Residents of Forced-Dues States Hurt by Higher Living Costs
Economists who wish to compare living standards among various countries routinely use purchasing power parity (PPP) in their calculations.
As the Economics Online web site explains, PPP is a means of determining the relative value of currencies based on “the quantity of the currency needed to purchase a given unit of a good, or common basket of goods and services.”
PPP thus means equalizing “the purchasing power of two currencies by taking into account . . . cost of living and inflation differences” between the countries that use those currencies.
One problem with PPP rates is that they are difficult to calculate with precision. By comparison, official exchange rates are always available.
But there is a wide consensus that PPP rates, imperfect as they are, enable researchers to make a much more reliable assessment of a country’s relative living standards than do official international exchange rates.
‘Shouldn’t We Be Using’ PPP ‘When We Compare New York To, Say, Illinois’?
Of course, even within a single country with a single currency, the purchasing power of that currency can differ greatly.
Economists who use PPP to compare living standards among various countries should also logically try to control for intranational, regional differences in purchasing power.
Financial journalist and former Reuters editor Felix Salmon, now a senior editor with the television cable and satellite news and satire channel Fusion, once put it this way:
“[I]f PPP makes sense — and it does, in many ways — then shouldn’t we be using it when we compare New York to, say, Illinois? The purchasing power of the U.S. dollar varies widely from state to state — is there some way of incorporating that into statistics?”
Indeed, for many years now, employees considering relocation to another state and businesses seeking to hire capable out-of-state employees have consulted interstate cost-of-living indices that are calculated and published four times a year by the Missouri Economic Research and Information Center (MERIC).
MERIC is a state government agency with no ax to grind on the Right to Work issue.
Its indices factor in housing, food, utilities, transportation, health care and other miscellaneous consumer goods and services.
For nearly a decade and a half, the National Institute for Labor Relations Research has used MERIC’s indices to make apples-to-apples comparisons of wages, salaries, and other forms of income in Right to Work and forced-unionism states.
In 2016, Not One of the 14 Most Costly States to Live In Had a Right to Work Law
MERIC’s annual data for 2016 show that, among the 14 states with the highest overall cost of living last year, not one has a Right to Work law barring the termination of employees for refusal to pay dues or fees to an unwanted union on the books.
But all of the nine lowest-cost states, and 15 of the 17 lowest-cost states, were already Right to Work last year.
(In 2016, 26 of the 50 states protected employees from forced union dues and fees.
This year, Kentucky and Missouri became, respectively, the 27th and the 28th Right to Work states.)
When 2016 disposable personal income (personal income minus taxes) data, as reported by the U.S. Commerce Department’s Bureau of Economic Analysis (BEA), are adjusted for differences in living costs, the results show that seven of the eight highest-ranking states have Right to Work laws.
Meanwhile, six of the eight bottom-ranking states lack Right to Work laws.
Overall, the Institute found that the average cost of living-adjusted disposable
income per capita in Right to Work states last year was $42,814, more than $2400 higher than the forced-unionism state average.
Compulsory Unionism Obviously Isn’t a Formula For Prosperity
National Right to Work Committee President Mark Mix said that no one ought to be surprised by the Institute’s findings.
“The forced-union-dues system foments hate-the-boss class warfare in many workplaces,” he noted.
“It helps Big Labor impose and perpetuate counterproductive and costly work rules.
“And union bosses funnel a large share of the forced dues and fees they collect through this system into the campaigns of Tax & Spend, regulation-happy state and local politicians.
“Undoubtedly, this is an important reason why ‘Tax Freedom Day,’ the day every year when America’s breadwinners have finally earned enough money to cover their entire tax burden and can start working for themselves, came 14 days sooner, on average, in Right to Work states than in compulsory-unionism states this year.”
(See page four of this Newsletter edition for more information about the Right to Work and “Tax Freedom Day, 2017.”)
Mr. Mix observed that it is only logical that, in states where forced union dues and fees are still permitted, workers and other residents would end up with less real purchasing power.
“Cost of living-adjusted U.S. Commerce Department data confirm that’s exactly what happens,” he added
Big Labor Propagandists Ignore or Understate Cost of Living’s Impact
Many statistics regarding incomes in Right to Work and forced-unionism states cited by Big Labor propagandists ignore regional cost-of-living differences completely.
For example, even though the U.S. Bureau of the Census has since 2011 regularly calculated and published state data measuring poverty adjusted for geographic differences in housing costs, Big Labor and its allies never reference these data, which show poverty is lower in Right to Work states than in forced-unionism states.
Instead, forced-unionism apologists publicly mention only another BOC poverty index that simply ignores large interstate variations in the cost of housing and other necessities.
“Union bosses and their allies on university faculties and in pro-Big Labor ‘think tanks’ understand that, if they adequately accounted for geographic differences in living costs, their data would show living standards are higher in Right to Work states,” said Mr. Mix.
“No wonder analyses comparing wages in Right to Work states and forced-unionism states published by the Big Labor-funded Economic Policy Institute routinely ‘under-compensate for the effect of living costs on wages,’ as a 2015 Heritage Foundation paper demonstrated.”
Restoring Employees’ Personal Freedom Is Primary Purpose Of Right to Work Legislation
“There is no half-way plausible economic or moral justification for keeping on the books any federal or state laws that authorize the firing of employees for refusal to pay dues or fees to an unwanted union,” Mr. Mix continued.
“Responsible elected officials should be fighting for repeal of all such forced-unionism laws.
“Passage of National Right to Work legislation [H.R.785 and S.545] would be a major step in the right direction.”
H.R.785 and S.545, introduced in the U.S. House by Reps. Steve King (R-Iowa) and Joe Wilson (R-S.C.) and in the Senate by Sen. Rand Paul (R-Ky.), would eliminate all the provisions in the National Labor Relations Act and the federal Railway Labor Act that authorize forced union dues and fees as a job condition.
“When forced-dues repeal becomes law, private-sector employees in all 50 states will have the freedom to choose as individuals whether or not to join or pay dues to a union, without facing job loss as a consequence of their decision,” Mr. Mix explained.
“Restoring the personal freedom of millions of American employees is the direct and primary purpose of H.R.785 and S.545.
“To do this, it isn’t necessary to add one word to federal law.
“And not just cost of living-adjusted per capita personal income data, but also an array of other major economic indicators of prosperity and growth, indicate that enactment of King-Wilson-Paul would benefit employees economically even as it protected their free association.”