washington, a union-shop state, along with more than 1,000 jobs.

The NLRB’s action, which Boeing will challenge at a hearing next month, is a big deal. It’s the first time a federal agency has intervened to tell an American company where it can and cannot operate a plant within the U.S. It lays the foundation of a regulatory wall with one express purpose: to prevent the direct competition of right-to-work states with union-shop states. Why, as South Carolina Gov. Nikki Haley recently asked on these pages, should Washington have any more right to these jobs than South Carolina?

A recent New York Times editorial justified the NLRB decision by arguing that unions are suffering from "the flight of companies to ‘Right-to-Work’ states where workers cannot be required to join a union." That’s for sure, and quite an admission. We’ve been observing that migration pattern for years, but liberals have denied it’s actually happening—until now.

Every year we rank the states on their economic competitiveness in a report called "Rich States, Poor States" for the American Legislative Exchange Council. This ranking uses 15 fiscal, tax and regulatory variables to determine which states have policies that are most conducive to prosperity. Two of these 15 policies have consistently stood out as the most important in predicting where jobs will be created and incomes will rise. First, states with no income tax generally outperform high income tax states. Second, states that have right-to-work laws grow faster than states with forced unionism.

As of today there are 22 right-to-work states and 28 union-shop states. Over the past decade (2000-09) the right-to-work states grew faster in nearly every respect than their union-shop counterparts: 54.6% versus 41.1% in gross state product, 53.3% versus 40.6% in personal income, 11.9% versus 6.1% in population, and 4.1% versus -0.6% in payrolls.

For years, unions argued that right-to-work laws were bad for workers and for the states that passed them. But with the NLRB complaint, they’ve essentially thrown in the towel. If forced unionism is better for the economy of a state, why would the NLRB need to intervene to keep Boeing from leaving Washington? Why aren’t businesses and workers moving operations to heavily unionized places like Michigan, New York, Ohio and Pennsylvania and fleeing states like Georgia, Tennessee, South Carolina and Texas?

In reality, the stampede of businesses from forced-union states like Washington has accelerated in recent years. A 2010 study in the Cato Journal by economist Richard Vedder of Ohio University found that between 2000 and 2008 4.8 million Americans moved from forced-union states to right-to-work states. That’s one person every minute of every day.

Right-to-work states are also getting richer over time. Prof. Vedder found a 23% higher per capita income growth rate in right-to-work states than in forced-union states, which over the period 1977-2007 amounted to a $2,760 larger increase in per-person income in those states. That’s a giant differential.

So now the unions concede that this migration is indeed happening, but they say that it is unhealthy and undesirable because workers in right-to-work states are paid less and get worse benefits than the workers in union states. Actually, when adjusting for the cost of living in each state and the fact that right-to-work states were poorer to begin with, a 2003 study in the Journal of Labor Research by University of Oklahoma economist Robert Reed found that wages rose faster in states that don’t require union membership.

Employers that move away from forced-union states mainly do so not to scale back wages and salaries—although sometimes that happens—but to avoid having to deal with intrusive union rules, the threat of costly work stoppages, lawsuits, worker paychecks going to union fat cats, and so on.
 

Speculation Time: GOP Primary Scenarios

After his narrow Iowa victory, Mitt Romney appears to be the most likely choice to garner the GOP presidential nomination. However, due to the fact that many conservatives simply don’t like him, that’s far from a certainty. CNN has an intriguing article outlining the different possibilities of how things will play out from this point on. Read the entire piece, but I have to run this portion for the die-hard Mitch Daniels enthusiasts out there:

(3) The long shot: Someone else enters the campaign (10% chance or less). Normally, this late in the game, a new entrant to the contest would be the stuff of science fiction. But conservative voters seem to be singularly dismayed by the choices in front of them: as CNN’s Erick Erickson tweeted last night, "Typical of email I’m getting: ‘If you put a gun to my head and said Romney or Santorum I would say pull the trigger.’"

Who would step into the fray? One hears voters pining for New Jersey Gov. Chris Christie (unlikely to join, especially after endorsing Romney) and some have floated Louisiana Gov. Bobby Jindal (who endorsed Perry). Former Florida Gov. Jeb Bush would be a strong candidate, but that may be a tough sell to Bushed-out voters only four years after the conclusion of his brother’s presidency.

Would a candidate who jumped in this late even have a path to victory? Perhaps. The early primaries and caucuses are richer in symbolic significance than they are in delegates, especially with the new rules prohibiting winner-take-all allotment of delegates in the early states. And even with such a late jump on fundraising and organization-building, a candidate who was able to rack up a string of impressive victories in the middle- and later-term primaries could theoretically build up a big enough head of steam to take the convention by storm while making use of the Internet and earned (read: free) media coverage to play catch-up on money and organization.

The late-entrant scenario is still a dark horse at best, but even the fact that it’s within the realm of possibility underscores the reason Democrats are quietly cheering last night’s outcome: the GOP is still, at best, a party that’s looking for a standard-bearer — or, more dangerously for their 2012 prospects, a disunited collection of smaller groups of voters still pushing their own.

Sanford Debacle Provides PR Lessons for CEOs

Well, we’ve complimented South Carolina Governor Mark Sanford’s more sound and judicious moves on this blog in the past. Now, suffice it to say, "sound" and "judicious" might not be applicable for him this week (although we all have our bad weeks).

However, Ragan.com took a look today at how his disappearance — which ultimately led to the disclosure of his affair — could serve as a lesson for CEOs in the business world. Read on:

To paraphrase Simon and Garfunkel: Where have you gone, Mark Sanford?

For the past few days, journalists, politicians, South Carolinians, bloggers, and your wife wondered about your whereabouts. First, we heard you were hiking the Appalachian Trail.

Well, not so much.

It turns out that you were in Argentina visiting a woman with whom you’ve been having an affair. (That’s a whole other domestic communication quandary.)

The issue for corporate communicators is this: Let’s say your CEO leaves unexpectedly—doesn’t even send a postcard. How do you communicate the message to your employees and other stakeholders?

Dustin R. Walling, principal of Dustin Walling Associates, shares these four tips on dealing with a missing or ailing CEO.

Business as near-usual: Every good corporation of size has—or ought to have—a well-conceived set of strategic and tactical plans. This is one of the primary jobs of the CEO and the executive team. If these plans don’t exist, hire a management consultant and get to work.

Appoint the next in command: The COO, CFO, or another key executive is the likely candidate to stand in during the CEO’s absence. The board should meet immediately and appoint one executive, a member of their own ranks, or another trusted leader to the position. Continue reading