Paychecks That Buy Less Turn Off Employees

On average, forced-unionism states are 28.8% more expensive to live in than Right to Work states. And there is a compelling case to be made that compulsory unionism actually fosters a higher cost of living.

Forced Unionism and Higher Cost of Living Go Hand in Hand

A few weeks ago, the Jefferson City-based Missouri Economic Research and Information Center (MERIC), a state government agency, published its latest update of comparative state cost-of-living indices, covering 2021 as a whole.

As MERIC explains on its web site, it “derives the cost of living index for each state by averaging the indices of participating cities and metropolitan areas in that state.”

(The city/metropolitan area indices are derived from an ongoing nationwide survey conducted by the nonpartisan, Arlington, Va.-based Council for Community and Economic Research.)

The MERIC indices released early this year estimate the average annual cost of living for each state, as well as for the District of Columbia and Puerto Rico.

The National Institute for Labor Relations Research has now used these data to calculate average 2021 costs of living for Right to Work states and forced-unionism states.

Ten of the 11 Lowest Cost-of-Living States Protect the Right to Work

Twenty-seven states have already adopted and implemented Right to Work laws protecting employees from federal labor law provisions authorizing forced union dues and fees as a job condition.

The 27 Right to Work states combined had a population-weighted cost of living 5.8% below the national average in 2021. 

The 23 forced-dues states combined had a population-weighted cost of living 21.3% above the national average.

Consequently, as a group, forced-unionism states are 28.8% more expensive to live in than Right to Work states.

(MERIC itself does not weigh states based on population size in calculating its indices. For that reason, the national average of population-weighted states does not equal 100.)

The correlation between forced-unionism states and a higher cost of living is robust. Not one of the 15 highest-cost states in 2021 has a Right to Work law. But 10 of the 11 lowest cost-of-living states protect employees’ Right to Work.

John Kalb, vice president of the National Right to Work Committee, commented:

“There is a compelling case to be made that compulsory unionism fosters a higher cost of living. Union officials wielding forced-dues privileges funnel a large share of the conscripted money they reap into efforts to elect and reelect politicians who favor higher taxes and heavier regulation of business.

“And many economists credibly argue that excessive government regulation is a major factor behind high housing, energy and other costs in forced-unionism states like California, Oregon, New York, Massachusetts, and Connecticut.

“Moreover, decades of academic research by economists such as Thomas M. Carroll and Richard J. Cebula have shown that one side benefit of Right to Work laws is that they help reduce the cost of living in jurisdictions where they are in effect.” 

Employees Care Most About What Their Paychecks Can Buy

Mr. Kalb continued: “Ignoring the findings of economists like Drs. Carroll and Cebula, Big Labor apologists sometimes feebly try to argue forced unionism doesn’t cause higher costs. 

“But there is no getting around the economic significance of the strong correlation between forced unionism and higher costs.

“What matters most to employees seeking better lives for themselves and their families, and employers seeking to attract and retain good employees, is not nominal wages and salaries.

“It is what those wages and salaries can buy in the location where the employees and their families live.

“That’s why honest efforts to make comparisons of annual wages and salaries and other types of income in Right to Work states versus forced-unionism states must always be informed by MERIC’s or some other nonpartisan comparative cost-of-living index.

“For example, in 2020, the real average annual compensation per private-sector employee in Right to Work states was more than $1,800 higher than the average per employee compensation in forced-unionism states, using MERIC’s indices to adjust U.S. Commerce Department data for regional cost-of-living disparities.

“Unfortunately, income data cited by Big Labor propagandists often do not factor in cost-of-living differences at all.

“And even when they are incorporated, cost-of-living differences are grossly and arbitrarily understated. Analyses published by the Big Labor-founded Economic Policy Institute, for example, do not fully account for how workers in lower-cost states need less money to purchase the same goods than workers in high-cost states.”

Mr. Kalb commended the National Institute for Labor Relations Research for its tenacious efforts to set the record straight regarding Right to Work states, forced-unionism states, and real, spendable income.

This article was originally published in our monthly newsletter. Go here to access previous newsletter posts.

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