Steel Factory Closing Symptomatic of Larger Issue
On Monday, Sept. 30, 376 Louisianans showed up to work only to find that they had suddenly lost their jobs. Bayou Steel, one of the largest employers in the area, closed its doors without warning, and the former employees were shocked.
As for an explanation for the plant closure, a letter from Bayou Steel to the Louisiana Workforce Commission said the company had “unforeseen circumstances and the inability to secure necessary capital.” In other words, Bayou Steel had run out of cash.
There are a number of potential reasons for the plant’s closure, but its likely that a combination of policy failures at the state and federal level are to blame.
The most recent policy change that likely affected Bayou Steel was the recent federal steel tariff. Bayou Steel specialized in working with reimported scrap metal rather than raw steel produced domestically. As such, they were particularly susceptible to an increase in prices caused by a tariff. Yet another illustrative example of tariffs picking winners and losers.
Unfortunately, bad federal policy is not the only culprit, as reports of businesses closing have become far too common in the Pelican State. While other states are enjoying the bountiful access to jobs and opportunity provided by the current economic expansion, Louisiana is the only state in the nation that has managed to lose jobs over the past year.
The story surrounding Louisiana’s failing economy was further underscored in a recent economic report from the Bureau of Labor Statistics. It found that the civilian labor force, those working or looking for work, decreased yet again to just more than 2,094,000, a decrease of more than 1,000 from July of 2019 and more than 6,000 from August in 2018.
If you look outside the New Orleans and Metairie areas, both of which saw an increase in employment, the rest of the state looks fairly bleak. From August 2018 to 2019, Houma-Thibodaux lost 2500 jobs and Shreveport-Bossier City lose 3,300 over the same time period.
Why is this story so often repeated in Louisiana? It’s not for the lack of citizens wanting to work or access to natural resources. Rather, it is instead a bevy of state policy failures. Louisiana has an expensive, outdated and confusing tax structure, unfair legal climate and reams of red tape. These all make it difficult for entrepreneurs to create jobs, and they also explain why in 2017 alone, an estimated 17,000 Louisiana residents found jobs and opportunity by simply moving next door to Texas.
While there is nothing that state lawmakers could do about federal tariffs, there is nothing stopping Louisiana from fixing its policy failures and becoming a state rife with jobs and opportunity like its neighbors. With an election around the corner, citizens have the opportunity to decide what kind of state that they want to live in. Will it be a state where more plant closures and layoffs are the norm? Or will it be a state where businesses are opening, and the people and families of Louisiana can find jobs and opportunity? We can and must do better, because our future depends on it.