Outflow of Income From Forced-Unionism States Accelerates When National Economy Is Expanding

As this web site reported early last month (see the first link below for more information), interstate migration data furnished by the IRS’s Statistics of Income (SOI) division show that, between 2012 and 2013 alone, the 26 states that still lacked Right to Work protections for employees as of the end of 2013 lost a net total of $18.2 billion in adjusted gross income (AGI).

This was no isolated occurrence.

SOI migration data going back to the 1991 Tax Filing Year (the first year for which such data are available) consistently show forced-unionism states losing billions of dollars a year in income due to taxpayers’ and their families’ “voting with their feet” in favor of Right to Work.

In fact, the last time forced-unionism states’ annual loss of income resulting from domestic taxpayer migration was under $10 billion was from 2000 to 2oo1, when the-then 28 forced-unionism states experienced an aggregate net outflow of $9.5 billion in AGI (all figures are in current dollars unless otherwise noted).

Moreover, the record shows that forced-unionism states lose more income (and, of course, tax revenue) due to out-migration during periods when the national economy is expanding than they do when it is stagnant or contracting.

After the 2000-2001 recession, the net AGI fleeing forced-unionism states rose over every one-year period through 2005-2006, when it temporarily peaked at $17.6 billion. Forced-dues states’ annual net AGI loss subsequently fell to $10.1 billion in 2009-2010 as a consequence of the Great Recession.  But by 2011-2012, forced-unionism states’ AGI loss had soared again to $13.8 billion, before reaching a record $18.2 billion in the most recent year for which data are available. Since the U.S. will apparently go into 2016 without having suffered another recession, the SOI division is likely to report even heavier losses for forced-dues states in the near future.

As a recent news story for the Newark, N.J.-based Star-Ledger by reporter Kala Kachmar has anecdotally confirmed (see the second link below), a high share of the out-migrants from Big Labor stronghold states are young adults who can be expected to remain the workforce for years to come.

Migration data furnished by the IRS do not convey how much taxpayers who flee forced-unionism states earn any later than the first year after they depart. But the financial cost endured by Big Labor-ruled states is clearly compounding, as well as recurring.

Over the  first decade of the millennium (Tax Filing Years 2001 through 2010), a net total of more than 3.7 million tax filers and dependents moved from a forced-unionism state to a Right to Work state. Counting just the income lost in the first year after each tax filer moved out, forced-unionism states lost a total of $137 billion (in constant 2010 dollars) due to net domestic out-migration over this 10-year period.

The actual net loss over the decade, including income reported by taxpayers in all years subsequent to their migration, was very likely at least four times higher, but cannot be calculated with available data.

In 2008, then-Gov Jon Corzine publicly insisted that the net exodus of roughly 50,000 Americans out of New Jersey a year during his tenure as chief executive was a “byproduct of prosperity.” But it’s doubtful any prominent Garden State politician would dare to make such a claim today. Image: John O’Boyle/(Star-Ledger (Newark, N.J.)

From 2012 to 2013, Forced-Unionism States Lost $18.2 …

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