ALEC’s State Ratings Favor Corporate Policy Wish-List Over Quality of Life

Utah ranks among the worst states in the country when it comes to gender pay equity. Oklahoma is among the worst in terms of poverty and food insecurity, and more than one in ten North Carolinians lacks health insurance. Yet, the American Legislative Exchange Council (ALEC) cites these as among the top five states in the country with the best economic outlook, according to its recently released Rich States, Poor States report for 2023. 

ALEC’s annual economic survey ranks states “rich” based on how closely states track the corporate pay-to-play group’s preferred tax and labor policies as opposed to actual quality of life factors such as wages, poverty rates, and access to healthcare. 

The report’s ratings are based on an “ALEC-Laffer State Economic Competitiveness Index” that favors states with low and regressive taxes (income, corporate, estate, real estate, sales), tax and spending limits, a low minimum wage, a minimal number of public employees, low workers’ compensation costs, anti-union “right-to-work” policies, and anti-plaintiff legal “reforms” favored by big business. 

This year that led them to rank Utah, North Carolina, Arizona, Idaho, and Oklahoma as the top five states with the most promising economic outlook. ALEC ranked New York, Vermont, Minnesota, New Jersey, and Illinois as the five worst states. 

Who’s Behind the Report?

ALEC coordinates closed-door meetings between state legislators and corporate lobbyists where players draft laws to maximize profits and advance right-wing policies. Corporate representatives sit on all nine ALEC task forces and vote as equals with state lawmakers to approve model bills.

Stephen Moore, one of the three authors of ALEC’s Rich States, Poor States, is a fellow at the ultra-conservative Heritage Foundation and previously served on the Wall Street Journal’s editorial board. In addition to his work for ALEC, he is affiliated with the free market advocacy organization FreedomWorks.

In March 2019, former President Trump nominated Moore to the Federal Reserve Board, but he withdrew his name from consideration once reporters exposed his history of disparaging women.

Moore is also the founder of the anti-union, conservative political funding group Club for Growth, and in 2016, he co-founded the Committee to Unleash Prosperity with Arthur Laffer, another right-wing economist who co-authored this year’s ALEC report and developed its methodology. Often called the father of supply-side or trickle-down economics, Laffer served in the Reagan administration and is an ALEC scholar-in-residence. 

Jonathan Williams, ALEC’s chief economist and executive vice president of policy, worked with Moore and Laffer as the third author of this year’s report.

In the early days of the pandemic, the three economists teamed up to launch and co-chair the Save Our Country Coalition, which pushed states to fully reopen businesses long before it was safe for employees to return to the workplace. They also promoted ALEC’s deregulatory agenda, denying scientific reality and medical prudence in an effort to favor corporate profits over safety concerns and potential risks to employees.

Pay Equity, Poverty, and Food Insecurity

Moore identifies the biggest economic problem in the U.S. as declining earnings for men, but his ranking system favors policies that suppress wages. And it may come as no surprise that the states rated highest in ALEC’s latest report pay women the least relative to men, and have poverty and food insecurity rates above the national average.

In Utah, which earned ALEC’s top rating for best economic outlook, women earn 69¢ for every $1 earned by men. Since 2004, the national average has only improved by 2% and now stands at 82¢ for every $1.

In Idaho and Oklahoma, which rank as the fifth and sixth worst states for gender pay gaps, women make 75¢ for every $1 earned by men. Yet ALEC ranks both among its top five states for economic prosperity.

Oklahoma is also one of the 10 poorest states in the country, with a poverty rate of 13.8% (compared to the national average of 11.2%). Based on the 2020 U.S. Census, three of the other five states touted by ALEC—Arizona, Idaho, and North Carolina—also have poverty rates above the national average. 

In terms of food insecurity—which the U.S. Department of Agriculture (USDA) defines as a lack of consistent access to enough food for every person in a household to live an active, healthy life—four of ALEC’s top five states report above average rates of households lacking sufficient food. 

According to the USDA, 10.2% of U.S. households suffered from food insecurity in 2019–21. Of the five states at the top of ALEC’s list, Oklahoma reported above average rates of food insecurity, while Arizona, Idaho, North Carolina, and Utah matched the U.S. average. None were among the states where food insecurity is below the U.S. average.

Wages and Workers’ Rights

ALEC routinely scores states higher in its economic survey if they still use the federal minimum wage of $7.25 an hour as their state minimum wage. Four of the top five states in this year’s report do that, with Arizona being the only exception in having a state minimum wage of $13.85.

ALEC economists also see no need to consider basic rights like healthcare in assessing economic indicators in each state. Four of the top five states in its 2023 report show above average rates of uninsured residents. Oklahoma ranked second from the bottom of all 50 states, with 13.8% of its population not covered for basic healthcare (as opposed to the national average of 8.6% of Americans lacking health insurance). North Carolina ranked 10th, with 10.4% of its population uninsured. 

Recent but very belated expansion of Medicaid programs in both states will finally begin to bring the rates of uninsured residents down, though North Carolina is still waiting for budget appropriations before implementation of its expansion program begins. 

All of the top five states have also embraced so-called “right-to-work” legislation, which makes payment of union dues or other membership fees optional in unionized workplaces even though all employees benefit from the higher wages and better working conditions the union negotiates. 

Given its longstanding opposition to unions, ALEC ranks right-to-work states higher than others even though states that are hospitable to unions do better with quality of life assurances since union workers earn higher wages, have health insurance, and are able to feed their families.

Getting It Backwards

The bottom line is that ALEC’s top-20 “rich” states have consistently ranked worse on per capita income, median family income, median wages, and poverty rates than its 20 “poorest” states over the past decade, according to economist Peter Fisher, a national expert on public finance and research director for Common Good Iowa.

“The actual purpose of Rich States, Poor States is to sell the ALEC-Laffer package of policies — fiscal austerity, taxing lower income people more than the wealthy and wage suppression — in the sheep’s clothing of economic growth,” Fisher states on his website. ALEC’s ranking system “provides a recipe for economic inequality and declining incomes for most citizens and for depriving state and local governments of the revenue needed to maintain public infrastructure and education systems that are the underpinnings of long-term economic growth,” Fisher said.

“It has been almost 40 years since such misleading ‘business climate’ studies were first discredited,” said Greg LeRoy, executive director of Good Jobs First. “But given ALEC’s corporate agenda, it’s no news that it would ‘rate’ states favorably for regressive taxation and wage suppression. This 1970s dogma won’t hunt in today’s economy.” 

In 2012, Good Jobs First and Fisher published Selling Snake Oil to the States, a detailed report that debunked ALEC’s methodology and found that states ranked the highest by ALEC actually had the worst outcomes for job creation and wages over the preceding five years.