Rising Compensation For Public Servants Relies on a Growing Private Sector

Compensation of employees by industry (SA06, SA06N)

From 2000 to 2011, the K-12 school-aged population of Right to Work states rose by 9.2%, even as the K-12 contingent shrank by 3.7% in forced-unionism states. But due to the healthy growth of private payrolls in Right to Work states, they have actually been better able to afford the rising cost of public education. Image by © Royalty-Free/Corbis

One of many canards hurled against Right to Work states by Big Labor apologists is that they starve their public sectors.  New and revised data released by the U.S. Commerce Department March 27 (see the link above) demonstrate, for the umpteenth  time, just how absurd this claim is.

From 2002 to 2012, aggregate compensation (including wages, salaries, benefits and bonuses) for state and local government employees in Right to Work states increased by 16.1%, after adjusting for inflation with the U.S. Labor Department’s CPI-U.  That’s nearly double the 8.3% real increase for forced-unionism states as a group.  (Indiana, which adopted its Right to Work law in early 2012, is excluded from this analysis.  Michigan, whose Right to Work law was passed in December 2012, but didn’t take effect until this past week, is counted as a forced-unionism state.)

These data soundly refute the bizarre Big Labor contention that school districts and public-safety departments somehow lose out financially when employees’ freedom to work without being forced to pay union dues or fees is protected, but  they don’t remotely establish that Right to Work states have the opposite problem of profligacy.

Demographic data show why it is totally unsurprising and appropriate that Right to Work states would increase spending on public employee compensation far more rapidly than forced-unionism states.  From 2000 to 2011, the number of residents aged five-t0-17 in Right to Work states grew by 9.2%, even as the population in the same age bracket fell by 3.7% in forced-unionism states.  Since K-12 public education accounts for a far larger share of state-and-local public employee compensation than any other government entity, and children aged five-to-17 are the basic “market” serviced by K-12 public schools, states with growing populations in this age bracket will almost inevitably have to increase spending on public employee compensation more rapidly than states with declining populations in this age bracket.

Fortunately for taxpayers in Right to Work states, private-sector compensation in such states is also growing far more rapidly than in forced-unionism states.  While from 2002 to 2012 there was greater growth in state-and-local compensation than private-sector compensation nationwide, the gap was far narrower in Right to Work states.  Real state-and-local compensation in such states grew roughly 13% more than private-sector compensation.  In forced-unionism states, the gap was 55%.

It is true that in Right to Work states, Big Labor bosses lacking forced-dues privileges have a harder time electing state and local politicians who are ideologically supportive of greater government spending, regardless of need.  But government union bosses who fight to block Right to Work legislation for that reason win a pyrrhic victory when they succeed.  Over time, only healthily growing private-sector payrolls can making public-sector payroll growth sustainable.