The Public Policy

Union Dues and Don’ts

Here's a handy new way to measure the freedom of American workers.

By 2.11.08

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In their heyday, Unions accounted for more than one third of all jobs in the American workforce. Today, organized labor plays a much smaller role in our open, competitive economy. Only 12 percent of workers, and seven percent of private employees, belong to unions. Why? Because as economic opportunities have increased American workers have preferred freedom to the regimentation that comes from organized labor.

That's the big picture, but the details matter. The U.S. remains a federal system, so the impact of organized labor varies greatly by state. To measure worker freedom, the Alliance for Worker Freedom recently released the Index of Worker Freedom (IWF).

The Index relies on ten variables which all measure economic liberty. They are (1) right to work laws, (2) minimum wage level, (3) union density, (4) paycheck protection for union members, (5) prevailing wage legislation, (6) defined contribution public employee pensions, (7) collective bargaining rights, (8) public sector unionization levels, (9) entrepreneurial activity, (10) and workers compensation.

Some of those indices deserve fuller explanation. Twenty-two states bar mandatory union membership or dues payment, which helps counteract the coercive aspects of federal labor law, and high minimum wage levels can drive up unemployment for low skilled workers.

Union density matters because, as the Alliance for Worker Freedom's Brian Johnson explains, "Areas of high union density are often prone to forced persuasion, violence toward non-union members, intimidation, as well as numerous political and campaign contributions on behalf of organized labor (often conflicting with members' political views)."

Prevailing wage laws mean government wage-setting for public contracts, which costs taxpayers and limits job creation, hurting lower-skilled workers the most. Public sector bargaining rights for government employees give unions a stranglehold over the monopoly public sector. And defined contribution pensions for public employees allow government to better control costs while providing portable benefits for workers.

NO STATE SCORED a perfect ten but Utah led the way at nine. Colorado, Idaho, Mississippi, and South Carolina followed at eight and an A-. Johnson gave a B+ to Georgia, Indiana, North Dakota, Virginia, and Wyoming, which all scored seven. A number of states, mostly southern or midwestern, came in at six and five, winning a B or B-, respectively.

At the other end of the spectrum, six states scored a perfect zero, earning a F: Connecticut, Hawaii, Minnesota, New York, Pennsylvania, and Rhode Island. There were five D's, with the relevant states receiving just one point out of a possible ten: California, Delaware, Illinois, Massachusetts, and New Jersey. Another five states, primarily in the northeast or upper midwest, came in with two points, and ten states ended up with a middling three or four points.

The states at the bottom obviously have much to do to improve their status, as well as the economic environment for their citizens. But even the best states might improve. Utah could look into defined contribution pensions for public workers, for instance.

As one moves down the list the opportunity for improvement obviously increases. Unfortunately, the political obstacles to reform remain significant.

This index matters because it measures more than individual liberty in the abstract. That liberty has practical consequences, including increased prosperity and, interestingly, population growth. Although it is hard to prove causation, there is clear and suspicious correlation between higher IWF rating and increased population. A fair assumption is that business creation and entrepreneurial investment flow to freer states and increased economic opportunity draws workers in its wake.

Labor unions claim to speak for workers, but workers most prosper when they are free. States that respect the right of workers to join unions but limit the ability of those unions to strong arm people into joining are doing the right thing. It's also the smart thing to do.

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About the Author
Doug Bandow is a senior fellow at the Cato Institute. A former Special Assistant to President Ronald Reagan, he is the author and editor of several books, including The Politics of Plunder: Misgovernment in Washington (Transaction).