April 5, 2010 1:59PM

Unions and Government Debt

In a recent bulletin, I argued that public‐​sector unions impose various costs and burdens on state and local governments. Here is some more evidence.


The chart below shows a scatter plot of the union shares in state/​local government workforces and state/​local government debt levels as a share of state gross domestic product. Each blue dot is a U.S. state.


The variables are correlated — as the union share increases, a state tends to have a higher government debt load. The chart shows the fitted regression line in pink dots (R‑square=0.27; F‑stat=18; t‑stat on the union share variable=4.2).


The correlation is likely caused by the fact that unionized government workers are powerful lobby groups that push for higher government‐​worker compensation and higher government spending in general.


(Thanks to Amy Mandler for data help and Andrew Biggs for suggestions. Andrew’s work on state debt is here).

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