In U.S. states, are strong public-sector unions correlated with fiscal crisis; if so, why; and what is going to happen here?

Looking at the surface, I don't see a lot of correlation. For instance, Alaska is among the most unionized states in the country and it has a strong budget position (partly due to the oil). On the other hand, its oil buddy Texas has among the lowest unionization and last year it had a huge budget shortfall (this year it has a surplus though). New Hamshire and North Carolina are also in a budget crisis although their workers are not that unionized. On the other hand, Connecticut and Washington are highly unionized and are in budget crisis. Thus, there are no patterns that I could see. http://kff.org/other/state-indicator/state-budget-shortfalls-sfy13/ http://en.wikipedia.org/wiki/Union_affiliation_by_U.S._state This is based on a cursory look. A more detailed research might unearth some patterns.

The fiscal crisis is spending more than we collect. Simple math. This is happening on a federal level and a state level. Very simple. Why? Much more difficult answer. States have massively under and un-funded liabilities. The bargained for, and got sweet . The budgets were not looked at as "Can we afford this now?" No. Unions can be blamed for making unreasonable demands for lavish pensions, but only because they believed unreasonable financial estimates. They were looked at as way out in the future. They were partly based on exaggerated growth figures financially. The growth did not come. The tax revenues did not follow the low or negative growth in these cities. During this time, crime increased, taxes increased and outflow migration of businesses and residents occurred. Jobs leave, people leave. is a fraction of the population size it was a decade ago, but still a very large city—now with areas nearly or actually not inhabited! Even the police won't go into some neighborhoods. On the federal level, the money presses are working overtime to pump out $85B per month with a flat GDP. Why? Partly because of the uncertainty in the business environment (partly due to ). The is not really going down (again, government regulations, EPA regulations, etc) and is only looking better because the worker participation rate is at generationally low levels. That being said, low growth, low employment, coupled with increases in entitlements and more part time jobs created than full time jobs being created is not funding the "welfare state" And stymying . Every year the is raised. Every year more spending is demanded to fill the void from stagnant growth and lack of good jobs! Here are some of my answers with some charts and some data to support this answer. Also see my discussion on Detroit: Will we follow ? Is really a problem? The causes? Why not just raise the ?

It's more a function of the officials who negotiated with the unions. The job of a union leader is to try to negotiate the best deal possible for his or her members. I have criticized unions from time to time, but my wife is a union organizer, my brother is a firefighter, and my parents were both teachers, so I don't think they are the source of all suffering and idiocy. However, unions have made an unholy alliance with some elected officials in the past. This breaks down pretty neatly along party lines. The fact that someone can name some exceptions is exactly the point; there are exceptions, but by and large Democrats favor unions and do what they can to strengthen them, and in turn, unions collect dues from their members (not voluntary donations, but required dues) and a substantial part of that money goes to support the Democratic Party and its candidates. That's not illegal; Democrats I know honestly believe that the workers are best off when they are unionized. They are not up for bid. There has been some misbehavior by union leaders over the years. It's getting much better. They used to murder each other, and now it's mostly the occasional lavish use of union money for offices, cars and trips. But the majority, as with any area, are honest and suffer a reputation that is earned by a tiny minority of miscreants. As Republicans have taken over states and cities in the past few years, they have renegotiated benefits for public unions. Many see this as anti-union, but Democrats find themselves in the same position: it's not a matter of wanting to take away pensions or health benefits -- it's a matter of there being no money. It was either spent on other things (overspending being something that I associate with Democrats as well) or the investments made on the contributions being made to a pension fund came nowhere near what optimistic unions and their public sector counterparts hoped for. It's human nature to be optimistic. I don't believe that any Democratic governor or mayor cynically negotiated benefits in a union contract knowing full well that they could not be fulfilled. Certainly it's tempting to allow unfunded liabilities to grow, because they are in the future. It's always tempting to trade pay cuts today for more retirement income twenty years from now. As Keynes himself said, in the long run, we'll all be dead. So I would buy into the notion that there is a correlation, but I blame the elected officials, not the unions. The union bosses came to work every morning with a duty to negotiate the best possible packages for their members. It seems that in some cases, sympathetic politicians who undoubtedly knew these unions as supporters and even personal friends, signed off on deals that are no longer viable. Keep in mind that people only look like crooks and fools when things go south. Someone who rides a bubble to the top and has a way out is seen as a genius. If we hadn't written so many bad mortgages, maybe employment would be high and much of the financial crisis we're limping through would have been completely avoided. Everyone would have been happy with the union contracts because unfunded liabilities would have become funded through the magic of financial markets.

I think Gary Teal did a great job arguing for why Unions are not the problem, however his argument fails to account for why we chose to give them these great benefits packages in the first place. Consider that median teacher salary is $54K a year thats roughly $10K less than a the median college graduate would earn. They are paid sub-market wages to do what many acknowledge is one of the most important jobs: training our future workforce. Now we have compensated for this low pay with great benefits, basically municipal governments made a bargain with the teacher's union: accept lower pay now in exchange for generous retirement benefits later. It then turns out that these governments cannot afford that deal because of wasteful spending and poor accounting practices. Really it's the unions that got shafted, they should have asked for that money upfront in the form of higher pay. They made the mistake of trusting the people they served. People want good government and they want cheap government. The problem starts when politicians try to give them both at the same time. There is no free lunch and politicians and citizens in municipal governments have found that out the hard way.  Instead of trying to have it both ways lets acknowledge that if you want great schools, hospitals, roads etc. it's going to take some sacrifice. Good government can't be had on the cheap, stop pretending otherwise.