The Relationship between Union Membership and State Budget Deficits

by John Sides on February 21, 2011 · 20 comments

in Political Economy

Contrary to Walker’s assertion, there is no direct correlation between public-sector collective bargaining and yawning state budget deficits. According to data gathered by the Center for Budget and Policy Priorities, while Wisconsin projects a state budget deficit of 12.8 percent for FY 2012, North Carolina, which does not allow government workers to bargain, faces a significantly higher deficit: 20 percent.

That is from Joseph McCartin’s piece in The New Republic on the current battle in Wisconsin. I wanted to look at the relationship between unions and deficits more systematically. Like McCartin I used the CBPP data on budget deficits, although I focused not on the projected 2012 deficits but on the 2011 deficits (see Table 4 of the report). I do not know of readily available data on public-sector collective bargaining or on public-sector union strength, so I used the percent of employed people who are members of unions (from this BLS report).

Here is the graph, with a non-linear fit line estimated via lowess.

unionsanddeficits.png

There is not much of a systematic relationship. The fit line bumps and wiggles but is essentially flat. The bivariate correlation is 0.19, with a p-value of 0.21. Based on these measures, states with larger unionized workforces do not have larger budget deficits.

If someone knows of better data on unions, please send it along. And, since this is an area in which I am mostly ignorant, cites to scholarly research are also welcome.

{ 18 comments }

TheRef February 21, 2011 at 9:46 pm

Here is state by state data on which states allow collective bargaining with their employees :
http://www.naen.org/CB%20Systems/ECS%20State%20CB%20Policies.pdf

It might allow you to make a better chart.

frankcross February 21, 2011 at 9:48 pm

I don’t think the critics claim is specifically about deficits, it’s about spending. The critics would concede that some states, with unions, simply impose higher taxes to make up for their added costs from unions. What’s the association with per capita spending?

Matt February 21, 2011 at 9:59 pm

The Cato Institute has a post using total state/local debt load by state as the DV:
http://www.cato-at-liberty.org/unions-and-government-debt/

I am not sure about the quality of their data, but this is probably a better DV if health and pension liability is the hypothesized mechanism.

Justin February 22, 2011 at 1:27 am

Pew has information on Pension liabilities by state:

http://www.pewcenteronthestates.org/report_detail.aspx?id=56695

I’d imagine that public employee unions have a greater effect on those than they do on the budget as a whole.

Jon February 22, 2011 at 9:13 am

Maybe this will help:

http://www.unionstats.com/

chris February 22, 2011 at 9:40 am

The big outlier is Nevada, and it’s obvious where that came from: their biggest city is Vegas, and the recession crushed the tourism industry. Who can afford to go to Vegas nowadays? Only Wall Street bankers, and they can gamble for higher stakes by staying home.

Conn Carroll February 22, 2011 at 10:08 am

this chart shows all union membership. Brooks article was on govt union membership. Big difference

MKS February 22, 2011 at 1:46 pm

How would you like a union for military personnel to bargain collectively?

This is essentially the same thing.

No employee union, whose members are paid directly by tax money, should be allowed to bargain collectively, regardless of the economic metrics.

It’s just not right.

Mark B. February 22, 2011 at 1:56 pm

I just coded the data “TheRef” posted to distinguish between states with no collective bargaining law and states with some sort of law (0=no law, 1=anything else) and used this to predict the 2011 shortfall as a percentage of budget. I have no idea if this coding is appropriate, but it should provide a rough estimate.

While the relationship was positive (like the r coefficient in the post) it explained less than 2% of the variance (R^2 = .017). This is actually less explained variance than that explained in the above post (.19*.19 = .04), though this could be due entirely to the linear compared to categorical nature of the predictors.

Just to note, the unstandardized beta was 3.08.

Joel February 22, 2011 at 2:16 pm

“not right” according to whom, MKS?

even engaging this question is to cede the answer to another: is the cheapest government the best government?

for my (tax) money, i’d rather see a government staffed by people who are well-qualified and happy with their work. so that they are both motivated and qualified to do a good job.

you get neither by turning the government into a burger-flipping operation.

ST February 22, 2011 at 2:18 pm

How would you like a union for military personnel to bargain collectively?

I’d be fine with it if it ensured better treatment for our veterans and military families.

No employee union, whose members are paid directly by tax money, should be allowed to bargain collectively, regardless of the economic metrics.

While we are at it, can we ban political contributions from any corporation which takes government contracts?

Steve Roth February 22, 2011 at 3:23 pm

Funny, I came across the same data set on union membership by state the other day, charted it against GDP/capita.

Pretty strong positive correlation (.5): higher union membership, higher GDP/capita. (Or the other way around…)

http://www.asymptosis.com/do-unions-kill-prosperity.html

Jared February 23, 2011 at 7:40 am

I agree with what a couple others have pointed out, the claim is that public sector union membership collective bargaining is correlated with budget deficits. Your data answer a different question.

It’s not even just how many public sector union members there are, it’s whether or not the degree of their collective bargaining relates to the state budget deficit. You need widely different data to ‘disprove’ that. The link someone posted to the Cato Institute is closer to addressing the question but even then it’s something different.

Anyway, your results are interesting, they just don’t do anything to counter Gov. Walker’s claims (that means his claims might or might not be true; it would be interesting to see the data, if they exist, upon which he bases his claims).

Stewart F Bush February 23, 2011 at 1:36 pm

Okay, so their may be other data out there that would be more corralative in one direction or the other. But, while the data presented at the beginning of this discussion says there in no significant correlation either way, it indicates that Gov Walker is unlikely to be able to back up his assertions relative to public-employee unions being the cause of high state debt and/or deficits. The citizens of Wisconsin should demand that he produce evidence to back his assertions – and those of the Koch brothers – his handlers.

Jackie February 23, 2011 at 2:26 pm

Can you post the graph for the public sector states only you made with the info from @TheRef?

Nina Johnson February 23, 2011 at 5:09 pm

Obviously not an accusation, but this exact analysis was already done on another blog a couple of weeks ago:

http://shankerblog.org/?p=1850

Reed1gm February 24, 2011 at 3:37 pm

frankcross posted a link to the Cato institute where they seem to have the same data only unmarked.

As far as I can tell the only difference seems to be that they have drawn and upward pointing line rather than your lumpy flat line.

mad one February 24, 2011 at 11:55 pm

MKS,
You cannot compare the two (military and public employees). When a person joins the military s/he willingly gives up certain rights and freedoms. This is most certainly not the case for a civil servant, a trash collector, or a school teacher.

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