- The Washington Times - Sunday, March 16, 2008

Labor unions claim to speak for workers. But workers most prosper when free. Although American workers are generally much freer than their European counterparts, the degree of freedom varies across the United States.

Unions once accounted for more than a third of the work force. Today only 12 percent of workers, and 7 percent of private employees, belong to unions. As economic opportunities have increased, American workers have demonstrated they prefer freedom to the regimentation that comes from organized labor.

Organized labor’s preference for regulated rather than free markets has resulted in an emphasis on capturing government employees. Indeed, unions gain market share only where there is no competition, efficiency is irrelevant and outcomes are determined politically.

Unfortunately, unions are working overtime to apply government principles to the private marketplace. Notes Brian Johnson of the Alliance for Worker Freedom (AWF), most “troubling is the recent swarm of policy that seeks to invade workers privacy, carve out specific niches for unions to proliferate and seek to define the labor market with command-and-control legislation.”

These, plus the plethora of proposed market interventions, “undermine the free market and attack employee liberty at every chance.”

However, the United States remains a federal system, so the impact of organized labor varies greatly by state. To measure worker freedom, the AWF recently released the Index of Worker Freedom (IWF).

The Index assesses 10 variables: right to work laws, minimum wage level, union density, paycheck protection for union members, prevailing wage legislation, defined contribution public employee pensions, collective bargaining rights, public sector unionization levels, entrepreneurial activity, and workers compensation.

The consistent measure is economic liberty. Twenty-two states bar mandatory union membership or dues payment, which helps counteract the coercive aspects of federal labor law. Some states set their minimum wages above the national level, further reducing employment of low-skilled workers. Union density matters because, explains Mr. Johnson, “Areas of high union density are often prone to forced persuasion, violence toward nonunion members, intimidation, as well as numerous political and campaign contributions on behalf of organized labor (often conflicting with members’ political views).”

Paycheck protection increases financial transparency and allows workers to prevent unions from using their money for political contributions. The prevailing wage means government wage-setting for public contracts, which costs taxpayers and limits job creation, hurting lower-skilled workers the most.

Defined contribution pensions for public employees allow government to better control costs while providing portable benefits for workers. Bargaining rights for government employees gives unions a stranglehold over the monopoly public sector.

Public sector membership compares unionization levels with that in the private sector. Entrepreneurial activity considers new business creation because, writes Mr. Johnson, “this is an important variable of worker freedom as competitive advantage is becoming more and more grounded in the reinvention of new and different business models.” Finally, the index measures workers compensation premiums, since higher rates consume dollars that otherwise would be available for either increased investment or benefits.

No state scored a perfect 10, but Utah led the way at 9. Colorado, Idaho, Mississippi and South Carolina followed at 8 and an A-. Mr. Johnson gave a B+ to Georgia, Indiana, North Dakota, Virginia and Wyoming, which all scored 7. A number of states, mostly Southern or Midwestern, came in at 6 and 5, 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 1 point out of a possible 10: California, Delaware, Illinois, Massachusetts and New Jersey. Another five states, primarily in the Northeast or Upper Midwest, came in with 2 points. Ten states ended up with a middling 3 or 4 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 should look to the areas where they are deficient. For instance, Utah needs to move to a defined contribution pension for public workers.

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

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