What's Good for the U.S. Chamber of Commerce Isn't So Good For You

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The U.S. Chamber of Commerce released a new report on Wednesday calling for the rollback of a wide range of employment regulations that it argues lead to a poor business climate in the Commonwealth of Pennsylvania.

The report ranked Pennsylvania's business climate as poor because of relatively strict limitations in the Commonwealth on child labor, overly generous rules that protect parents from losing their job if they take leave to care for a child, and overly broad prohibitions against employment-related discrimination and harassment (here is the list of states and their rankings). 

The report is 116 pages, but I think the basic message can be broken down into three figures.

The first figure below groups the 50 states according to the Chamber's business climate rankings of good, fair, and poor, and plots median hourly earnings in each of those states.  The vertical lines in each plot represent the low and high values for median wages, the grey boxes mark the area between the 25th and 75th percentile, and the red diamonds denote the median of each group.  That stray dot in the good grouping is for the Commonwealth of Virginia which has, relative to other states in the good grouping, high wages.  The bottom line is that the U.S. Chamber of Commerce marks states with relatively high wages as having a poor business climate.

The next figure plots the Chamber's rankings against the human development index, which as the name implies is a measure of the key ingredients of human well-being: health, education and income.  The bottom line here is the states the U.S. Chamber of Commerce rates as having a good business climate have a lower level of human development than those that don't have a good business climate. 

I know what you are thinking: sure, it is easy to be against child labor and in favor of high wages and more human development, but what matters right now is jobs.  OK, well, the next figure plots the U.S. Chamber's business climate rankings by the percent change in employment growth after subtracting out the percent change in population growth.  The outlier in the states with a poor business climate is Nevada.  The bottom line here is there doesn't seem to be much of any relationship between the Chamber's business climate rankings and job growth. 

So what do these rankings tell us?

They tell us that it's possible to combine healthy job growth with strong employment protections and high levels of human development. We think that’s the combination to shoot for — if you’re smart about it, human development and strong employment protections can be used to fuel healthy job growth.

All else equal, the Chamber seems to prefer that any given level of job growth go along with lower wages and less human development. This leads you to conclude that the Chamber values lower wages and less human development as simply good things in and of themselves. Kind of like apple pie. Go figure.

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