Seven Lowest-Ranking States For Cost of Living-Adjusted Income Lack Right to Work Laws


Despite High Cost of Living, New Jersey Has Yet to Bump Up Its 

If the high cost of living in forced-unionism states hurts teachers and minimum-wage workers, mustn't it also hurt other types of employees? To paraphrase the old saying, what's bad for the goose is bad for the gander. Image:

Professional economists and ordinary Americans alike understand that the purchasing power of a dollar varies widely from state to state.  That’s why employees who are considering relocating to another state and businesses seeking to hire capable out-of-state employees often consult 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 state cost-of-living indices factor in housing, food,  utilities, transportation, health care, and other miscellaneous goods and services.  A state whose average cost of living is identical to the U.S. average would have an index of 100.00.  A state with a cost of living 10% above the national average would have an index of 110.00.  And the index for a state 10% less expensive to live in than average would have an index of 90.00.

When they aren’t talking about the Right to Work issue, union officials and other forced-unionism proponents comprehend as well as anyone else that, because of interregional differences in the cost of living, nominal (unadjusted) salaries can’t be used to make apples-to-apples comparisons of wages and salaries and other forms of income from state to state.  For example, the 2008 edition of the National Education Association teacher union’s book of “Rankings and Estimates” of state school statistics explicitly warned readers:

[A]ny discussion of average salary figures in the absence of other data about the specific state or district provides limited insights into the actual “value” of those salaries.  For example, variations in the cost of living may go a long way toward explaining (and, in practice, offsetting) differences in salary levels from one area of the country to another.

Similarly, early this year Chaz Bolte, a regular contributor to the Big Labor-allied “WePartyPatriots” web site, protested that the New Jersey commission charged with annually reviewing whether the Garden State’s $7.25/hour minimum wage should be hiked had in its most recent report “failed to account for New Jersey’s high cost of living, roughly 30 percent above the national average.”  Mr. Bolte’s data came straight from MERIC.

Regardless of how one assesses the merits of federal or state minimum wage hikes, it is certainly true that $7.25 doesn’t go nearly as far in forced-unionism New Jersey as it does in any of the 23 states that currently have Right to Work laws on the books.  According to MERIC’s report for the second quarter of 2012, 21 Right to Work states have overall living costs below the national average.  One, Arizona, has an index of 103.05.  No data for Right to Work Wyoming are available for the second quarter of 2012, but in the first quarter its index was 103.86.  Fourteen forced-unionism states have a cost-of-living index higher than that of Wyoming, the most expensive Right to Work state.

Given that the NEA elite accept in principle the idea of adjusting nominal incomes to reflect regional cost of living and Mr. Bolte actually used MERIC’s indices to do so, one would think that Big Labor bosses and their ideological cohorts would agree that MERIC’s indices, apparently the only currently available comprehensive gauge of cost of living differences in the 50 states, are an appropriate tool for evaluating the economic impact of Right to Work laws.

Instead, professional forced-unionism apologists such as Lonnie Stevans, a statistician and a former secretary-treasurer of the American Association of University Professors (AAUP), blow a gasket when one suggests to them that one should use MERIC’s indices to compare incomes or salaries in Right to Work and forced-unionism states.

Is it possible the reason that pro-union monopoly academics like Dr. Stevans get so upset at the idea of MERIC’s indices entering into  the Right to Work debate is not any quibble they may have about methodology, but ratherthat they know the results won’t be favorable to compulsory unionism?

Take, for example, the U.S. Bureau of Economic Analysis data for 2011 disposable personal income in the 50 states.  Adjusting the reported incomes to reflect cost of living by dividing them by an average of MERIC’s quarterly reports for 2011 (expressed in percentage terms) reveals a clear negative correlation between forced unionism and disposable income per capita.  The Right to Work average of $36,938 is nearly $2500 higher than the forced-unionism average.

Moreover, all of the seven states with the lowest cost of living-adjusted disposable incomes per capita in 2011 (Alaska, California, Hawaii, Maine, Oregon, Vermont and West Virginia) lack Right to Work laws.  Of the nine states with the highest cost of living-adjusted incomes, Iowa, Kansas, Nebraska, North Dakota, South Dakota, Texas, Virginia and Wyoming all have  Right to Work laws.  The sole exception among the nine is forced-unionism Illinois.  While the Prairie State’s relatively high spendable average income is a positive, it should be noted the state is at the same time plagued by high out-migration of families with children and extraordinarily poor job creation.