Other Things Being Equal, Poverty Is Clearly Lower in Right to Work States

If Right to Work laws had no economic impact whatsoever, the share of people residing in Right to Work states who are poor would surely be higher by roughly a percentage point than the share of people residing in states where compulsory union dues and fees are permitted.

The reason is simple demographics.  As a U.S. Census Bureau analysis published early this month confirms, members of some demographic groups are far more likely to be poor than members of others, regardless of where they live.  And several demographic groups that are disproportionately poor are over-represented in states with Right to Work laws on the books.

The November 6 Census Bureau reports estimates for nationwide and regional poverty according to both the standard measure and a special supplemental measure.  The Census Bureau began calculating poverty according to the alternative method as well as the traditional one a couple of years ago in response to rising criticism about the inadequacy of the latter.  A CNN report last week (see the link below) explained:

The special “supplemental poverty measure” differs from the official poverty rate because it takes into account more federal benefits, such as refundable tax credits, food stamps, government heating subsidies, and expenses such as child care and work-related items. It also reflects differences in the cost of housing, which vary depending on geographic area.

Many economists agree that the supplemental report reveals a more accurate picture of who is poor than the official poverty rate.

Nationwide, the supplemental poverty measure (SPM) shows that in 2012 an average of 18.0% of people under 18 and living in the U.S. were poor, compared to 15.3% of people aged 18 and over.  In Right to Work states, this disproportionately poor group constituted 24.2% of the population, compared to just 23.0% for forced-unionism states.

Nationwide, the SPM shows that last year 25.8% of black Americans nationwide were in poverty, compared to just 14.5% of Americans of other races.  But as of 2011, 16.4% of residents of Right to Work states were black, compared to just 10.2% of residents of forced-unionism states.

A substantially larger share of Right to Work state residents aged 25 and over never graduated from high school, compared to the forced-unionism average.  (This remains true today, even though Right to Work states have far outpaced forced-unionism states in college-educated population growth for at more than a decade.)  Though the SPM does not publish a cross-tab of poverty based on education level, surely this group as well is disproportionately poor.

Knowing nothing else, then, one would surely predict the average poverty rate in Right to Work states would be higher. In reality, though, the Census’s SPM shows that the average poverty rates for Right to Work and forced-unionism states for the years 2010-2012 were statistically the same:  16.0% in each case.

Moreover, though the SPM is clearly superior to the traditional measure for comparing and contrasting poverty rates in different states, it undoubtedly fails to adjust sufficiently for higher living costs in forced-unionism states.  Regional cost-of-living indices calculated and published by the nonpartisan Missouri Economic Research and Information Center show that, on average, not just housing, but also food, energy, and other necessities cost significantly more in forced-unionism state than in Right to Work states.  Yet the SPM attempts to account only for interstate differences in housing costs.

In short, once key variables such as population composition with regard to age, race, and education level as well as interstate differences in the overall cost of living are factored in, it’s obvious that the aggregate poverty rate for forced-unionism states is substantially higher than the aggregate poverty rate for Right to Work states.

Not just housing, but also other necessities like food and energy are substantially less expensive in Right to Work states than in forced-unionism states. And lower prices for such necessities benefit the poor and the near-poor at least as much as everyone else. When differences in living costs and other key variables are taken into account, Right to Work laws are correlated with significantly lower poverty rates. Image: AP

Poverty level doesn’t budge: 50 million and counting – CNN Money