Tuesday, July 07, 2009

Low Union=High Growth; High Union=Low Growth

From 2003 to 2008,the aggregate gross domestic product (GDP), in constant, chained 2000 dollars, for the states with the lowest share of workers under union monopoly control increased by a healthy 17.3%. In these 10 states, as of 2003 4.7% or less of private employees were forced to accept a union as their monopolybargaining agent. Meanwhile, the real GDP of the country as a whole grew by just 12.7%. And in the 10 states with the highest private-sector unionization, aggregate output grew by just 9.9% -- roughly 57% as much as in the lowest-union-density states (see chart above).

At a time when the country is struggling to pull out of a recession, Congress must not pass any legislation to promote union monopoly bargaining, which has a strong negative correlation with economic growth generally and with job growth in particular. Enactment of S.560 (the Senate version of the proposed anti-worker "card check" legislation) or its near equivalent would mean millions more employees hamstrung by wasteful union work rules and slowdowns that destroy good jobs.

Another consequence would be millions of additional workers forced to pay union dues or fees just to keep their jobs. Much of the confiscated cash would be funneled by Big Labor into efforts to elect even more anti-Right to Work, Tax & Spend politicians to Congress. That's why Right to Work members and supporters are preparing for an allout battle to ensure that not just S.560 and H.R.1409 themselves, but all phony card-check 'compromises,' are defeated in Congress this year and in 2010.

~
National Right to Work Committee President Mark Mix

9 Comments:

At 7/07/2009 4:14 PM, Anonymous Lones Smith said...

Another wonderful correlation! I am sure to share it. I just wish this blog (and others) would push for more than correlations, and challenge whether we are seeing causation. If only to make us seem more like introspective academics. For instance, pro union states could be "old economy" states, and "old economy" could be anti-growth. In fact, much as I am averse to unions, my guess is that this is the smarter story here.

 
At 7/07/2009 4:27 PM, Blogger Paul said...

I'm not a big fan of labor, but if you want to be honest about the data you'll have to acknowledge a bias of the methodology. 1) Selection is a effect here. If you have Toyota which has its choice of states to build in where states are otherwise similar, Toyota will choose the low union state. This will bias growth to non-union states, but does not say anything about the effect of unions on aggregate growth.

2) Unions are concentrated in certain industries. There is a good chance of a spurious correlation between state union laws (historic union membership in a state) and growth. Both could be the result of aggregate shrinking manufacturing sectors. Rust belt states with old manufacturing will have slower growth than states without manufacturing. There are plenty of candidates for the decline of the "industrial" or "manufacturing" sector relative to services other than unions.

Sure, unions decrease efficiency, worsened the great depression and have largely lost their function with current labor law. The data you provide isn't telling you what you want it to. You'll need a real model if you want to say something serious about the effects of unions.

 
At 7/07/2009 4:37 PM, Anonymous Robert Miller's boyfriend said...

I wonder if someone could do a study, and find out that states that get huge federal infusions of cash (ie rural states) grow faster than states that have money sucked out of them, such as California and urban states.
Rural subsidies might explain more than unionization, now a minor fraction of the private-sector workforce.

 
At 7/07/2009 4:37 PM, Anonymous Anonymous said...

All Union=No Growth.

 
At 7/07/2009 5:02 PM, Anonymous Anonymous said...

And the 10 states from the Hirsch/MacPherson data base with 2003 private sector unionization of less than 4.7% are:

Arkansas
Arizona
Florida
North Carolina
North Dakota
Oklahoma
South Carolina
South Dakota
Texas
Utah

Residential construction booms gone bust and oil/natural gas booms gone bust(?) are the causative factors.

 
At 7/07/2009 8:32 PM, Anonymous Ralph Short said...

Unions are generally a parasitic organization and no smart enterprising business would want to start a business in a pro union government environment.

All one needs to do to figure that out is look how the UAW sucked the life blood from the automakers and then moved to the taxpayer once the cos. became a corpse.

 
At 7/08/2009 4:24 AM, Blogger 1 said...

"All one needs to do to figure that out is look how the UAW sucked the life blood from the automakers and then moved to the taxpayer once the cos. became a corpse"...

Well as a union member for 33+ years I really can't find any major fault with Ralph Short's comments...

Still there was no mention of federal (and state?) interference, a.k.a. C.A.F.E. standards for instance...

The Heartland Institute noted in 2004 the following: According to Congressional Budget Office (CBO) estimates released on January 5, a federally mandated increase in corporate average fuel economy (CAFE) standards for cars and light trucks would raise average vehicle prices $228, costing consumers an extra $2.4 billion a year and the auto industry another $1.2 billion....

There's also another downside to this federal imposition, more deaths...

Sam Kazman writting in the WSJ noted in his Small Cars Are Dangerous Cars: The death rate in minis in multi-vehicle crashes is almost twice as high as that of large cars. And in single-vehicle crashes, where there's no oversized second vehicle to blame, the difference is even greater: Passengers in minis suffered three times as many deaths as in large cars.

So when its all said and done in the one industry that is/was heavily unionized, the ailing/dying auto industry it isn't all the union's fault...

 
At 7/08/2009 5:31 AM, Anonymous Ralph Short said...

1, I agree with you and in fact have stated before the management of the cos. has to take responsibility as well. If 5, 10 or 15 years they would have taken the strike to rid themselves of the onerous contractual burdens they would have been able to withstand the meltdown, their cars would be better and I submit their market share would have stabilized.

Having said that I also recognize the government, federal and state, always brought pressure on them to accept deals because of the economic impact of a strike. So, at the end of the day the Union sucks the blood out, the government supports that because of elections, agenda, etc., management does not tell them to stuff it and we have what we have today. Those that lent them money are screwed, the taxpayer gets screwed and the union gets 40% or whatever ownership. It is absolutely pathetic.

 
At 7/09/2009 6:44 AM, Blogger 1 said...

"So, at the end of the day the Union sucks the blood out, the government supports that because of elections, agenda, etc., management does not tell them to stuff it and we have what we have today. Those that lent them money are screwed, the taxpayer gets screwed and the union gets 40% or whatever ownership. It is absolutely pathetic."...

Hmmm, this is both laughable and something to cry over because you've pretty much nailed it in my opinion Ralph Short...

Sadly this situation won't end anytime soon considering how many people voted for the Manchurian Cretin who is on yet another 'grovel ready tour' which can't be good for our international standing and economy...

 

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