April 6, 2010 10:38PM

Unions and State Government Management

State and local governments that have high levels of unionization have a harder time efficiently managing their finances and other aspects of their operations. At least, that's my argument. The other day, I showed that states with higher levels of debt had higher levels of unionization. The statistical correlation was very strong.

Today, let's look at the quality of state management, as measured by a major report by the Pew Center on the States. The Pew report gave letter grades to the 50 state governments for management of finances, employees, infrastructure, and information. Pew also provided an overall state score.

I've converted the Pew overall state government management scores to numbers from 1 to 10 and plotted them against state unionization rates ("10" is the best management score). The chart below shows that as the share of a state workforce that is unionized grows, the overall quality of state management falls, as measure by the Pew scores. The chart shows the raw data in blue dots and the statistically fitted line in pink. 

The bottom line: public-sector unionization is not a good idea, as it apparently leads to lower-quality government management and to higher debt levels. As such, I've argued that collective bargaining in state and local government workforces should be banned.

(Details: R-square at 0.12 indicates that unionization explains only a small share of management quality, but the F statistic at 6.3 and the t-stat on the management variable of -2.5 indicate that the regression is quite strongly statistically significant. Note that the unionization variable is the union share in state and local governments, but the Pew data regards only the states. Thus, I'm assuming that my unionization variable is a reasonable proxy for state-level unionization.  Thanks for data help from Amy Mandler )

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