Compulsory Unionism Plunges States Deep Into Red

8bit-forced-dues-tapayer-debt-800x800None of the 12 States With the Greatest Absolute State-and-Local Government Debt Per Capita Protects Employees From Being Fired For Refusal to Bankroll an Unwanted Union

Twenty-five years ago this May, as state officials across the nation were raising taxes and curtailing essential services to patch over large and widening budget gaps, a prescient cover story in Forbes magazine identified legal special privileges granted to union officials as a key factor behind manifold fiscal woes.

The article, “Collision Course,†was written by Forbes Executive Editor James Cook. It identified union bosses wielding monopoly control over employees as the “principal culprit behind swollen public payrolls and deteriorating public services.â€[1]

Cook passed away in 2002.  But were he alive today, he could easily cite the Washington, D.C.-based Tax Foundation’s Facts & Figures 2016: How Does Your State Compare? as a resounding confirmation of his quarter-century-old analysis.

Table 37 of the latest edition of Facts & Figures draws on the U.S. Census Bureau’s “State and Local Government Finances by Level of Government and by State: 2013†and state population data to calculate state-and-local debt per capita for the Fiscal Year (FY) 2013.

Forced-Unionism States’ Public Debt Measured as a Share of Income 25% Higher Than Right to Work States’

Table 37 suggests that forced-unionism New York, with a state-and-local debt per capita of $17,584, is in the worst fiscal shape of all. And the 11 other states with the greatest debt per capita in absolute terms (Massachusetts, Alaska, Connecticut, Rhode Island, Illinois, New Jersey, Washington, California, Pennsylvania, Hawaii and Colorado) also lack Right to Work protections for employees.

Meanwhile, among the nine states with the least absolute debt per capita, eight (Wyoming, Idaho, Mississippi, Arkansas, Oklahoma, North Carolina, Georgia and Tennessee) have Right to Work laws prohibiting the termination of employees for refusal to join or pay dues or fees to an unwanted union. Forced-unionism Montana is the sole exception.

On average, the 26 states that still lacked Right to Work protections for employees in 2013 (the 25th and 26th state Right to Work laws were adopted, respectively, by Wisconsin in 2015 and by West Virginia early this year) had an average per capita state-and-local debt of $10,918, or nearly $3500 higher than the average for Right to Work states that year.

To some extent, the data cited in the three preceding paragraphs reflect the fact that a dollar in a forced-unionism state typically doesn’t go as far as a dollar in a Right to Work state. Indices calculated and published by the Jefferson City-based Missouri Economic Research and Information Center (MERIC), a state government agency, show that in 2013 forced-unionism states were on average 21% more costly to live in than Right to Work states.[2]

(Since then, Right to Works states’ cost-of-living advantage has only widened.[3])

But even government debt measured as a share of personal income, which effectively cancels out regional differences in the cost of living, reveals a strong positive correlation between compulsory-unionism status and government insolvency

In 2013, forced-unionism states collectively had a state-and-local government debt equivalent to 22.9% of their combined personal income as reported by the U.S. Commerce Department that year. That’s a debt burden 25% greater than Right to Work states’.

Tax Burdens as Well as Debt Burdens Are Heavier in Big Labor Stronghold States

Eight (New York, Kentucky, Alaska, Rhode Island, Massachusetts, Illinois, Washington and Hawaii) of the 10 states with the greatest government debt, measured as a share of personal income, are forced-unionism. Only two (Nevada and South Carolina) are Right to Work.

On the other hand, 11 (Wyoming, Idaho, Oklahoma, North Dakota, Arizona, Iowa, North Carolina, Mississippi, Tennessee, Georgia, and South Dakota) of the 12 states with the lowest amount of government debt relative to income have Right to Work laws. Forced-unionism Montana is the only exception.

Union officials and other promoters of Tax-and-Spend policies sometimes suggest that outsized state government debt, if it is a problem at all, must be a consequence of too little taxation.

However, many Big Labor stronghold states that are deep in hock actually have a combined state-and-local tax burden that is far greater than the national average of 9.9% of personal income, as calculated by the Tax Foundation.[4]

In the aggregate, state and local taxes consumed nearly 10.8% of 2012 personal income in states that then lacked Right to Work laws, but just a little more than 8.6% in states that protected employees’ Right to Work at the time.[5]

In addition to the taxes they levy, states and localities derive revenue from several other sources, among which by far the most important are revenues transferred from the federal government. Total state-and-local revenues for forced-unionism states were equivalent to 19.7% of personal income in 2013. That’s significantly greater than the 18.2% share for Right to Work states.[6]

To sum up, in states where Big Labor wields compulsory-unionism privileges, state-and-local taxes consume a 25% higher share of personal income in forced-unionism states than in Right to Work states. And state-and-local debt as a share of income is also 25% greater in forced-unionism states.

Evidence Indicates Forced-Dues-State Residents Fork Over More Money For Inferior Public Services

What quality public services to residents of compulsory-unionism states get in exchange for being saddled with higher taxes and greater government debt?  The best available evidence bears out James Cook’s 1991 observation that special privileges for Big Labor bosses result in “deteriorating public services†as well as “swollen public payrolls.â€[7]

Here we will consider only K-12 public education, on which American taxpayers spend more than $550 billion every year, of which 88% is covered by state and local governments.[8]

A recent analysis by Dr. Matthew Chingos, a senior fellow at the Washington, D.C.-based Urban Institute, looked at the comparative academic performance of schoolchildren in the 50 states, using National Assessment for Educational (NAEP) scores as his gauge.  Unlike other well-known standardized tests, the NAEP is administered to a random sampling of all schoolchildren in certain academic years when it is offered, not just the college-bound, and it is nationwide.

To calculate only differences in academic performance that are potentially a result of state education policy, rather than demographics, Chingos adjusted for race and ethnicity, English-language proficiency, the number of books in schoolchildren’s homes, family structure, and several other relevant factors.[9]

Chingos’s data covered four NAEP exams: math and reading for fourth graders, and the same two subjects for eighth graders. He measured how many academic months ahead of or behind schoolchildren in a particular state are, compared to similarly-situated schoolchildren nationwide.

Chingos found that, in 2013, schoolchildren in the 24 states that then had Right to Work laws on the books, weighting scores according to each state’s share of the aggregate 5-17-year-old population for the group, were on average 0.4 months ahead of their peers in the average state, whereas schoolchildren in forced-unionism states were 0.6 month behind their peers.

Without a doubt, public schools and other important government services could perform much better than they currently do in all 50 states.

But in considering possible reforms of such institutions, it is worth keeping in mind that, in states where compulsory unionism is permitted, schools are substantially more costly to run and produce worse results than in Right to Work states.

Reasonable people may differ about particular measures that may be needed to spur government institutions to serve the public better at a reasonable cost. But federal and state reforms ensuring that no workers — private or public, anywhere in America — are forced to fork over money to a union they would never join voluntarily would surely represent a major step in the right direction.

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Stan Greer is the National Institute for Labor Relations Research’s senior research associate.  He may reached by e-mail at [email protected] or by phone at 703-321-9606.   Nothing here is to be construed as an attempt to aid or hinder the passage of any bill before Congress or any state legislature.

[1] See the May 13, 1991 edition of Forbes.

[2] Stan Greer, “Forced Unionism States Were on Average 21% More Costly to Live in Than Right to Work States in 2013,†National Institute for Labor Relations Research blog post, February 20, 2014.

[3] Greer, “Forced-Unionism States Far More Costly to Live in,†National Institute for Labor Relations Research blog post, February 15, 2016.

[4] “State-Local Tax Burden Rankings FY 2012,†published January 20, 2016.

[5] Greer, “In Forced-Unionism States, State and Local Taxes Consume an Average of 10.8% of Personal Income,†National Institute for Labor Relations Research blog post, January 23, 2016.

[6] Tax Foundation, Facts and Figures 2016, Table 7 and the “State and Local Personal Income†page on the U.S. Commerce Department’s Bureau of Economic Analysis web site.

[7] See Footnote 1.

[8] See the “Federal, State and Local K-12 Finance Overview†on the web site.

[9] “Breaking the Curve: Promises and Pitfalls of Using NAEP Data to Assess State Role in Student Achievement,†October 2015 research report, Urban Institute, Washington, D.C.