Big Labor ‘Think Tank’ Ignores Large Negative Correlation Between Forced Unionism and Construction Employee Compensation Growth

In a 2010 article for the International Journal of Epidemiology, Donna Spiegelman of the Harvard School of Public Health observed:

The adage ‘correlation is not causation’ has been repeated so often that another salient feature of the relationship of correlation to causation seems virtually to have been forgotten: that correlation is a necessary (but not sufficient) condition for causation.

As Spiegelman went on to acknowledge, there are theoretical exceptions to the rule that a causal relationship between two phenomena cannot be established without first demonstrating they are correlated, but as a practical matter the rule is iron-clad.  It applies, of course, not just to epidemiology but to all kinds of scientific research.

In a recent paper touting the purported benefits of compulsory unionism to employees, Robert Bruno of the University of Illinois and Frank Manzo of the Illinois Economic Policy Institute ignore the rule cited by Spiegelman a few years ago.  (See below for a link to a Big Labor commentary touting the Bruno-Manzo study.)

Their paper purports to demonstrate a positive causal relationship between the federal labor policy authorizing the extraction of forced union dues and fees from private-sector employees and worker compensation.  By definition, if the Bruno-Manzo claim were correct, then there would be some kind of positive correlation between the permissibility of compulsory unionism in a state and its relative rate of employee compensation growth.

The correlation wouldn’t necessarily be on the surface.  It could be that another variable (or variables) caused the measured level of compensation growth to be lower in forced-unionism states, but once this variable (variables) was/were factored out, the positive correlation between forced unionism and compensation growth would be revealed.

But the fact of the matter is, Bruno and Manzo did not even investigate relative growth rates in employee compensation in forced-unionism and states with Right to Work statutes protecting employees from the forced-dues provisions in federal law.  Without conducting such an investigation, it is completely impossible to prove what they purport to prove.

Why would Bruno and Manzo ignore actual compensation growth in a study effectively claiming Right to Work laws lead to lower compensation growth?  A quick look at the actual data suggests that they may well have dodged them because they were not at all helpful to the point they were trying to make.

U.S. Commerce Department data show that, in a wide range of sectors, forced unionism is actually associated with lower compensation growth.  Since Bruno and Manzo focused primarily on the construction industry, I will cite construction industry data as an example here.

Over the most recent 10-year period for which Commerce data are now available (2002-2012), construction industry output and employment have been shrinking nationwide.  However, the declines have on average been far more severe in states that lack Right to Work laws.

From 2002 to 2012, in the 27 states that lacked Right to Work laws for the whole time, construction employee compensation fell by an average of 15.8%, after adjusting for inflation using the CPI-U.  Over the same period, real construction employee compensation in Right to Work states fell by just 5.6%, or barely more than a third as much.  (Because Indiana switched from forced-unionism to Right to Work in 2012, it is excluded.  Michigan, whose Right to Work law didn’t take effect until March 2013, is counted as compulsory unionism.)

The strong positive correlation between Right to Work status and compensation growth in a wide range of sectors (not just construction) does not in itself prove that Right to Work laws cause wages, salaries and benefits to rise more rapidly, but it is evidence indicating that they may well do that.  This is evidence that Bruno and Manzo should have carefully considered before making unsubstantiated and highly implausible statements about the economic impact of Right to Work laws.

A new study by two rabidly pro-forced unionism academics purports to show that employees generally, and construction workers in particular, benefit from Big Labor monopolies, but utterly fails to back up its contentions. Image: Whitney Radley/houston.culturemap.com

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