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Economy

Orr wants more Sanders/Warren-style regulations

Bill Britt

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Once again, Sen. Arthur Orr, R-Decatur, will join forces with left-leaning organizations to impose more regulations on payday lending in the upcoming legislative session.

While the Trump Administration over the last three years has taken giant steps toward rolling back Obama-era regulations, Orr is taking a page from Democrat senators and presidential hopefuls, Bernie Sanders and Elizabeth Warren, to promote legislation that will place greater burden on businesses, endanger Alabama’s free-market economy and drive small loan borrowers to unregulated online lending sources.

Beyond denying consumers direct access to readily available small loans at stores where they regularly do business, Orr’s legislation will also endanger some of those businesses’ very existence resulting in a loss of jobs.

Job growth, available credit and protection for individuals and business has been a hallmark of the Trump presidency, but Orr and his supporters would turn back the clock on those accomplishments.

Orr’s efforts are said to be aimed at protecting consumers from predatory lenders. Speaking of his 30 days to pay bill in 2019, he said not only would the legislation give people longer to pay off their debt it would, “lowers the APR in excess to 450 percent, down to a little over 200 percent.”

But the type of loans Orr is talking about don’t charge an annual percentage rate.

According to the Alabama State Banking Department, payday lenders do not charge an APR but a flat fee of $17.50 per $100 borrowed. The average loan in 2019, according to the latest report from the banking department, was $348, which is consistent with the historic average loan amount. The average fee is just under $60.

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Orr and those who support his legislation casually throw around words like “APR,” “predatory lending” and “price-gouging,” while falsely claiming that payday lenders charge up to 456 percent APR. Such inflammatory rhetoric is used to incites those who don’t understand how the industry works.

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Deferred presentment loans are high risk and generally used by those who have immediate needs but less than excellent credit.

“People do not turn to payday lenders because they temporarily misplaced their American Express Platinum cards,” writes Kevin D. Williamson in National Review. “Borrowers turn to payday lenders because those are, as the borrowers calculate, their best alternative — maybe their best bad alternative, but their best alternative nonetheless.”

Orr and others who claim to be protecting Alabamians from payday lenders seem to think that borrowers are ignorant of the fees they pay for these temporary short-term loans, but they are not.

A survey conducted by Pollfish for lendedu.com found that 82.00 percent of payday loan borrowers looked at the fees before taking out a loan, while 18.00 percent did not.

“All that silly talk about ‘predatory’ lenders is little more than rhetorical cover for the patronizing insistence that poor people are too stupid or dysfunctional to make their own financial decisions,” writes Williamson.

The report by the banking department shows that August is the most active month for those seeking short-term loans, which coincides with “Back to School,” which shows that these borrowers are not exercising poor financial behavior but using available resources to meet an essential need for their children.

Five years ago, lawmakers passed legislation to drive rouge lenders from the state and establish a database to keep a check on payday lending. A recent report from the state’s banking department shows the Legislature’s commonsense approach to regulating payday loans is working.

Before the establishment of the unified state database, there were more than 1,150 deferred presentment locations statewide today; there are approximately 600 lenders.

The deferred presentment industry, as it is called, is highly regulated by the Alabama Department of Banking, with regular audits and violators punished for any misrepresentation or mishandling of loans.

In 2019, Orr said, “The legislation I carry is not to put the payday lenders out of business. It’s not to ban the product. But it is to give the borrower a little more time to repay the loan.” But his legislation will have a job-killing effect on some of the state’s lenders.

Industry leaders say some stores could close if Orr’s legislation passes. There are currently around 1,800 Alabamians directly employed at payday facilities across the state.

Alabama spends tens of millions on recruiting a few hundred jobs from out of state companies with the passage of Orr’s bill; jobs would be lost, undercutting the growth Alabama is currently experiencing.

Orr and his partners for the last several years have targeted payday lenders claiming they charge outrageous fees but not once has Orr or his allies taken on big banks.

A report by the FDIC shows that banks collect billions in overdraft fees.

“These banks drain billions of dollars annually from their customers through abusive overdraft fee practices, severely harming poor Americans and working-class families living paycheck to paycheck,” said CRL Senior Researcher Peter Smith, who authored the 2017 report. “Instead of serving families fairly, these banks are driving their customers deeper in a hole and often out of the banking system altogether.”

Also, Orr and his allies never talk about the staggering profits credit card issuers reap from fees or their enticements to borrow.

“Credit card companies rely on our foolishness to make money,” writes John Schmoll. “They’re counting on their cardholders to let self-control and wise spending go by the wayside.”

The two most abundant revenue streams for traditional credit cards are fees and interest, which produced a combined $178 billion in revenue for credit-card companies in 2018, according to estimates from the industry consulting firm R.K. Hamme, as cited by Alex Morrell in Business insider.

Somehow, Orr and the left-leaning groups that support him never mention the fees, interest-rates, and overdrafts used by big banks to make money.

As Williamson writes, “But in the long term, we are going to have to answer the question of just how patronizing we intend to be toward people with low incomes and modest means.”

Warren is the mother of the Consumer Financial Protection Bureau which has worked to dismantle small lending institutions through its ubiquitous powers. CFPB has been a main target of Trump’s deregulation efforts.

Both Sanders and Warren have made attacks on financial institutions a part of their presidential agenda which is aimed at wealth redistribution. This, too, is anathema to President Trump’s supporters. That Orr embraces similar regulatory acts is foreign to most Alabama Republicans.

Will the Alabama Legislature, let the free market determine loan values, or will the Warrens of the world with their ideologically driven regulators like Orr decide markets?

Orr’s legislation will soon appear before the Senate Banking and Insurance Committee chaired by Sen. Shay Shelnutt, R-Trussville.

The question before Shelnutt and other Republicans on the committee is, will they side with President Trump and his push to stop job-killing-nanny state regulations, or will they join with the Sanders-Warren faction of the Democratic Party to regulate every action of Alabama’s citizens?

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Economy

Byrne: Alabama’s economy will take off with signing of USMCA

Brandon Moseley

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Wednesday, President Donald J. Trump (R) signed the United States-Mexico-Canada Agreement (USMCA) into law. U.S. Senate candidate Congressman Bradley Byrne, R-Montrose, said that the signing of the USMCA is a “cause for celebration” and that the “Alabama economy is primed to explode.”

“Alabamians have cause for celebration with the passage of a new trade deal with Mexico and Canada that will deliver jobs and drive up wages from the Tennessee Valley to the Gulf Coast,” Byrne said. “The USMCA is a major win for Alabama that replaces the flawed NAFTA and puts American workers first.”

“With our expanding Port of Mobile and vibrant automobile manufacturing, agriculture, steel, energy and high-tech sectors, Alabama’s economy is primed to explode,” Byrne added. “President Trump and his administration deserve great credit for getting a deal done that many said was unachievable.”

Congressman Byrne voted for the USMCA on December 19, 2019.

President Trump made renegotiating trade deals a major part of his 2016 campaign.

“I’m not a big fan of tariffs. So, when the president imposed tariffs as leverage in world trade talks, I was skeptical,” U.S. Senator Chuck Grassley, R-Iowa, wrote in the Des Moines Register. “And yet, here we are starting the fourth year of his presidency and President Trump has succeeded in securing two major trade agreements that are good for America and good for Iowa.”

Last week in Davos, Switzerland Pres. Trump celebrated his economic accomplishments as President.

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“Since my election, America has gained over 7 million new jobs,” Trump said. “The unemployment rate is now the lowest in over half a century. The average unemployment rate for my administration is the lowest of any U.S. President in recorded history.”

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“Unemployment rates among African American, Hispanic American, Asian Americans has reached a record low in the history of our country,” Trump continued. “The lowest. African American youth unemployment has reached the lowest in the history of our country. So proud of that. African American poverty numbers have plummeted to their lowest rate ever recorded. Doing really well. Unemployment rate for women has reached the lowest level in almost 70 years. And the veterans unemployment rate dropped to a record low. Unemployment rate for disabled Americans has reached its all-time record low also.” “Workers without a high school diploma have received the — and achieved the lowest unemployment rate ever in recorded history.”

“A record number of young Americans are now employed,” the President said. “We have the highest number of people working in our country that we’ve ever had before. We’ve never had anything even close. We’re almost up to 160 million. And we’ve lifted 10 million people off of welfare.” “The U.S. stock markets have soared and they’ve reached the highest point that they’ve ever, ever had. We’ve made at least $19 trillion, in terms of wealth — in terms of wealth creation for our country, beyond the stock markets.”

Larry Kudlow is the Director of the National Council of Economic Advisors.

“I think the President’s trade deals have inspired a lot of confidence among large and small businesses, and I think it’s going to add at least a half a point to GDP this year,” predicted Director Kudlow in Davos. “I think we’re going to be moving into the 3 percent zone. We still have to cope with the slowdown in Boeing. We’ll see how that plays out. But I think USMCA and the China deals are going to add a lot to growth this year and the years ahead.”

Byrne is running for the U.S. Senate seat currently held by Doug Jones, D-Alabama.

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Economy

Jones introduces bill to promote workforce development for in-demand industries

Jessa Reid Bolling

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Yesterday, Senator Doug Jones, D-Alabama, and Senator Catherine Cortez Masto, D-Nevada, introduced legislation to promote education and training for Alabama workers in high-demand industries. 

The bill, named the Working On Rewarding and Keeping Employees Resilient (WORKER) Act, is aimed at ensuring employees have access to and are prepared for well-paid, skilled jobs in Alabama and across the country. 

Jones, a member of the Senate, Health, Education, Labor and Pensions (HELP) Committee, said that this bill will help Alabamians invest in the skills necessary to keep up with the 21st century workforce demands.

“As our economy continues to evolve, we must prepare students at an early age for the jobs of the future while also supporting workers who have been displaced due to automation,” Jones said.

Last year, Jones introduced a bill to increase federal investments in workforce development and training to prepare workers for jobs of the future, and he has also supported legislation to protect worker pensions and end the gender pay gap. In 2018, Senator Jones worked with Democratic and Republican colleagues to successfully reauthorize the Carl D. Perkins Career and Technical Education Act, which provides $1.2 billion in federal support for career and technical education in high schools and community colleges around the country.

The WORKER Act  will:

  • Expand programs in engineering at elementary and secondary schools by awarding grants to local educational agencies to support, develop, and implement formal and informal engineering education programs in elementary and secondary schools;
  • Expand programs in maker education at schools to teach hands-on skills in design and manufacturing by amending the Carl D. Perkins Career and Technical Education Act to allow funding for “maker education,” “makerspaces,” and training for teachers;
  • Expand promotion of registered apprentice programs by the Department of Labor, including outreach to underrepresented populations, young people, and veterans;
  • Promote collaboration with post-secondary institutions to promote apprenticeships, including allowing academic credit for apprenticeship programs;
  • Coordinate unemployment programs with career counseling, job search assistance, training assistance, and income support services to better support unemployed workers in finding a job;
  • Create a Training Voucher program to support dislocated workers completing short term training in in-demand industry sectors; and,
  • Create a stipend for dislocated workers to ensure their transportation and child care costs can be covered while they retrain for new jobs.

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Report: Better collaboration, alignment needed to meet state workforce needs

Staff

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A new report warns that a gap is widening between Alabama’s workforce development system and expected workforce needs. It calls for increased collaboration and alignment between business, education, and career and technical training programs to better define what skills and credentials a highly skilled worker in Alabama needs.

The Business Education Alliance of Alabama included these findings in its latest report, Education Matters. Dr. Joe Morton, BEA’s Chairman and President, unveiled the report today during a gathering of the Alabama Workforce Council.

Education Matters is the first in a series from BEA evaluating Alabama’s workforce development system. The current edition provides a review of critical data points in the education to workforce pipeline. It also outlines numerous recommendations state policymakers should address to ensure Alabama has a highly qualified pool of workers in the future.

“Our state is facing a critical juncture in our efforts to redesign our workforce development system to better prepare workers for the jobs of tomorrow,” said Alabama Governor Kay Ivey. “In order to give all Alabamians a strong start and a strong finish, it is imperative that we know what is working well in our workforce pipeline and where we can do better. I am grateful for the Alabama Workforce Council’s and BEA’s leadership and collaboration in undertaking this task.”

The report measures Alabama’s progress towards its goal of preparing 500,000 highly skilled workers by the year 2025. This goal represents the number of workers the state expects to need to compete for new industries and replace retiring workers successfully.  

“Alabama is on pace to have a shortage of close to 200,000 highly skilled workers by 2025-2026 if nothing changes in the workforce development pipelines,” said Dr. Joe Morton, the chairman and president of the Business Education Alliance of Alabama. “Our report sought to discover whether the state has the right tools in place to produce an increased number of highly skilled workers, and what needs to change to ensure those workers are qualified for the jobs that will become available.”

Education Matters highlights how the state’s various education achievement measures, such as the state’s low third-grade reading proficiency and the nation’s worse National Assessment of Education Progress (NAEP) math and reading scores, impact Alabama’s ability to prepare students for success in college and their career. The report calls for new investments in Alabama’s First Class Pre-K program, a more targeted effort to improve reading and math foundational skills, and increased collaboration with community partners to improve student outcomes.

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The report also looks at the state’s career and technical education programs. Similar to the report’s recommendation to establish a better educational foundation for students, Education Matters encourages policymakers to develop a more meaningful college and career readiness measurement. It also encourages local communities to convene new conversations on what career pathways, credentials, and certificates are needed locally.

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Education Matters is among the first to detail what measurements an effective education to workforce pipeline must include,” said Tim McCartney, the chair of the Alabama Workforce Council. “Although the state has an ambitious goal of training 500,000 highly-skilled workers by 2025, BEA’s report shows that we must do more to prepare workers than try to reach a target number. It is equally important the workers gain the critical skills they need to be competitive in the workplace as Alabama strives to be even more successful in the future. 

The Public Affairs Research Council conducted research and reporting for this report. The A+ Education Partnership provided additional research support and consultation.

Additional findings can be viewed at https://beaalabama.com/research/

 

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Economy

Study | Alabama’s Economy: Progress and Prospects

Stephen G. Katsinas and Noel E. Keeney

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A key issue facing businesses and citizens alike is how will our state capitalize on the current economic boom to prepare workers for 21st century jobs. Before analyzing Bureau of Labor Statistics data and their implications for policymakers, we begin by noting there is much good news:

  • From November 2018 to November 2019, Alabama led the nation in lowering its unemployment rate–a 1.2 percent decrease.
  • From November 2018 to November 2019, Alabama was sixth among all states in increasing its labor force participation rate–a 1.2 percent increase.
  • Workforce development is an integral part of Governor Kay Ivey’s Success Plus initiative, launched in April of 2018 with the goal of adding 500,000 skilled employees with degrees, certificates, and credentials to the Alabama’s workforce by 2025.
  • Our workforce development program was recently selected by the National Governors Association to become a mentor state within its Policy Academy.

STARS: Alabama’s Original Alignment Program

When Sen. Jimmy Holley wrote the 1994 bill creating Alabama’s Statewide Transfer and Articulation Reporting System, transfer was from one 2-year college to one 4-year university. Today, transfer is a dynamic process that integrates and aligns advanced placement, dual enrollment, and CTE credits earned in high school ​prior​ to college entry.  Just a third of Auburn University and University of Alabama graduates in 2015-16 earned all their credits at these two universities. With half of all CTE credits at community colleges on Pell Grants, Pell can be considered a workforce training program. Nearly every high-wage, high skill job requires at least some credits beyond high school, which is why Alabama needs a better aligned systems across all P-22 education and our workforce training system to save students and families time, credits, and money. This is what the unsung hero of our state’s alignment efforts, the STARS program, does.

Change: The Magazine of Higher Learning: Volume 51 Issue 3 https://www.tandfonline.com/doi/full/10.1080/00091383.2019.1606607 

Lower Unemployment

Alabama had the largest percentage decline in its unemployment rate among all fifty states from November 2018 to November 2019.  Alabama’s decline of -1.2 percent was three times better than the national average of -0.4 percent. Our statewide unemployment rate of 2.7 percent rate was tenth lowest.   Chart 2 compares the unemployment rates of the state of Alabama and national average over four decades. Every county in Alabama saw improved unemployment rates in 2019 compared to 2018.

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Labor Force Participation Rates

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Recent national publications have cited the diverging Alabama and Mississippi economies, which were “two peas in a pod” for nearly 150 years.  For decades, the two were roughly six to seven percentage points below national averages. Then, in 2017, Alabama’s labor force participation rate suddenly ticks up toward the national average, while Mississippi’s ticks down.

Alabama’s investment explains why. Alabama’s labor force participation rate was 56.8 percent in April 2017 when Governor Ivey assumed office. It has improved by 1.8 percent in just two and a half years. If Alabama gets to the national average of 63.2 percent, 196,000 more Alabamians would be working. This is roughly 40 percent of Governor Ivey’s target of 500,000 new Alabamians by 2025. However, we note that other states are moving forward too, so Alabama cannot satisfy itself by being average. 

Moving Forward:  Progress and Prospects

Alabama’s Strong Start, Strong Finish program is comprehensive in sweep and scope that includes but is not limited to:

  • universal pre-K-12
  • expanding apprenticeships and school-to-work pathways
  • aligning education and workforce training programs
  • expanding broadband and
  • expanding STEM teacher pathways.

A statewide task force charged to create a pipeline of computer science teachers for Alabama schools was begun, and the first class of new computer science teachers graduated in 2019 (recent Praxis test results for the initial class are promising). Efforts to seamlessly integrate early childhood, K-12 education, and workforce development efforts, combined with new funding, appears to have accelerated Alabama’s progress in 2019 and 2020. Today Alabama is a top destination for new business locations, and Kay Ivey is among the ten most popular governors of any state

Alabama’s state-level investments build upon federal efforts led by Senator Richard Shelby in 2016 to make the Pell Grant program year-round.  This was accomplished on May 4, 2017 as President Donald Trump signed the Consolidated Appropriations Act of 2017, which created a summer Pell grant of about $3,000 per student. Since Alabama has the lowest state-student aid program of any southeast state, federal student aid undergirds our state’s alignment programs, as Chart 1 shows.

Today’s positive position is in part due to enactment a decade ago of the Rolling Reserve Fund, which sought to end the “boom and bust” education funding cycles. When combined with federal and state alignment efforts, Alabama is positions well. Today’s challenge is to better align our education and workforce programs with services such as transportation, childcare, food security, and housing.

Alabama has built positive momentum to give our current and future workers the 21st century skills needed to compete in the global economy.  K-12, community college, regional and flagship university, and independent non-profit education leaders are combining with our state’s workforce training system to create a seamless journey all the way through. Now, as the Alabama Legislature considers a lottery to fund universal pre-K and establish a statewide College Promise program, our future is limited only by our vision.  Alabama’s challenge is to match potential with possibilities for progress.

Stephen G. Katsinas is Director of the Education Policy Center at the University of Alabama and Professor of Higher Education and Political Science. Noel Keeney is a Research Associate at the EPC. Katsinas coordinated a visit by Alabama leaders, including State Superintendent Eric Mackey, Alabama Commissioner on Higher Education Jim Purcell, and ACCS officials to visit Knoxville to see the Tennessee Promise, in May 2019.

 

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