Recently the Jefferson City-based Missouri Economic Research and Information Center (MERIC) published its latest set of comparative cost-of-living indices for the 50 states. (See the link below.) MERIC’s new indices estimate the average annual cost of living in 2014 for each state. The National Institute for Labor Relations Research has now used these data to calculate average annual costs of living for Right to Work and for forced-unionism states.
Twenty-four states had Right to Work laws protecting employees from federal labor law provisions authorizing forced union dues in 2014. The latest state to pass a Right to Work law, Wisconsin, is counted as a forced-unionism state in the Institute analysis, since its ban on private-sector forced union dues was adopted and took effect just yesterday. In 2014, 26 states lacked Right to Work laws.
The 24 Right to Work states combined had a population-weighted cost of living 5.5% below the national average in 2013. The 26 forced-unionism states combined had a population-weighted cost of living 14.9% 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.) On average, forced-unionism states were roughly 22% more expensive to live in than Right to Work states.
The correlation between forced-unionism status and a higher cost of living is robust. Not one of the 15 highest-cost states in 2014 has a Right to Work law. But 11 of the 12 lowest-cost states have Right to Work laws.
Correlation does not equal causality, but there is a case to be made that compulsory unionism actually 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 on and heavier regulation of businesses, including the real estate and energy businesses. 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, New York, New Jersey, Connecticut and Massachusetts.
But even if it could be established that forced unionism did not cause higher living costs, the strong correlation between forced unionism and higher costs would still be relevant in assessing the economic impact of Right to Work laws. What matters most to employees seeking better lives for themselves and their families and employers seeking good employees is not nominal wages and salaries. It is what those wages and salaries can buy in the location where they are earned.
That’s why, when U.S. Commerce Department data on annual wages and salaries and other types of income in the 50 states are published later this month, honest efforts to make comparisons between Right to Work and forced-unionism states will always be informed by MERIC’s or some other nonpartisan comparative cost-of-living index.