The national unemployment rate has been stuck above 8 percent for more than 40 straight months. A handful of states have watched their jobless rates reach the double digits. It’s obvious what states need: more jobs. What they don’t need? More lawsuits.
Frivolous lawsuits are dead weight on a state’s economy. America’s job creators look at several factors when considering whether they’ll hire, expand or choose a location. And a system that fosters frivolous lawsuits is certain to drive companies out of town or out of business.
Small businesses, which collectively create 64 percent of all new jobs, are especially vulnerable to lawsuit abuse. Many smaller enterprises operate on razor-thin profit margins. In this economy, a single lawsuit can force them to close their doors forever.
To assess America’s legal climate on a state-by-state basis, the U.S. Chamber of Commerce’s Institute for Legal Reform recently commissioned a survey to rank all 50 states according to the fairness and reasonableness of their state liability systems. In response to the annual survey, 7 in 10 business leaders said that a state’s lawsuit climate is a significant factor in where they choose to expand or grow. That’s up 13 percent from five years ago.
It should come as no shock that some of the states at the bottom of the survey — including Illinois and California — have some of the highest unemployment rates in the country. Likewise, several of the states with the highest-ranking legal climates also have some of the lowest jobless rates. Nebraska, for example, is second in the nation for business-friendly liability systems. It also happens to have the second-lowest unemployment rate at an enviable 4 percent.
The good news is that this year’s survey shows a slight improvement in the nationwide health of the lawsuit climate. We hope this means that lawmakers are halting the expansion of lawsuits in favor of economic growth and job creation. We urge more state leaders to step up and take action for the health of their economies and the good of their workers.
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Best Lawsuit Climates
» 1. Delaware
» 2. Nebraska
» 3. Wyoming
» 4. Minnesota
» 5. Kansas
Worst Lawsuit Climates
» 50. West Virginia
» 49. Louisiana
» 48. Mississippi
» 47. California
» 46. Illinois
— Tom Donohue is president and CEO of the U.S. Chamber of Commerce.
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