Ignoring Forced-Unionism States’ Higher Cost of Living Won’t Make It Go Away

JURIST – Forum: ‘Right to Work’ in Michigan: Depleting Unions …

Data compiled by the nonpartisan Missouri Economic Research and Information Center show that in 2011 the average cost of living in states where forced union dues are permitted was nearly 20% higher than in Right to Work states. Obviously, efforts to compare incomes and spending in forced-unionism and Right to Work states that ignore cost-of-living differences are fundamentally flawed. Image: cnbc.com

Union officials and their academic allies understand, just as well as other Americans do, that a dollar doesn’t go nearly as far in forced-unionism New York as it does in Right to Work Texas.  And when they are campaigning for policies like state and local  minimum wage hikes, Big Labor partisans openly acknowledge that forced-unionism stronghold states like New York, Massachusetts, California, Alaska and Hawaii are extraordinarily expensive.  A January 28 post on the AFL-CIO Now blog, for example, complained that the earnings of a New York minimum wage employee working full time and year round are “far less than what is needed to afford the state’s high cost of living.”

Not all forced-unionism states are expensive, but on average their cost of living is substantially higher than the cost of living in states with Right to Work laws on the books protecting employees from termination for refusal to join or pay dues to an unwanted union.  Any interested citizen can see this for himself or herself by reviewing the interstate cost-of-living indices that are calculated and published four times a year by the nonpartisan Missouri Economic Research and Information Center (MERIC).

MERIC’s indices factor in housing, food, utilities, transportation, health care, and other miscellaneous goods and services.  For a number of years, the National Institute for Labor Relations Research has used MERIC’s indices to make apples-to-apples comparisons of wages, salaries, and other forms of income in Right to Work and forced-unionism states.  To obtain annual indices for 2011, the Institute simply averaged the quarterly indices for each state.

The annualized MERIC data show that, among the 16 states with the highest overall cost of living in 2011, not one has a Right to Work law on the books.  On the other hand, among the 13 states with the lowest overall cost of living, 10 had Right to Work laws in 2011.  (Two other low-cost states, Indiana and Michigan, adopted Right to Work laws in 2012.)  On average, the cost of living in states where forced union dues were permitted in 2011 was nearly 20% higher than in Right to Work states.

In light of the above facts, it’s obvious that efforts to compare incomes and spending in forced-unionism and Right to Work states that ignore cost-of-living differences are fundamentally flawed.

Failure to take into consideration cost of living differences is yet another serious problem with the anti-Right to Work screed Michigan law professor Susan Bitensky wrote for The Jurist last month.  (See the link above.)  I have discussed a number of Bitensky’s other logical and factual fallacies in two previous posts.

An alternative poverty index, calculated and published by the U.S. Census Bureau last year, takes into account regional differences in cost of living as well as several other factors not measured by the standard index.  It shows that, on average, there is only a 0.1 percentage point difference between the average poverty rate for forced-unionism states and the average for Right to Work states.  This, despite the fact that the southern, Rocky Mountain and Plains states that now have Right to Work laws clearly did have economies lagging behind the national average 80 years ago, before compulsory unionism was authorized by federal labor law.  Therefore, completely contrary to what Bitensky claims, an objective look at the poverty data suggests Right to Work laws help reduce poverty rates.

Bitensky’s data on per pupil spending in forced-unionism and Right to Work states is also flawed because it fails to take into account interstate differences in cost of living. But these particular data suffer from an even more serious problem.  There is no credible evidence that higher per pupil spending, either on a nominal or a cost of living-adjusted basis, is positively correlated with higher student achievement.  If, as appears to be the case, Texas white, black, and Hispanic students all tend to acquire better math, science and English skills than their counterparts in Wisconsin, despite the fact that Wisconsin spends more per pupil than Texas does, should Wisconsin taxpayers be happy about spending more on education than Texas taxpayers?  Hardly.  And yet Bitensky simply assumes they should be.

One money-based comparison offered by Bitensky actually does purport to take into account regional differences in cost of living, but not in the way she claims.  Bitensky cites research by Organized Labor-funded Economic Policy Institute (EPI) regarding workers’ annual earnings in Right to Work and forced-unionism states.  What the EPI purports to find is that, if workers’ average annual pay were adjusted for more than a dozen variables, one of which is cost of living but some of which it doesn’t even identify, then pay would be on average roughly 3% higher in forced-unionism states.

Given that the EPI acknowledges that it is funded largely by union officials and refused to fulfill my request to offer an explanation as to exactly how it reached its conclusion, I think it is fair to say that people who want honest comparative information about Right to Work and forced-unionism states should regard the EPI’s purported findings with intense skepticism.  A simple analysis of cost of living-adjusted private-sector wage and salary incomes (including contract employees and the self-employed as well as payroll employees) in the 50 states for 2011 actually shows a slight Right to Work advantage of roughly $300 a year.

In addition to her monetary comparisons between Right to Work and forced-unionism states, Bitensky makes several non-monetary comparisons.  Obviously, they aren’t flawed due to a failure to account for cost-of-living differences.  But they are nevertheless quite spurious.  I will discuss these comparisons in a final post on Bitensky’s pro-forced unionism diatribe next week.