Cost of Living-Adjusted, After-Tax Annual Income Per Capita $2900 Higher in Right to Work States Than in Forced-Unionism States

As Marquette University associate professor Andrew Hanson (pictured) and fellow economist Zackary Hawley pointed out in a commentary they published late last week, the real value of a dollar varies dramatically around the country. But Big Labor propagandists routinely understate or ignore regional cost-of-living differences when they are attacking Right to Work laws. Image:

An ever-growing mountain of scholarly research and countless Americans’ personal experience confirm that nominal income per capita, unadjusted for regional differences in cost of living, is quite misleading as a gauge of living standards within a state.

Just this past week, Dr. Andrew Hanson, an associate professor at Marquette University, and fellow economist Zackary Hawley, an assistant professor at Texas Christian University, highlighted this point in an op-ed calling for reform of the federal Earned Income Tax Credit.  (See the link below for more information.)

As Hanson and Hawley noted, the cost of feeding a family in Boston, Mass., is 53% higher than it is in Jackson, Tenn.  Overall, a dollar in Harlingen, Texas, is worth nearly 2.7 times as much as a dollar in New York City.

Union officials and other opponents of Right to Work laws know as well as anyone else that compulsory-unionism states like Massachusetts, New York, California and New Jersey are far more expensive than the national average. But they routinely downplay, or even try to pretend out of existence, regional disparities in the cost of living when they are attacking Right to Work laws.

The fact is, nonpartisan analysts such as the Missouri Economic Research and Information Center (MERIC), a state government agency, consistently find that compulsory-unionism states as a group have a substantially higher cost of living than do Right to Work states as a group.

In 2015, 25 states had Right to Work laws protecting employees from federal labor-law provisions authorizing forced union dues and 25 states did not. The 26th Right to Work law, in West Virginia, was not adopted until this year, so it is counted as a forced-unionism state for the purpose of analyzing 2015 cost-of-living data.

Last year, the 25 Right to Work states combined had a population-weighted cost of living of 94.2, or 5.8% below the national average.  The forced-unionism states combined (excluding New Mexico, for which MERIC was unable to assemble annual 2015 cost-of-living data) had a population-weighted cost of living of 117.8, or 17.8% above the national average.  (MERIC itself does not weigh states based on population size in calculating its indices. For that reason, the national average for population-weighted states does not equal 100.)

This week, the National Institute for Labor Relations Research adjusted 2015 disposable income in the 50 states as reported by the U.S. Commerce Department on March 24 for cost of living by using MERIC’s annual cost-of-living indices for 2015.

The Institute found that the average cost of living-adjusted disposable income per capita in Right to Work states last year was $41,112, $2900 higher than the forced-unionism state average. All of the eight highest-ranking states (Iowa, Kansas, Nebraska, North Dakota, Oklahoma, Texas, Virginia and Wyoming) have Right to Work laws on the books. Moreover, seven of the eight bottom-ranking states for cost of living-adjusted disposable income per capita lack Right to Work laws.

Adjust the EITC for cost of living – R Street Institute