Four times a year, the nonpartisan Missouri Economic Research and Information Center (MERIC) calculates and publishes indices ranking each of the 50 states with regard to their cost of living relative to the national average. MERIC’s indices consistently show that, on average, the cost of living is substantially higher in states that lack Right to Work laws barring the termination of employees for refusal to pay dues or fees to an unwanted union.
For example, annualized MERIC data for 2012 show that, among the 14 states with the highest overall cost of living last year, not one has a Right to Work law. On the other hand, among the 10 states with the lowest overall cost of living, nine have Right to Work laws.
The vast majority of analysts of business location and expansion decisions believe that high living costs tend strongly to discourage investments in job-creating enterprises, whereas as low living costs tend strongly to encourage such investments.
Of course, given the facts cited above, apologists for compulsory unionism in the workplace have every incentive to discount the importance of a low cost of living for business investors. And that’s undoubtedly why a number of Big Labor allies in academia and journalism are attracted to the theories espoused by Berkeley economist Enrico Moretti. In his 2012 book The New Geography of Jobs and in other writings, Moretti contends that most of the leading centers of economic growth in the coming decades will be high-cost metropolitan areas, and that high costs are not a major impediment to investment in areas where an extraordinarily high share of adults (40% or more) have at least a bachelor’s degree education. Moretti admits that the total number of jobs created by high-tech businesses is not great, and that such businesses offer few opportunities for less-educated workers. However, he explains, as one sympathetic commentator put it, that “more than a few crumbs” fall to the workers who “style the hair, cut the grass, and . . . build the houses” of America’s innovative class.
In an essay recently published in Forbes magazine and on the NewGeography.com web site that he edits (see the link above), economist/demographer Joel Kotkin points to several fundamental flaws in the Moretti analysis. The first is that, once the extraordinarily high cost of living in San Francisco, Silicon Valley, Boston and Manhattan is taken into consideration, it is not at all clear that the incomes of baristas, taxi drivers, or therapists in these metro areas are higher than those of their counterparts in less expensive cities and towns.
Moreover, Moretti and other economists of his ilk fail to distinguish between cities that have a highly educated population due to the many opportunities they have to offer for employees and entrepreneurs with extraordinary skills and cities that have a highly educated population due mostly or solely to a persistent and substantial net out-migration of the less educated. The high-tech bastions in forced-unionism California, Massachusetts, and New York are not by any means the U.S. leaders in expansion of their educated workforce. On the contrary, writes Kotkin, “the cities with the fastest-growing college-educated populations are primarily in the [overwhelmingly Right to Work states of the] Sunbelt and the Intermountain West, such as Houston, Austin, San Antonio and Nashville.” These cities have rapidly growing numbers of middle-class residents largely thanks to “more mundane industries, such as energy, construction, manufacturing and logistics . . . .” And success in these areas can go hand in hand with success in high tech, as Right to Work Texas has shown especially well. Since 2001, it has “added tech jobs at a much faster pace than California.”
Multi-year U.S. Census Bureau data show that working-age Americans who have less than a college degree are “voting with their feet” in a way directly opposed to what Moretti’s theories would indicate. That is, they are fleeing the high-tech meccas in forced-unionism states that the professor contends offer them the best opportunities to advance economically and heading for the low-cost Right to Work regions he scorns. And this trend has been evident for a long time, including during the 1990’s when the movement of energy prices was generally downward and the energy industry was actually shrinking in oil- and gas-rich Right to Work states like Texas and Louisiana.
The perspective that high-tech firms are the key to long-term overall job growth has little evidence to recommend it, but it is remarkably convenient for Big Labor apologists who need to have some explanation other than monopolistic unionism for why high-union-density states like Wisconsin, Illinois, Ohio and Pennsylvania have suffered from chronically slow job growth. Before Michigan adopted its Right to Work law in late 2012, Oregon “labor studies” professor and union-boss cheerleader Gordon Lafer actually suggested that the Wolverine State could turn its economy around by attracting firms specializing in “cloud computing, energy management, and mobile software applications”!
Echoing high-tech gurus like Moretti, Lafer has written contemptuously about the growth in jobs related to fossil fuels in Right to Work states like Texas, Louisiana and North Dakota, even though fossil-fuel industries provide lots of high-paying jobs for the very blue-collar workers Lafer purports to care about, and even though it is largely thanks to innovations made by U.S. businesses in the energy industry that our country’s greenhouse emissions have declined in recent years, despite our growing population.
As Kotkin concludes: “Providing broad opportunities for the mass of Americans — not enriching the few, even if they happen to be hip and cool — should be the primary objective in the economy of a democracy.” It should also be the primary objective of labor union officials and their academic allies, but, sadly, the evidence indicates it isn’t.