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Misguided attack on California

Few documents have ever been more misleading than a 116-page U.S. Chamber of Commerce report this spring on how state employment laws affect job growth, a study that can be read as a direct attack on California and its employment laws.

One example: The U.S. Chamber ranks Mississippi high in its "good" category, while listing California dead last when it comes to the way state laws affect both hiring by private businesses and the creation of new businesses.

And yet, only 139 new businesses opened in Mississippi in 2009 (the most recent year the Chamber could study, compared with 10,087 in California. This state contains a little over 12 percent of the national population, but 19.5 percent of all new businesses opened here, compared with Mississippi's .00026 percent.
The California number, thus, far exceeds the state's proportion of the national population, so some business people must believe things are not so bad here.

Why compare California and Mississippi? Because the chamber chose Mississippi's Republican Gov. Haley Barbour to present its report and because that report ranks California at the bottom in many categories, while laughably putting Mississippi near the top.
It's not surprising that Barbour, a jovial former national chairman of the GOP and likely 2012 presidential candidate, immediately seized on the report to defend the fact that Mississippi has no labor laws going beyond the most basic federal requirements, including no minimum wage above the federal level of $7.25 a hour. California's has been $8 a hour since 2008.

Mississippi, meanwhile, has the lowest per-capita income in America, the lowest life-expectancy and ranks last in the category of child welfare, according to the Annie E. Casey Foundation.
In fact, some people are reading the chamber report as a kind of reverse guide to how well-off citizens are in other states.
The lower the ranking in the chamber's employment-encouragement index, generally speaking, the higher the standard of living.

While more than 25 percent of Mississippians live below the federal poverty line, the figure in California is barely 15 percent, despite having by far the nation's highest number of poorly paid illegal immigrants. This suggests that many of the jobs that keep Mississippi's unemployment rate at about 9.7 percent (compared with 12.2 percent here) are extremely low-paid.

But there is little evidence for the claim that low minimum wages equal high employment. Washington state has America's highest minimum hourly wage, at $8.55 an hour, while Mississippi's is $1.30 lower.

Yet Mississippi's unemployment rate hovers around half a percent higher than Washington's.

There are plenty of economists critical of the chamber study, saying many policies it claims are bad for job creation have little or no relation to creating jobs. One example could be laws like the California measure that requires employees be given breaks for meals and rest.

All this means anyone who takes this report to heart makes a big mistake.