Are corporations taking over state governments?

Are corporations taking over state governments?

  • Corporations are spending a lot of money to influence state governments
  • Millions of lives are affected by this strategy
  • Right-to-work laws tend to drive down wages for union and nonunion workers alike.

There is a powerful narrative going around that says corporations and wealthy individuals are taking over state governments in certain parts of the United States.

Wisconsin, Iowa, Indiana, and many other Midwestern states are passing legislation to weaken public unions, freeze or lower the minimum wage, and other measures threatening union rights. Iowa’s governor even signed into law a bill blocking local governments from setting minimum wages higher than the statewide floor. This was clearly aimed at frustrating pro-labor cities to improve the working conditions of their residents.

Why this dramatic shift to a more anti-union stance in those states? Is this a concerted effort to further curb the already diminishing power of the labor movement?

Some researchers, including Gordon Lafer who recently authored a book The One Percent Solution: How Corporations Are Remaking America One State at a Time, argue that companies are spending an inordinate amount of money and political power to influence state legislatures to pass bills crippling public and private unions. They even contend that many of those bills are written by well-heeled business lobbies.

Since state- and local-level decisions are made out of the national spotlight, there is less public scrutiny and corporations and wealthy people are spending a lot of money on promoting those anti-labor laws. Millions of lives are affected by those measures, from receiving unemployment benefits to health insurance coverage.

The main objective of these corporate interests is to arrest and reverse the growing expansion of social and economic rights and benefits for working Americans.

Of course, this strategy of promoting business-friendly measures has been facilitated by the easing off of campaign finance limits after the landmark Citizens United Supreme Court decision.


Sometimes, those same corporate lobbies clash against each other. In Tennessee, for example, the governor proposed to expand his state’s Medicaid program to cover uninsured poor adults as part of the Affordable Care Act. However, his plan was strongly opposed by Americans for Prosperity (AFP), but supported by the state’s Chamber of Commerce and major hospital associations.

One wonders why legislatures in those states are more prone to adopt proposals written by the American Legislative Exchange Council (ALEC). One explanation is that in many states lawmakers are part-time, understaffed, and under-resourced. They don’t have the necessary resources to spend time on either developing legislation and/or thoroughly studying bills written by ALEC.

Therefore, they rather adopt what is readily available out there such as proposals that are more or less compatible with their conservative ideas.

According to some political think tanks, one way to address this predicament is to focus on those states in which the legislators are understaffed and under-resourced. For example, hiring more staff, increasing resources, etc., might allow the legislators to look at those bills proposed by ALEC in a more critical and thorough fashion.

However, is this really feasible especially in an age of anti-government sentiments and budget cuts? The near future will tell us.

The potential and logical outcome of this strategy is to increase poverty, inequality, and economic insecurity. It is also to further cripple the already flagging power of the unions and their fight to keep wages as decent and equitable as possible.

For example, according to some studies, right-to-work laws tend to drive down wages for union and nonunion workers alike.

Although most American adults are opposed to this kind of strategy, it would be difficult for many of them to effectively rally around a cause that is becoming less appealing and less perceptible, especially in Midwestern states, and in an era in which the power of the corporate lobbies is going increasingly unchecked.

Gradually raising the federal minimum wage to $15 by 2024 (not freezing or lowering the state minimum wage as implemented in some states) would lift pay for 41 million workers, nearly 30 percent of the U.S. workforce, according to the Economic Policy Institute.

Although current economic indicators might look promising, and they were improving since 2010, how to distribute wealth in a more sensible way, so that more people would effectively benefit from jobs growth, is another matter.

About the author

Vahe Tcharkhoutian is the founder and editor of Los Angeles Intelligence. He holds a Master of Arts degree in Political Science [American Politics] and a Master of Arts degree in Educational Administration. He currently teaches in Glendale, California.