States with strong goverment unions have slower job growth, faster government growth
States with laws giving government employee unions greater power tend to have less economic growth and more government spending growth, according to a recent analysis by Mackinac Center scholars. The degree of public sector unionism is one of a number of theories for what causes some states to grow while others suffer economic decline, one that acquires additional weight thanks to this analysis. Policymakers looking to reverse Michigan's decade-long decline should not ignore the role these laws may play.
Most people in Michigan probably think that government employee unions are an unalterable fact of life, but in fact, nothing in the U.S. Constitution or federal law requires state or municipal governments to engage in collective bargaining with their employees. In fact, public employee unions are a relatively recent phenomenon, dating back only to the 1960s and 1970s.
What people forget is that since "progressive" era reforms of the early 20th century, government employees already enjoy "civil service" protection. This swept away the system wherein government jobs were viewed as patronage plums — whenever there was a change in party control, many public employees found themselves swept out with the losing party.
Civil service protections also make it much harder for government unions to argue that they are needed by workers. Indeed, watching the debacle that is the City of Detroit's fiscal situation — and to some extent, the state's — many here and elsewhere believe that public employee unions actually do a disservice to civil society.
With that as context, my colleagues James Hohman and Paul Kersey created an index to determine which states could be characterized as "strong public unionism" states. This included whether state laws provide for mandatory vs. optional vs. prohibited collective bargaining for government workers, binding arbitration for some or all of them, and Right to Work protection.
They identified 29 strong government union states, and then made comparisons using economic performance and government spending growth indicators. Here are two findings:
Between 2000 and 2008, total employment grew on average by 7.3 percent in states without strong government unions, vs. 4.5 percent in states that do have them. Average state and local government spending (as a percentage of per capita personal income) grew 11.0 percent in the strong union states, vs. 6.9 percent in the rest. The 11 states with the worst economic performances were all strong government union states.
There are numerous limitations, exceptions and footnotes to this, and of course, correlation does not equal causation.
However, when one looks at the clout and effect of public employee unions in political decision-making here and in other strong public union states like California and New York, a causal relationship seems not just plausible, but likely. Just as private unions tend to lower a firm's profits, public unions tend to drain the public purse. And with their livelihoods dependent on flows of taxpayer dollars, public unions lobby and politic hard to protect and expand that flow, and stop any reforms like privatizaton that might divert it.