The Numbers on Public Sector Unions and State Debt

In today’s Washington Examiner, David Freddoso outlines the close correlation between state government debt and public sector unions. As he notes, “the states with the highest per-capita debt all have something in common: Robust public-sector unions that have, over the years, cut sweetheart deals with politicians — usually, but not always, Democrats.”

There’s a good reason for that. Public sector unions receive considerable benefit from participating in the political process. In effect, they are working to elect their bosses. This in turn gives politicians an incentive to keep their union supporters happy.

Meanwhile, the costs of public employee rents (compensation above what they would earn in an open, competitive market) are dispersed widely to be borne by the population at large. As a result, public sector unions’ concentrated benefits give them a much greater incentive for involvement in the political process than diffuse costs give the rest of the population.

Now, however, there’s a new force coming into play in this scenario: Weakening state finances. The correlation is clear and voters are starting to notice, as the numbers tell the story.

[T]he states coalesce into three main groups:

  • Among states whose government workers are less than 40 percent unionized, median per capita state debt is $2,238.
  • Among states with between 40 and 60 percent of their government workers in public sector unions, the average debt is $3,609.
  • Among states with more than 60 percent of the government workforce unionized, the average (median) per capita debt is $6,380.

As you keep an eye on the fiscal collapse of California, and New Jersey Gov. Chris Christie’s (R) efforts to rein in the unions’ power next year, bear in mind that this is quickly becoming the biggest fiscal issue in America today.

I couldn’t agree more. Yet state finances look even worse when considering the dire situation of many states’ public employee pensions.

So what to do? Freddoso cites the Cato Institute’s Chris Edwards, who recommends that, “states should follow the lead of Virginia and ban collective bargaining in the public sector.” Of course, getting there won’t be easy, but facing financial collapse could well force what once seemed politically nigh-impossible, as taxpayers decide they’ve had enough.

For more on public sector unions, see here and here.

UPDATE: Chris Edwards also writes about unions and government debt today at Cato@liberty.