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The cost of public unions

Absent the cost of volatile food and energy crises, we are told that inflation in the US is under control. This is probably true, as the cost of many goods and services has come down or stayed the same over the last few years.

Here is the problem. The cost of government, in regulation, taxation, debt, and overall spending, has climbed dramatically over the last few decades. While there are many drivers of this costly growth in government, a recent study shows that public unions are one of the primary cost multipliers.

The huge cost of public unions

Tenured, well-paid and politically powerful — all would suggest a link between union concentration and the size and cost of government. My study tested this hypothesis, and over the period of 2003 to 2010 found that a 10% increase in public union membership expands government by as much as 4.25%.

The effect of this relationship on taxpayers is obvious, but there’s also a clear effect on a state’s business climate. Business owners small and large must navigate the higher taxes and debt along with the regulatory maze and Escher-like tax codes favored by government bureaucracies.

Chief Executive magazine publishes an annual survey of 650 CEOs on the best and worst states in which to do business. All 50 states are evaluated on metrics like taxes, regulation, quality of the workforce and living environment (where 1 is best and 50 is worst).

I compared these rating to public union density, yielding an unsurprising conclusion: Expanding union memberships worsen business climates.

States where union membership was highest (New York, Rhode Island, New Jersey, Connecticut, Hawaii, Minnesota, Massachusetts, Michigan, Washington and California) averaged 43.4 on the business climate index; the states with the least union concentration (North Dakota, Texas, Idaho, Louisiana, Arkansas, Georgia, Mississippi, South Carolina, Virginia and North Carolina) averaged 13 on the business climate index.

Public unionism trends should be a concern for those interested in creating job opportunities outside of government, but also to union members, since they rely on businesses, their employees and customers to pay for the very government they are so expert in expanding.

Public Unions don’t provide public services, they merely make providing services more expensive. This is particularly true in education, where technology could lead a steep cut in the cost of educating a child. Instead, education is one of America’s worst cost drivers – an expensive bureaucracy delivering a mediocre (suburbs) or outright bad (urban) product.

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1 Response to "The cost of public unions"

  1. Comment by Republican Professor on August 28, 2012 at 1:44 pm said:

    Unions provide employees with fair and equitable rules against arbitrary and capricious decision making from political appointees, administrators and school boards. It is the politicians who over regulate and create such a mess. Can we expect the people who created this mess to fix it?

    We have failing schools because they are labeled to fail. Politicians and bureaucrats have forced career education out of the schools. We require algebra classes and then kids give up. One teaching method is approved by the state board of education and teachers are certified to that standard.

    Picking on teachers won’t solve the problems.