Cost of Living-Adjusted Poverty Higher in Forced-Unionism States
A few weeks ago, the U.S. Census Bureau (BOC) released its sixth report furnishing estimates for nationwide and regional poverty according to both the standard measure and a special supplemental measure. In 2011, the BOC began calculating poverty according to the alternative method as well as the traditional one in response to rising criticism about the inadequacy of the latter. Scott Sumner, an economist who teaches at Bentley University in Waltham, Mass., and regularly shares his thoughts with academics and laymen across the world in his Money Illusion blog, has explained the supplemental poverty measure (SPM) this way:
The traditional definition of poverty in America has been criticized for ignoring factors such as government benefit programs and regional variation in the cost of living. Now the Census Bureau has released new estimates of poverty, which account for various types of benefit programs and cost of living differences.
Nationwide, the SPM shows that an average of 15.1% of all Americans were in poverty over the course of 2013, 2014 and 2015. Twenty-five states lacked Right to Work laws protecting employees from being fired for refusal to pay dues or fees to an unwanted union throughout this three-year period. The average SPM poverty rate for these forced-unionism states was 15.4%, 0.3 percentage points above the national average. Meanwhile, 24 states had Right to Work laws on the books for the entire time from 2013 to 2015. The average SPM poverty rate for these states was 14.9%, 0.2 percentage points below the national average.
(Since Wisconsin’s Right to Work law was adopted and took effect in 2015, it is excluded from this analysis. Since West Virginia did not become a Right to Work state until this year, it is counted as a forced-unionism state here.)
Because the real purchasing power of a household matters much more than its nominal income in assessing how well off it is, the SPM is clearly superior to the traditional measure for comparing and contrasting poverty in different states. But the SPM undoubtedly fails to adjust sufficiently for higher living costs in forced-unionism states. Regional cost-of-living indices calculated and published by the nonpartisan Missouri Economic Research and Information Center 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. Yet the SPM attempts to account only for interstate differences in housing costs.
In short, once interstate differences in the overall cost of living are factored in, it’s obvious that the aggregate poverty rate for forced-unionism states is even higher relatively to that of Right to Work states than the SPM data show.