Higher Prices Don’t Make Workers ‘Wealthier’

A chart of the Lowest Real, Spendable Incomes Per Capita, 2023: Hawaii, California, Oregon, and Massachusetts. All four are forced-dues states.
All the bottom four, and six of the bottom seven, states for purchasing power are forced-unionism.

Real, Spendable Income Higher Per Capita in Right to Work States

For decades, nonpartisan research on interstate cost-of-living differences conducted by government agencies as well as by independent economists has shown a strong correlation between public policies authorizing the termination of employees for refusal to bankroll a union and higher living costs.

The annual interstate cost-of-living indices for 2023 published by the Missouri Economic Research and Information Center (MERIC), a state government agency, are a case in point. 

They confirm that families in the two dozen states that still lack Right to Work laws continue to fork over more money for housing and other necessities of life.

Among the 14 states with the highest cost of living last year, not one has a Right to Work law. But 14 of the 15 lowest-cost states protected employees’ Right to Work in 2023.

When 2023 disposable personal income (personal income minus taxes) data, as reported by the U.S. Commerce Department, are adjusted for differences in living costs, the results show that four of the five highest-ranking states have Right to Work laws. Meanwhile, six of the seven bottom-ranking states lack Right to Work laws.

Overall, the mean cost of living-adjusted disposable income per capita in Right to Work states last year was $59,329, roughly $2,800 higher than the forced-dues-state mean.

Forced Unionism Lowers Business Investment, and That Lowers Living Standards

“No one should be surprised that Right to Work states enjoy a purchasing-power advantage over forced-unionism states equivalent to more than $11,000 a year for a family of four,” said National Right to Work Committee Vice President Matthew Leen.

“As the eminent economist Richard Vedder once explained, ‘Capital moves’ to Right to Work states ‘with a more stable labor environment, and that increases labor demand and, ultimately, incomes and wages.’

“Dr. Vedder is a supporter of Right to Work laws. But his core point that monopolistic unionism is associated with lower business investment in physical capital and R&D is accepted in our time by economists of all stripes, including Harvard’s Richard Freeman, arguably America’s leading academic apologist for Big Labor and its special privileges.

“And there is no known economic theory that explains how lower business investment might lead to higher living standards for workers.”

Deck Stacked by CAP

Nevertheless, a number of academic allies of union officialdom continue to claim that corralling workers into unions really does make them better off. One such effort that has received a significant amount of media attention is an ongoing study for the union boss-funded Center for America Progress (CAP) that was updated this March.

The CAP study stacks the deck in several ways. For starters, it simply ignores the plain evidence showing that cost of living-adjusted, after-tax incomes are higher in Right to Work states than in forced-unionism states, including those with the highest union densities.

Forced-Unionism Apologists ‘Out of Touch With Reality’

Lead author David Madland and his two collaborators even go so far as to pretend the sky-high housing costs borne by residents of forced-unionism stronghold states like California and New York are a benefit rather than a detriment for employees and their families.

Mr. Leen commented: 

“According to the National Association of Realtors, the nationwide median price for an existing home is $387,600, but that figure varies dramatically from state to state.

“In the Golden State, the median is $793,600 — more than double the national average and the highest in the country. Empire State housing is barely more affordable, with a median price of $649,000, higher than 47 other states.

“Exorbitant housing costs in California, New York, and many other forced-dues states stem primarily from costly mandates and bad policies, and they make families worse off, not better off. That’s why families are fleeing those states in droves.

“But if the analysis of Dr. Madland and his cohorts were correct, states that are manifestly inhospitable to the middle class would be ideal places for middle-class families to ‘build wealth’!

“What the CAP study really shows is how far out of touch apologists for forced unionism are with reality.”

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