How To Create Fifty Thousand New Jobs

If Wyoming families could spend like Americans in general, there would be $4 billion more spent in our state.

Another $4 billion in consumer spending in our state could create as many as 50,000 new private-sector jobs.

The Bureau of Economic Analysis has released state-level consumer spending data for 2017. As with so much other economic news, this one tells us firmly that Wyoming families have tight budgets and cannot afford higher cost of living.

The numbers also tell us what an incredible opportunity there is for our state in prioritizing traditional values such as economic freedom, entrepreneurship and limited government.

Private consumption accounts for about 70 percent of the U.S. economy. It consists of a wide range of spending, from haircuts and groceries to airline travel, internet service and health care. The stronger a free-market economy is, the larger is the share of private consumption in GDP. In large European welfare states, where government promises to cater to people's needs, private consumption sometimes accounts for as little as 50 percent of domestic absorption.

The consumption share of the economy can therefore be a gauge of how strong the free-market system is. It can be a good way to assess how wealthy households are, and how much control they have over their own lives. In addition, a strong private sector, led by private consumption, opens up a good aggregate market for private businesses - including ones that create local jobs. When people can spend money, it benefits retail businesses, home maintenance and improvement firms, car repair shops, bowling alleys, restaurants, etc. 

With this in mind, it is sad to see that Wyoming's families are not doing very well. Private consumption only accounts for 59 percent of our state's GDP. This means two things:

a) A disproportionate share of our state's economy consists of exports. This is not a moral statement, just a matter of fact: by comparison to most other states, what comes out of our production - in this case minerals - does not benefit our state the way other states benefit from their production. The minerals industry is good, it provides many well-paying jobs and we should do what we need in order to encourage minerals businesses to stay here in Wyoming. However, the effects of this industry on the rest of the Wyoming economy are limited and isolated.

b) There is a great deal of business earnings streaming through our economy. While comprehensive data on interstate income flows is difficult to find, the high earnings in the minerals industry combined with a low consumption share in state GDP suggests that the minerals companies transfer a large portion of their earnings out of state. It is, simply, not being spent here in Wyoming in the same proportion as many other industries would. Again, this is not a moral statement, only an observation of how our state's economy works. 

These observations merge into an important point: if we want the people of Wyoming to benefit from the economic activity in our state, we need to have a government, a tax system and a regulatory framework that give businesses the best possible reasons to grow and stay in Wyoming. That does not mean "economic development" - it means competitively low taxes, a minimum of regulations and limited government spending.

The last point is important: when government spends big, it sets itself up for future budget problems, and future budget problems most certainly mean higher taxes.

Wyoming is there, now. 

Instead of higher taxes, we need a smaller government. As yet more evidence of how weak the private sector is in our state, consider Figure 1 which reports the current-price growth rate in private consumption, nationwide as well as here in Wyoming:

Figure 1
Source: Bureau of Economic Analysis

While consumer spending is growing at four percent or more per year nationally (again before we adjust for inflation), it just barely reached 2.5 percent in our state in 2017. We have trailed the national economy for three years now, putting our state at an increasingly uncompetitive disadvantage. If you are considering starting a business that depends on the spending power in the local economy, would you be more likely to make a good living in a state where household spending is growing at 2.5 percent, or five percent (Texas), 5.5 percent (North Carolina) or 5.7 percent (Utah)? 

Adjusted for inflation, the consumption growth rate here in Wyoming amounts to hardly anything. In other words, it is difficult for consumer-oriented entrepreneurs to even keep up with the cost of doing business. Add to that higher property taxes, higher sales taxes and the real threat of a corporate income tax, and the case against Wyoming is - sadly - rather strong. 

Courtesy of Big Tax.

If, on the other hand, we had more family-friendly, private-sector oriented policies here in our state, we would have an entirely different future to look forward to. If our economy left as much purchasing power in our household pockets as in the country as a whole, we the consumers in this state would have another $4 billion to spend. 

That could mean as many as 50,000 new private sector jobs.

How can we do that? By reducing the size of government, by lowering, not raising taxes, and by rolling back regulations. There is no one-trick magic formula that will do it; only a long-term, steadfast reform process can make Wyoming the prosperous and growing state it deserves to be. 

That, in turn, starts with educating people in Wyoming on the virtues of a future defined by economic freedom, self determination and limited government. 

Too many Wyomingites still think that this future is not possible. Too many believe that we should stick to business as usual - or, more aptly, taxes as usual - and that we somehow can afford the big government we have. 

Too many of our neighbors and friends remain in the dark about the grave threat that Big Tax is to our future. They need to hear the truth. They need the information that you already have.

Don't let Big Tax win. If they do, the current demographic trend, where Wyoming is losing population, will continue:

Figure 2
Source: Bureau of Economic Analysis

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