Poverty Higher in Forced-Dues States

A busy mall with people walking and sitting on escalators.

A recent U.S. Census Bureau (BOC) report furnishes data on the average share of residents living in poverty in each of the 50 states from 2016-18. BOC supplemental poverty measure (SPM) data show a population-weighted average forced-dues-state poverty rate of 13.4%. That’s more than 2% higher than the population-weighted average for Right to Work states. (Since Kentucky’s Right to Work law was not adopted until 2017, it is excluded from this analysis.)

Ryan McMaken, a senior editor at the Auborn, Ala.-based Mises Institute, a pro-free market think tank, has explained the importance of the SPM with these observations:

“If we’re going to use [BOC] data to guess the [relative] prevalence of low-income households [in different states], the SPM is greatly superior to the old poverty rate. There’s a reason, after all, the Census Bureau developed it, and the Bureau has long warned that poverty rates using the old measure don’t make for good comparisons across state lines.

“The old poverty measure was a far more crude measure that did not take local costs into account, did not include poverty-assistance income, and basically ignored what can be immense differences in the cost of living in different locations.”

Because the real purchasing power of a household matters much more than its nominal income in assessing how well off it is, McMaken’s assessment that the SPM is far superior to the traditional poverty measure for comparing and contrasting poverty in different states is surely correct.

But the SPM undoubtedly fails to adjust sufficiently for higher living costs in forced-dues states, because, by the BOC’s own account, it factors in only regional differences in “median gross rents for two-bedroom units with complete kitchen and plumbing facilities.”

Regional cost-of-living indices calculated and published by the Missouri Economic Research and Information Center, a state government agency, show that, on average, not just housing, but also food, health care, and other necessities cost significantly more in forced-unionism states than in Right to Work states.

An analysis that factored in all kinds of living expenses would show that the average poverty rate in forced-dues states is even higher relative to the Right to Work average than is indicated by the SPM.

A black and white image of an eagle with its wings spread.
Not just housing, but also other necessities like food and energy are substantially more expensive in forced-unionism states than in Right to Work states. Higher prices for such necessities hurt the poor and the near-poor most of all. (Image: Andy Holzman/Los Angeles Daily News)