How Government Unions Affect State and Local Finances

Executive Summary

Over the past half-century, the American union movement has moved into government. Despite highly publicized efforts to curtail collective bargaining powers of government unions in Ohio and Wisconsin, almost all changes to government collective bargaining statutes over the past 20 years have increased, not decreased, the powers enjoyed by government unions.

This Special Report seeks to determine the extent to which unionization has increased the cost of state and local governments using three different econometric methods: (1) synthetic control, (2) regression analysis, and (3) Bayesian analysis. It includes a thorough review of statewide collective bargaining statutes across all 50 states and compares changes in these laws with changes in spending over the past six decades.

Using synthetic-control case studies, we find that collective bargaining significantly increased the cost of government for New York and New Jersey taxpayers, but had statistically insignificant effects in Ohio and South Dakota.

Expanding our analysis to use panel data for the entire country from 1957 to 2011, we find that mandatory collective bargaining increases government compensation, with little offsetting reduction in overall government employment. Instead, total state and local government spending increases by approximately $600 per person, per year. This represents a $2,300 greater annual tax burden on the average family of four.

Bayesian analysis shows an even larger effect, with mandatory collective bargaining increasing the cost of government operations by more than $750 per person, per year. This represents a $3,000 greater annual tax burden on the average family of four.

Across the United States, government unions increased spending by state and local governments by almost $127 billion in 2014, according to our regression results, and by $164 billion, according to our Bayesian results. These cost increases are concentrated in the states that grant the most aggressive powers to union leaders.

Download and read the full study here.

Geoffrey Lawrence

Geoffrey Lawrence

Director of Research

Geoffrey Lawrence is director of research at Nevada Policy.

Lawrence has broad experience as a financial executive in the public and private sectors and as a think tank analyst. Lawrence has been Chief Financial Officer of several growth-stage and publicly traded manufacturing companies and managed all financial reporting, internal control, and external compliance efforts with regulatory agencies including the U.S. Securities and Exchange Commission.  Lawrence has also served as the senior appointee to the Nevada State Controller’s Office, where he oversaw the state’s external financial reporting, covering nearly $10 billion in annual transactions. During each year of Lawrence’s tenure, the state received the Certificate of Achievement for Excellence in Financial Reporting Award from the Government Finance Officers’ Association.

From 2008 to 2014, Lawrence was director of research and legislative affairs at Nevada Policy and helped the institute develop its platform of ideas to advance and defend a free society.  Lawrence has also written for the Cato Institute and the Heritage Foundation, with particular expertise in state budgets and labor economics.  He was delighted at the opportunity to return to Nevada Policy in 2022 while concurrently serving as research director at the Reason Foundation.

Lawrence holds an M.A. in international economics from American University in Washington, D.C., an M.S. and a B.S. in accounting from Western Governors University, and a B.A. in international relations from the University of North Carolina at Pembroke.  He lives in Las Vegas with his beautiful wife, Jenna, and their two kids, Carson Hayek and Sage Aynne.