Spendable incomes lower in forced-union dues states like California – Press Enterprise
In a paper he once wrote for the National Institute for Labor Relations Research, economist Barry Poulson, an emeritus professor at the University of Colorado and past president of the North American Economics and Finance Association, raised a point that seems obvious, but is generally overlooked in both academic and media analyses of relative living standards in the 50 states:
People in general, and workers in particular, are more likely to move to jurisdictions where they can furnish a higher standard of living for themselves and their family members than they have been enjoying up to the time of their move. As a rule, workers do not flock to places where they expect their living standards will be lower.
“We expect,” wrote Dr. Poulson, that jurisdictions with higher cost of living-adjusted incomes “would attract more workers.”
Poulson’s analysis continues to provide a simple explanation of why Big Labor-dominated, compulsory-unionism states like California and New York – which on paper seem to have high incomes – are losing workers and business owners in droves. From July 1, 2020 to July 1, 2022 alone, these two states lost a combined total of nearly 240,000 residents in their peak-earning years (ages 35-54), entirely as a consequence of net domestic out-migration to other states.
Data furnished by the U.S. Commerce Department’s Bureau of Economic Analysis this fall, adjusted for interstate cost-of-living differences according to an index calculated by the Missouri Economic Research and Information Center (MERIC), a state government agency, show that theaverage after-tax income per person last year in the 27 states with Right to Work laws banning forced union dues and fees as a job condition was $55,320.
That’s roughly $3,700 higher per person than the forced-unionism state average.
The fact is, families in Right to Work states have thousands of dollars more to spend each year than families located in forced-unionism states. For a family of four, a per capita purchasing power advantage of $3,700 is equivalent to nearly $15,000 a year!
Six of the eight states with the highest real, spendable incomes per capita are Right to Work. And the eight states with the lowest spendable real incomes – Hawaii, Oregon, New York, California, Maine, Massachusetts, Maryland and Vermont – are all forced-unionism.
No one should be surprised that union coercion hurts workers, along with small business owners, taxpayers and retirees. The forced-union-dues system foments hate-the-boss class warfare in many workplaces. It helps Big Labor impose and perpetuate counterproductive and costly work rules. And union bosses funnel a large share of the forced union dues and fees they collect through this system into the campaigns of Tax & Spend, regulation-happy state and local politicians. Undoubtedly, this is an important reason why tax burdens are consistently higher on average in forced-unionism states than in Right to Work states.
Over the past decade, the cost-of-living disadvantage of forced-unionism states relative to Right to Work states has gotten substantially wider. Specifically, thanks to Right to Work laws’ anti-inflationary impact, which has been well-documented by economists such as Richard Cebula, states that banned forced unionism relatively recently have become more affordable relative to forced-dues states as a group since those laws took effect. For example, between 2012, the year Michigan’s Right to Work law was adopted, and 2022, the overall cost of living in the Wolverine State as gauged by MERIC’s indices fell by more than 6% relative to the 23 remaining forced-dues states.
Unfortunately, many commonly cited analyses of living standards in Right to Work states ignore regional cost-of-living differences completely. A Federal Reserve sponsored study published early last month by Fed staffers Kabir Dasgupta and Zofsha Merchant is a case in point.
To be blunt, the failure of Dasgupta and Merchant to account for the well-documented fact that living costs during the first decade their Right to Work laws were in effect rose far more slowly in Michigan and Indiana than they did in forced-unionism states collectively invalidates their claim that forced unionism somehow benefits workers economically.
Of course, the flimsiness of this study hasn’t deterred Big Labor propagandists like the New Republic’s Tim Noah from latching on to it as a justification for their ideological aversion to Right to Work. My question for Noah and company is, if forced unionism is so good for workers, why are they fleeing this system in droves?
Stan Greer is senior research associate for the National Institute for Labor Relations Research
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