Twenty-six years ago next month, as state politicians across the nation were raising taxes and curtailing essential services to patch over large and widening budget gaps, a prescient cover story in Forbes magazine identified special legal privileges granted to union officials as a key factor behind manifold fiscal woes.
The article, “Collision Course,” was written by Forbes Executive Editor James Cook. It identified union bosses wielding monopoly control over employees as the “principal culprit behind swollen public payrolls and deteriorating public services.”
Cook passed away in 2002. But were he alive today, he could use the Washington, D.C.-based Tax Foundation’s Facts & Figures 2017: How Does Your State Compare? to demonstrate that his 1991 analysis has held up well.
Table 40 of the latest edition of Facts & Figures draws on the Census Bureau’s “State and Local Government Finances by Level of Government and by State: 2014” and state population data to calculate state-and-local debt per capita for the Fiscal Year (FY) 2014.
Table 40 suggests that forced-unionism New York, with a state-and-local debt per capita of $17,465, is in the worst fiscal shape of all. And the 11 other states with the greatest debt per capita in absolute terms (Massachusetts, Connecticut, Alaska, Illinois, Rhode Island, Washington, New Jersey, California, Colorado, Hawaii and Pennsylvania) also lack Right to Work protections for employees.
Meanwhile, among the 10 states with the least absolute debt per capita, nine (Wyoming, Idaho, Mississippi, Oklahoma, North Carolina, Tennessee, Arkansas, Georgia and Iowa) have Right to Work laws prohibiting the termination of employees for refusal to join or pay dues to an unwanted union. Forced-unionism Montana is the sole exception.
On average the 26 states that still lacked Right to Work protections for employees in 2014 (since the beginning of 2015, Wisconsin, West Virginia, Kentucky and Missouri have all gone Right to Work) had an average per capita state-and-local debt of $10,884, or more than $3400 higher than the average for Right to Work states that year.
To some extent the data cited in the three preceding paragraphs reflect the fact that a dollar in a forced-unionism state typically doesn’t go as far as a dollar in a Right to Work state. Indices calculated and published by the Missouri Economic Research and Information Center, a state government agency, show that in 2014 forced-unionism states were on average 22% more costly to live in than Right to Work states.
But even government debt measured as a share of personal income, which effectively cancels out regional differences in the cost of living, reveals a strong positive correlation between compulsory-unionism status and government insolvency.
In 2014, forced-unionism states collectively had a state-and-local government debt equivalent to 21.8% of their combined personal income as reported by the U.S. Commerce Department that year. That’s a debt burden 23% greater than Right to Work states’.