Political Economy

The Relationship between Union Membership and State Budget Deficits

Feb 21 '11

bq. 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”:http://www.tnr.com/article/politics/83829/wisconsin-public-employees-walker-negotiate?page=0,1 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”:http://www.cbpp.org/cms/?fa=view&id=711 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”:http://www.bls.gov/news.release/union2.t05.htm).

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


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.