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What’s up this week at Oklahoma Policy Institute? The Weekly Wonk shares our most recent publications and other resources to help you stay informed about Oklahoma. Numbers of the Day and Policy Notes are from our daily news briefing, In The Know. Click here to subscribe to In The Know.
This Week from OK Policy
Lawmakers made incremental changes towards justice reform last session, but Oklahomans deserve much more: During Oklahoma’s 2023 legislative session, lawmakers made some positive improvements in the state’s criminal legal system, including investments into diversion programs and significant reforms around court fines and fees. While these changes are commendable, they are only the beginning of what is necessary to tackle the state’s ongoing incarceration crisis. To make a real impact, Oklahoma needs much more substantial reform in the years ahead. [David Gateley / OK Policy]
Investments in people can help make Oklahoma’s workforce competitive (Capitol Update): State Labor Commissioner Leslie Osborn had a thoughtful Labor Day opinion piece published Sunday in the Tulsa World (and perhaps in other newspapers.) As Labor Commissioner, she is aware that we do not have the necessary workforce in our state. Keeping businesses open requires people to fill the jobs. [Steve Lewis / OK Policy]
Policy Matters: Removing barriers for Oklahoma’s workforce: Oklahoma has the potential to be an economic powerhouse thanks to an abundance of natural resources, geographic advantages, and our secret weapon – our residents. But too many bad policy decisions prevent our state from reaching its full potential. This starts with workforce development. [Shiloh Kantz / Journal Record]
Legislative Priorities Survey: We are asking Oklahomans to complete an online survey about the important issues facing our state. Survey responses will help shape legislative priorities for OK Policy and Together Oklahoma during the coming legislative session and beyond. [Complete Online Survey]
Weekly What’s That
Labor Force Participation Rate
The labor force participation rate measures the percentage of the non-institutionalized, working-age civilian population that is currently in the labor force (meaning they either have a job or are looking for work). Working-age refers to anyone 16 years of age or older, while non-institutionalized civilians refer to anyone who is not incarcerated, in a mental facility, or actively serving in the armed forces. Essentially, the labor force participation rate measures, out of all of the people who are currently able to work, the percentage who are either working or looking for work.
Labor force participation rate is an important indicator of an economy’s health, with a higher participation rate usually being a sign of a healthier economy. More people participating in the labor force generally means more people supporting those who are unable to work, whether because of age or disability status. Labor force participation also has fiscal implications for governments at every level. As more people are engaged in the labor force, this means more people to pay taxes—referred to as broadening the tax base. Conversely, fewer people in the labor force means fewer people paying taxes, which requires governments to either raise taxes to maintain spending levels or make funding cuts, hurting many of the core services upon which we all rely.
Labor force participation has been on a gradual decline in both Oklahoma and the country as a whole since the turn of the century. Much of this decline has been due to our aging population, while other recent contributing factors are child care responsibilities and COVID-related disabilities. With the strong post-COVID economic recovery, Oklahoma’s labor force participation rate in June 2023 reached its highest rate – 61.4 percent – since March 2018. Workforce investments like expanding access to child care, increasing the value of the Earned Income Tax Credit, and creating a paid family and medical leave program can strengthen labor participation rates.
Look up more key terms to understand Oklahoma politics and government here.
Quote of the Week
“As long as we keep electing people who want to attack our teachers and run them out and run cultural war issues while they’re mismanaging the biggest chunk of a state budget, then we are going to continue to have these problems.”
– State Representative John Waldron, D-Tulsa, on the recently announced partnership with OSDE and PragerU Kids, a conservative education platform. [News 9]
Editorial of the Week
Muskogee Phoenix Editorial: This is no time for a complete tax cut
Governor Kevin Stitt’s proposal to eliminate Oklahoma’s income tax is born of a boon mentality that will become a bust reality.
Stitt’s plan is emboldened by two financial realities:
- • Oklahoma’s General Revenue Fund collections for fiscal year 2023 exceeded expectations by $1.6 billion.
- • Oklahoma’s Rainy Day Fund is at a record $1.3 billion.
Stitt is dealing from a place of strength when you consider those facts. They suggest now would be a good time to give a break to Oklahoma taxpayers.
However, Oklahoma’s revenue stream is not guaranteed to grow or even maintain this robust pace. A tax cut would be a permanent loss of revenue
Oklahoma’s economy is a roller coaster. The boon and bust cycles of the oil and gas industry here have caused rapid declines and ascents over decades. Oklahoma must be vigilant to prepare for the next downfall.
Oklahoma’s Rainy Day Fund is approximately 10 percent of the state’s annual budget. That means $1.3 billion is an approximate five-week cushion. Financial institutions suggest saving 13 weeks of pay in case you lose your job.
If the state’s economy goes bust in the near future, we may wish we had even more in the Rainy Day Fund. Cutting revenue in the form of a complete tax cut would make a recession that much more difficult for the state to survive without drastic cuts in services.
The average taxpayer does not want dip into — much less potentially deplete — savings in the event of loss of income. When you lose income, most people cut expenses to compensate.
We don’t want services cut because eliminating the state income tax eventually dictates such a move. Taxpayers want good roads, a strong infrastructure, better education and safer communities. A recession — without a state income tax — could jeopardize those cornerstones.
We are willing to continue to pay a state income tax to grow peace of mind that another oil and gas bust won’t bust our state budget. A strong economy will help fill the coffers to help us withstand a financial crisis. Remember, it wasn’t that long ago that people were very worried about a possible recession, and we remain concerned about inflation.
Taxes also are much easier to cut than they are to raise.
Most people would be in favor of more money in their bank accounts. Eliminating the state income tax would do just that.
It probably would be fairly easy to find a majority of state legislators needed to sign off on a tax cut.
However, if circumstances require the state to try to raise taxes in the future, 75 percent of lawmakers would have to agree. That’s daunting…
Numbers of the Day
- 29% – Oklahoma saw the number of unaccompanied youth experiencing homelessness (under age 25) grow by 84 from 2020 to 2022, which was the nation’s third highest increase in number. Oklahoma reported 374 unaccompanied youth experiencing homelessness in 2022, which was a 29% increase. [The 2022 Annual Homelessness Assessment Report (AHAR) to Congress]
- 3.5% – The vaccination exemption rate for Oklahoma kindergartners for the 2021-22 school year, which was up from 2.4% the previous year. Public health officials pay attention to kindergarten vaccination rates because they are an important indicator of community immunity and allow officials to better target health resources if a disease outbreak occurs. [Oklahoma Watch]
- 61.6% – Oklahoma’s seasonally adjusted labor force participation rate in July 2023, which indicates the percentage of all people of working age who are employed or are actively seeking work. Oklahoma’s labor force participation rate generally has been declining since the end of the Great Recession in May 2009, when it was 64.2%. The state’s highest labor force participation rate in the last five decades was 65.5% in July 1986. [St. Louis Fed]
- 15.6% – Oklahoma’s poverty rate for 2021, which was the nation’s 10th highest. The Census Bureau will be releasing data for 2022 next week. [OK Policy]
What We’re Reading
- Homeless people were given lump sums of cash. Their spending defied stereotypes: Researchers at the University of British Columbia, in collaboration with Vancouver-based charity Foundations for Social Change, provided a lump sum of 7,500 Canadian dollars in 2016 (about $5,540 today) to 50 people experiencing homelessness in Vancouver. They found that the recipients spent fewer days homeless, increased their savings and put more money toward essentials compared with a control group of 65 people who received no cash transfer. The recently published study followed individuals for one year after they received the lump sum and reported no increase in spending on what researchers call “temptation goods,” defined as alcohol, drugs and cigarettes. By decreasing time spent in shelters, the intervention led to a decrease in public spending of 777 Canadian dollars (about $574) per person, the paper said. [Washington Post]
- Small Multifamily Homes Were Disappearing. Now States Are Scrambling to Revive Them: Housing construction in the US has long focused on single-family homes and large apartment buildings, leaving a deficit of everything in between—sometimes referred to as “middle housing” by housing experts and advocates. While the number of new apartment building units recently reached the highest point in nearly half a century, the construction of denser alternatives to single-family homes made up just 1% of new housing units built in 2022. Legislators and advocates are pushing for that to change, arguing that middle housing could lower costs and alleviate a national housing shortage. [Bloomberg News]
- What works in workforce development—and how can it work better?: The good news is that federal spending on workforce development—including the Workforce Innovation and Opportunity Act (WIOA) system—improves disadvantaged worker outcomes. The bad news is that improvements are quite modest. In the words of one of our group members, we appear to be “stuck in a low-resource, low-efficacy” equilibrium. Small benefits at low levels of funding discourage higher levels of investment; yet without additional funding, it is unlikely we’ll see substantial improvement. At the same time, students and workers lack other options to finance training—for instance, Pell grants do not cover noncredit or shorter-term training efforts. The WIOA system, and the workers who use it, are caught in a policy catch-22. [Brookings]
- What to Watch for in Next Week’s Census Data on Poverty, Income, and Health Insurance in 2022: On September 12, the Census Bureau will release nationwide figures for poverty, income, and health insurance coverage in 2022 from its Current Population Survey (CPS). Additional health insurance data from the American Community Survey (ACS) will follow September 14. Here are two things to look for. [Center on Budget and Policy Priorities]
