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By Steve Erdman
47th District 

Straight Talk From Steve: The Labor Shortage

 

September 14, 2023



Last month Gov. Jim Pillen put together a new task force to examine Nebraska's workforce shortage. In predictable fashion, Gov. Pillen stacked the task force with those who continue to ignore Nebraska's most pressing problem, namely the need for tax reform. Instead of choosing people who care about tax reform, those who were selected for the task force represent the most supportive of our state's broken tax system. Besides state agencies, the task force will consist of representatives from the University of Nebraska system, the state college system, and the Nebraska Community College Association, all of which are institutions funded by tax dollars.

Nebraska's labor shortage is a direct consequence of our broken tax system. Out of control property taxes is the number one factor that is causing people to leave our state. The fact of the matter is that the State of Nebraska is nearly surrounded on every side by states with better tax codes and better economies than Nebraska. Until those running our State begin to listen to the people of our State who pay the taxes rather than the institutions of our State which spend the tax dollars, will we never begin to take the first steps towards solving our labor shortage problem.

It is a fundamental mistake of governments to believe that they can somehow attract new workers. The power of governments to proactively attract new workers inevitably comes in the form of new kinds of grants, subsidies and incentive programs for laborers, which require even more tax dollars to implement, and any such government programs automatically cross the line into socialism. Consequently, whenever the government money runs out, so does the flow of new workers into the state. The bottom line is that government programs as such cannot provide any kind of long-lasting, meaningful solutions to our state's labor shortage problems.

The one good thing that governments can do is to get out of the way. It is not the job of the state government to pay workers to move to Nebraska; instead, people will move to our state when they realize that Nebraska has a good economy with an affordable standard of living. According to the U.S. News and World Report, Nebraska ranks number 17 on the list of most affordable states to live in. More importantly, though, Iowa ranks number 6, South Dakota ranks number 8, Kansas ranks number 11, and Missouri ranks number 13. Only Wyoming, at number 18, and Colorado, at Number 43 rank behind Nebraska. Workers do not come to Nebraska because it is more affordable to live elsewhere.

Until the leaders of our state government come to this most basic understanding of economics, they will continue to fraternize with solutions which simply do not work and they will continue to squander our hard-earned tax dollars. For example, building more government subsidized workforce housing won't cause people to move to Nebraska so long as they would be better off living and working in one of our neighboring states.

The best solution to Nebraska's labor shortage problem is staring our politicians right in the face. The EPIC Option Consumption Tax would eliminate the state income tax, the state sales tax, the property tax, and the inheritance tax and replace these taxes with a consumption tax at a rate of 7.5 percent. Passing the EPIC Option Consumption Tax would make Nebraska the most tax friendly state as well as the most affordable state in America, and this is the right way to bring people to Nebraska.

The EPIC Option Consumption Tax would bring new workers and new opportunities to Nebraska. When the Beacon Hill Institute published their dynamic study of the EPIC Option Consumption Tax in February of this year, they determined that the population of Nebraska would grow by 1.9 percent in 2026 and by 2.3 percent in the year 2030. In addition, 47,154 new jobs would be created in 2026 and another 58,056 in 2030. Most importantly, though, Nebraska's Gross Domestic Product (GDP) would grow by $23.25 billion in 2026 and by another $32.22 billion in 2030. Considering that Nebraska's 2022 GDP was $123.54 billion, that amounts to more than 25 percent growth by 2030. So, the EPIC Option Consumption Tax would be a win for everyone. Even if Nebraska only experienced half of these growth rates, it would still give us the best economy in America. The EPIC Option Consumption Tax would grow our economy, keep senior citizens, students, and young families from leaving our state, stop the brain drain, and bring new skilled workers into our state.

 
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