A cover story for Barron’s published this past weekend (see the link below) looks at the fiscal state of the states. Reporter Andrew Bary’s relatively optimistic view is that, on average, states’ “financial obligations look manageable, when measured against revenue, personal income, and the size of state economies.”
However, a number of states continue to be in deep fiscal danger as a consequence of debt and unfunded government-employee pension liabilities. And a table (based on a study by Eaton Vance) that accompanies the article ranks all 50 states based on their debt and pension burdens.
The table shows that the eight states with the highest share of combined debt and unfunded pension liabilities as a share of GDP are, starting with the worst of all, Connecticut, Illinois, Hawaii, Alaska, Massachusetts, West Virginia, New Jersey and Kentucky. Not one of these states has a Right to Work law. Among the 20 bottom-ranking states, 17 lack Right to Work laws.
In contrast, every single one of the 16 states that are least encumbered by debt and unfunded pension liabilities has a Right to Work law on the books. Starting with the most fiscally sound of all, they are: Nebraska, Iowa, South Dakota, North Carolina, Nevada, Idaho, Kansas, North Dakota, Florida, Arizona, Wyoming, Michigan, Georgia, Utah, Alabama and Tennessee.
What do Right to Work laws, which protect employees from forced payment of union dues and fees as a condition of getting or keeping a job, have to do with states’ fiscal soundness? As Wall Street Journal senior economics writer and editorial board member Stephen Moore emphasized in an August analysis for Newsmax.com, governments in Right to Work states are less in danger of going broke in large part because laws prohibiting forced union dues attract employees and firms.
Politicians in Right to Work states, like politicians everywhere, waste taxpayers’ money, but when they do sturdier state tax bases and greater private-sector employment growth tend to cushion the fiscal blow.
A second important benefit of Right to Work laws, also cited by Moore, is that without forced union dues fueling their warchest, Big Labor and its lobbyists have significantly less ability to deter elected officials from curtailing unnecessary spending when public opinion demands frugality.
Of course, the main reason National Right to Work Committee members and supporters fight for enactment of more Right to Work laws and preservation of existing ones is to protect the personal freedom of each and every American employee. Lower debt burdens and faster economic growth are basically side benefits of employee free choice.
Munis on the Mend