Fleeing to Low-Tax States May Hurt Workers

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One of the many side effects of businesses moving to low-tax states has been an unexpected consequence for workers. Low-tax states have been creating more jobs, but those new jobs aren’t necessarily as good as the ones that left when companies moved elsewhere. This phenomenon could help explain why wage growth has remained so weak despite the fact that unemployment rates are dropping, and it’s important to understand how it works if we want to make wages grow faster in the future.

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Businesses are not hesitant to pick up and move.

Many states are luring businesses to relocate by providing benefits like lower taxes, but a better business climate doesn’t always translate into a better working environment.

Niani Tolbert, founder and CEO of Hire Black Now, an organisation that combines recruiting and talent development to improve the upward mobility of Black women in the U.S. workforce, said that things that benefit employers in terms of their bottom line or their margin can directly conflict with things that benefit actual employees, residents, and workers.

Many of the states with the best corporate incentives have also passed contentious social measures that have been opposed by some firms and members of the public. These challenges include discrimination against LGBTQ people, restrictions on voting rights, bans on abortion, and obstacles to diversity and inclusion trainings in workplaces and schools.

The annual Greatest States to Work Index from anti-poverty organisation Oxfam America examines which states have the best labour laws.

The worst states for workers in 2021, according to Oxfam America, are North Carolina, Mississippi, Alabama, and South Carolina.

“Almost always, the worst states to work in are in the South. And that continued to be the case in 2021, according to Kaitlyn Henderson, senior researcher at Oxfam America.

Labor policies have created a party rift. Democrats are more likely to enact the kinds of laws that Oxfam America tracks in its ranking of the best states to work, laws like raising the minimum wage, allowing pregnant employees to work, and protecting the freedom to form a union.

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However, Oxfam America’s data shows that the states with the greatest worker regulations also frequently have the highest costs of living.

According to Rachel Lipson, director of the Project on Workforce at Harvard University, “there are a lot of elements that employees are searching for when they think about exploring new employment options and that firms have to consider when they’re recruiting individuals for jobs.” “The labour market is still quite tight, and employees still have a lot of power and discretion.”

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