Vermont tied as one of the ‘least free’ states

By Jon Street | Vermont Watchdog

The results are in and they’re not pretty.

Vermont is one of the “least free” states, according to a report on economic freedom in North America.

“It’s sad, but not surprising. What’s worse is we’re headed in the wrong direction,” said Rob Roper, president of the Ethan Allen Institute, a Vermont-based free-market think tank.

The report looked at things like how much the government contributes to the overall state economy and workforce, levels of tax revenue, minimum wage laws and labor union density.

Generally, states that have higher taxes, enforce higher minimum wage laws and require workers to join labor unions are considered to be the “least free” states in terms of economic freedom.

The Tax Foundation, a nonpartisan tax research group based in Washington, D.C., ranked Vermont 13th in the country for the highest combined state and local taxes in 2010, the most recent year for which complete data are available.

Higher taxes generally mean more government involvement in economic enterprise, thus limiting the economic freedom of the private sector.

Vermont’s minimum wage of $8.60 per hour, another contributing factor for it being ranked one of the “least free” states, is higher than the national average minimum wage of $7.25, according to the U.S. Department of Labor. That means employers and their employees have fewer options to negotiate wages and other employee benefits. In effect, a higher minimum wage can make it more difficult for employers to hire more workers, potentially limiting how fast a business can grow.

Vermont’s labor union laws don’t help its case for economic freedom either.

The Green Mountain State is not considered a “right to work” state, according to the National Right to Work Foundation. The Virginia-based right-to-work group considers any state with a law protecting workers from being forced to join labor unions a “right to work” state. Without such a law in Vermont, it’s possible that workers who do not want to participate in organized labor are forced to pay for union membership anyway.

Vermont tied for “least free” with nine other states — New Mexico, West Virginia, Mississippi, Maine, Kentucky, Montana, Arkansas, Hawaii and Rhode Island. These bottom 10 states had an average gross domestic product of $40,014 in 2011. That’s compared with an average GDP per capita of $49,355 for the other states.

Delaware, Texas, Nevada, Wyoming, South Dakota, Colorado, Nebraska, Georgia, Uta, and Illinois were among the ten “most free” states. The average GDP per capita in these states in 2011 was $53,077, compared with the average GDP per capita of $46,089 for the bottom 40 states.

“I can only imagine where we will end up after single-payer health care is fully implemented,” said Roper, of the Ethan Allen Institute.

“The findings in the study that economic freedom is positively correlated with higher per capita income, economic growth, greater life expectancy, stronger civil institutions, etc. just shows that our political class is actively working against our own prosperity and happiness,” he said.

The report, “Economic Freedom of North America: 2013” is an annual report published by the Canada-based Fraser Institute, an independent, nonpartisan research and educational organization.

Contact Jon Street at jstreet@watchdog.org

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