Educated Legislators, Bad Economy

California has the most educated legislators, according to a recent Chronicle of Higher Education study. Those stellar academic credentials, unfortunately, have not lifted the state from its economic malaise.

California’s unemployment rate, as of May, is nearly 12 percent, higher than every state in the bottom five of the study. Even when averaged together, the top 15 educated states have an unemployment rate of 8.9 percent compared to the least educated which has an average unemployment rate of 8.1 percent. Further, the 15 states that had the “least educated” legislatures consistently trump the top 15 “most educated” in six different economic metrics.

Comparing the top 15 to the bottom 15 in unemployment rates, employment growth rates, economic freedom, fiscal freedom, economic performance, and state economic outlook ratings, the “least educated” outperform the “most educated” group every time. The American Legislative Exchange Council publishes Rich States, Poor States, a study that ranks the states based on economic outlook and performance ratings. The rankings are based on 15 state policy variables influenced directly by state lawmakers through the legislative process. Of the highest states, six came from the “least educated” group, while California ranks a low 47th out of 50.

Likewise, the Mercatus Center’s Freedom in the 50 States shows that the bottom 15 educated states have more economic and fiscal freedom than the 15 most educated states. Fiscal freedom is measured by spending, taxation, and fiscal decentralization. Economic freedom is a measure of individual liberty, government spending, income taxes, and sales taxes.

South Dakota, one of the least educated legislatures, ranks number one on the economic freedom scale due to its high fiscal decentralization, low levels of taxation, and spending. California, which ranks 47th out of 50 according to the Mercatus study, “not only taxes and regulates its economy more than most other states, it also aggressively interferes in the personal lives of its citizens.”

California confirms that a more educated legislature does not necessarily translate into a strong economy. One notes that only six of the 100 declared majors of the California legislature have a degree in economics. Whatever their education and background, California legislators should craft policies that expand economic freedom, including tax reform.

California’s top income tax rate of 10.55 percent is third-highest in the country. The state’s second-highest rate of 9.55 tops the rates of all but three states, and kicks in at $47,055. The combined state and local sales tax is second-highest in the country. California’s corporate income tax is eighth-highest in the country, and 14 states impose lighter property tax burdens. Regulatory reform would also boost the economy.

None of this is an argument against legislators earning more college degrees, nor against studies that rank states on that basis. But scholars should be diligent in checking that legislators’ degrees are legitimate. California’s Assembly Speaker, John Perez, claimed to have graduated from the University of California at Berkeley, a claim repeated by the press, in official biographies, and by Hilda Solis, now U.S. Secretary of Labor. But Perez, a Chicano Studies major, left UC Berkeley without graduating.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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