Appendix C: Fact-Checking Common Impressions

Often I felt that my new friends and I lived not only in different regions but in different truths. I would leave an interview wondering myself what the facts really were. So below I offer statements that I frequently heard, as well as the facts, as researched by Rebecca Elliott, based on the most recently available data, the sources of which are found in the endnotes.

“The government spends a lot of money on welfare.”

Eight percent of the total 2014 U.S. budget was devoted to “welfare”—benefits that are income-needs based.

“Welfare rolls are up, and people on welfare don’t work.”

Since President Bill Clinton declared “the end of welfare as we know it” in 1996, Aid for Families with Dependent Children (AFDC) ended and Temporary Assistance for Needy Families (TANF, with work requirements and time limits) began. TANF—assistance to the nation’s poorest families with children—is now 20 percent below its 1996 levels in thirty-five states and the District of Columbia. But since the Great Recession of 2008, the number of Americans who receive food stamps (Supplemental Nutrition Assistance Program, SNAP) has risen above 1995 levels, although that number peaked in 2013 and has fallen steeply since then. Medicaid expenditures have also risen but, according to a Kaiser Family Foundation study, they are projected to fall to 1999 levels by 2016.

Most government aid recipients are children or the elderly. Of Medicaid recipients in 2013, for example, 51 percent were children under age eighteen and 5 percent were senior citizens over age sixty-five. As for those between the ages of eighteen and sixty-four on all forms of means-tested aid—i.e., “welfare”—based on 2010–2012 data, most work. Of Medicaid or Children’s Health Insurance Program recipients—by far the largest recipient list—61 percent work. Thirty-six percent of food stamp recipients and 32 percent of TANF families work. All Earned Income Tax Credit recipients work, but recipients work at jobs that are poorly paid and for which full-time work is unavailable. To turn it around, in 2013, among fast-food workers, 52 percent relied on some form of welfare to supplement low wages paid for full-time work. Among childcare workers, 46 percent relied on welfare, and among homecare workers, 48 percent did so. In such instances, public taxpayers can be said to make up for low wages offered by some companies—a form, some argue, of “corporate welfare.”

“People on welfare depend entirely on money from us taxpayers to live.”

For the poorest 20 percent of Americans, only 37 percent of their total income in 2011 came from the government; the rest was payment for work.

“Everyone who’s poor gets a handout.”

Not all poor people get government help. According to the U.S. Census Bureau’s Survey of Income and Program Participation for 2012 (latest available), among families in poverty, 26.2 percent did not participate in any of the major means-tested benefit programs (i.e., Medicaid, SNAP, TANF/GA, Housing Assistance, or SSI). States also differ, one from the other. In Vermont there are seventy-eight TANF recipients for every hundred poor persons. In Louisiana, the ratio is four TANF recipients to every one hundred poor people. And, more than one may imagine, the government is helping those at the top. By one estimate, half of all tax benefits go to the richest 20 percent of Americans.

“Black women have a lot more children than white women.”

In the United States in recent years, the fertility rates for white and black women have almost converged. In 2013, the total fertility rate for black women was 1.88 children over the course of a lifetime; for white women it was 1.75.

“A lot of people—maybe 40 percent—work for the federal and state government.”

According to the Bureau of Labor Statistics, at the end of 2014, 1.9 percent of the 143 million American non-farm workers were employed in the civilian sector of the federal government. An additional 1 percent were in the enlisted military. About 3.5 percent of workers work for state government, including school and hospital workers. In addition, 9.8 percent of workers—including public school teachers—work for local government. In 2014, 826,848 people—or 0.58 percent of all Americans—served in the military reserves. So adding together all military and civilian workers at the federal, state, and local levels, in 2014, less than 17 percent of Americans worked for the government.

“Public sector workers are way overpaid.”

Using the Annual Social and Economic Supplement of the Current Population Survey for 2006 and 2007, and comparing public-with private sector workers of similar education, experience, sex, race, ethnicity, marital status, full-time/part-time status, number of hours worked, and other variables, researchers reported that private sector workers earn 12 percent more than their public sector counterparts.

Women with advanced degrees earn 21 percent less than comparable men in the private sector but only 12 percent less in the public sector. So while women are underpaid in both sectors, they are less underpaid in the public sector. The same thing is true for blacks: at every level of education, blacks in the public sector earn less than whites—but not as much less as they do in the private sector. In the public sector they earn 2 percent less than whites; in the private sector, 13 percent less.

“The more environmental regulations you have, the fewer jobs.”

Nearly all the Tea Party sympathizers I interviewed referred to a trade-off between jobs and environmental protection. The tougher the environmental regulations, the logic goes, the higher the costs to firms, who pass that cost on by raising the price of their goods, thereby reducing sales and employment.

But does that either-or logic check out? Actually, it does not. A 1993 study that compared states’ ratings on strictness of environmental protection with indicators of economic health (overall growth, employment growth, construction growth) over twenty years found that stronger environmental standards have not limited the relative pace of economic growth. In a 2001 study of new air-quality regulations for manufacturing plants in the Los Angeles area, researchers reported no evidence that local air-quality regulation, among the strictest in the nation, substantially reduced employment. A 2002 study also analyzed the impact of environmental regulations on four industries that generate significant pollution—and might therefore be expected to suffer losses from the effects of environmental regulation. In two of the four industries researchers studied (plastics and petroleum), the net employment impact of the environmental regulations was small but positive, while in the other two industries (pulp and paper, and iron and steel) there was no statistically significant impact. Finally, a 2008 study found that investments in environmental protection create some jobs and displace others, but that the net effect on employment is positive. In fact, environmental protection is itself a major sales-generating, job-creating industry. In a comparison of Florida, Michigan, Minnesota, North Carolina, Ohio, and Wisconsin, two researchers reported that stricter environmental policies did not inhibit job growth.

Do excessive demands imposed by environmental regulatory agencies lead to massive layoffs? According to the Mass Layoff Statistics kept by the Bureau of Labor Statistics, 0.1 percent of all layoffs were “environment and safety-related” from 1987 to 1990. The most recent data, from 2012, covering 6,500 private, non-farm layoff events, show that forty-five events, or 0.69 percent of the total layoffs, were “disaster or safety” related, including events attributed to “hazardous work environment” or “natural disaster.” Only eighteen events, or 0.28 percent of the total, were attributed to “government regulations/intervention.”

“Economic incentives and more relaxed regulations are needed to attract oil and gas business that could and would go elsewhere.”

In 2004, researchers investigated the effects of local fiscal policy on the location decisions of 3,763 establishments that began operations in Maine between 1993 and 1995, and found that businesses favor municipalities that spend high amounts on public goods and services, even when these expenditures are financed by an increase in local taxes. This suggests that a local fiscal policy of reduced government spending to balance a tax cut may attract fewer new businesses than a policy featuring additional spending and higher taxes. There is also recent evidence that suggests, whether or not they “work” to attract business, governments that rely on incentives may face negative outcomes. A 2010 study, based on an analysis of national surveys of 700 to 1,000 local governments from 1994, 1999, and 2004 that tracked the use of business incentives over time, found that governments that rely most heavily on incentives may face more intergovernmental competition, stagnating or declining economies, and lower tax bases. For such governments, business incentives may contribute to a cycle of destructive competition.

“State subsidies to industry help increase the number of jobs.”

An eight-part 2014 investigative special report in The Advocate, Louisiana’s largest daily newspaper, was entitled “Giving Away Louisiana.” If Louisiana gives away roughly $1.1 billion per year in taxpayer money to corporations as “incentives,” the team of journalists wanted to know, are citizens getting their money’s worth back in jobs? Their answer was “no.”

The Louisiana taxpayer can pay enormous amounts for each job industry brings in. As Gordon Russell writes, “When Valero announced an expansion of its Norco operations, creating 43 new jobs, Louisiana promised to cover $10,000,000 of the cost, or nearly a quarter of a million dollars per job.” When jobs do come to Louisiana, it’s also not clear that they are in response to subsidies. In 2013, Louisiana paid $240,000,000 in tax exemptions to fracking companies, but Russell notes, “There is little evidence the tax break stimulates drilling . . .” Drilling goes up and down with the availability and price of oil and gas, he says, not with changing amounts of government subsidies. State subsidies to corporations have also been growing faster than the Louisiana state economy.

Good Jobs First, a watchdog group that researches the link between government subsidies to corporations and jobs, notes that the fifty states it has surveyed vary in their degree of disclosure. But with that disclaimer, it reports that, on a per-capita basis, Louisiana gives away more taxpayer money than any other state in the nation.

“Oil stimulates the rest of the economy.”

Does the money oil generates stay in Louisiana, or does it end up leaving the state in the form of executive pay and returns to out-of-state shareholders? To answer this question, we compared Louisiana’s gross state product (GSP) to its total personal income (TPI). The more money that “leaks” out of the state, the larger the difference between GSP and TPI. In other words, if the sum of all personal income is higher than the GSP, it must be going somewhere else because it doesn’t add to the gross state product. Based on Bureau of Economic Analysis data, adjusted to 2012 dollars, we provide a measure of “leakage” as a percent of income from 1997 to 2012. For most years, leakage out of Louisiana is between 20 and 35 percent. (Leakage also varied from year to year; low in 2003 and high in 2005, for example.) Local businesses tend not to leak their profits away to other states, while large, multinational businesses with operations and headquarters elsewhere do.

“The economy always does better under a Republican president.”

For the years 1949–2009, unemployment has been lower and gross domestic product has been higher under Democratic presidents. Political scientist Larry Bartels has also shown that inequality has increased greatly under Republican presidents and decreased slightly under Democrats. Recently, economists at Princeton confirmed that the U.S. economy has grown faster under Democratic presidents, who have also produced more jobs, lowered the unemployment rate, generated higher corporate profits and investments, and seen higher stock market returns. They attribute this, however, to the timing of oil shocks and when major technologies debuted that had positive effects on the economy (e.g., the Internet under Clinton)—in other words, some of the correlation is due to factors outside a president’s control. Republican presidents have also added far more to federal debt levels than Democrats have, as a percent of GDP; since 1945, Reagan has added the most, with an almost 60 percent increase in federal debt to GDP. Presidents Truman, Kennedy, Johnson, Carter, and Clinton all managed to reduce debt as a percentage of GDP.