Tuesday, May 23, 2017

Right to Work Laws Increase Wages

 The academic field of industrial relations is, as I pointed out last year, biased in favor of monopolistic unionism and regulation so that much industrial relations research amounts to partisan advocacy, and the claim that real disposable income is higher in forced unionism states is a case in point.

Advocates of forced unionism claim that nominal per capita income is lower in right to work states than in forced unionism states.  They then make a leap of false logic: They claim that right to work laws reduce real wages.

One frequent and major omission from labor research is an adjustment for state or local differences in cost of living.  The cost of living in a forced unionism state like California is 53.4% higher than in a right to work state like Indiana.  On average, the cost of living in the 24 forced unionism states[1] is 21.9% higher than in the 26 right to work states.  (The data cited here and below are not weighted for differences in state population size.)

While nominal per capita disposable personal income is significantly higher in forced unionism than in right to work states ($45,595 versus $39,914), when I apply an index of the cost of living in each state, the cost-of-living-adjusted disposable personal income is higher in right to work states ($42,450) than in forced unionism states ($40,140). The 2016 interstate cost of living index is published by the Missouri Economic Research and Information Center.

In order to assess why real after-tax purchasing power per capita is roughly 6% higher in right to work states than in forced unionism states, it is necessary to consider several important demographic differences between the two groups of states.

Although the mean populations of the forced unionism and right to work states are not terribly far apart (6.9 versus 6.0 million), the forced unionism states tend to be more urban.  The average size of the largest city in the right to work states is 527,800, but it is 1,038,500 in the forced unionism states.  Several large forced unionism states such as California, New York, and Illinois skew the mean.

Today, large cities like Los Angeles, San Francisco, Chicago, Boston and New York have highly educated workforces, but their college-educated populations have grown relatively slowly in recent years. The demographic evidence indicates the primary reason cities like the Big Apple are now much more educated than the U.S. average is massive out-migration of people who do not hold at least a bachelor’s degree.

One reason why forced unionism states are relatively attractive to the highly educated is that high-status service firms such as law, advertising, high-tech, and investment banking firms are found mostly in large cities.  (There is evidence indicating such high-status service industries are now, as other economic sectors like manufacturing have already done, shifting to right to work states, but the shift for high-status services remains today only at an early stage.)  The centralized urban settings that are, at present, more commonly located in forced unionism states reduce interest groups’ costs of organizing; that is, large-city settings facilitate successful lobbying by special interests. For instance, centralized urban settings reduce the cost of travel to group meetings and to political officials’ offices.  The concentration of highly educated workforces residing in forced unionism states and a heavier labor regulation load in forced unionism states may skew real wage levels, distorting comparisons of right to work and forced unionism states over and above the cost of living adjustment.

Specifically, the percent of the 25-to-44-year-old population with a BA or greater is 34.0% in the forced unionism states and 28.0% in the right to work states. Moreover, the right to work states have less labor market regulation (excluding forced unionism) as measured by an index of labor market freedom published by William P. Ruger and Jason Sorens of the Cato Institute.  Education levels are higher and labor market regulation is more burdensome in forced unionism states, and these factors may affect disposable income, including wages.

To examine how those factors affect disposable income, I used a technique called multiple regression analysis that enables one to control for the effects of competing explanatory variables.  I included state-level measures for exports of manufactured goods per capita, overall state population, the population of the largest city, the percentage of 25-to-44 year olds with BAs or higher, labor market freedom not counting right to work laws (as measured by the Cato Institute), and the presence of a right to work law.  I also included controls for the states of New York, California, and Virginia.  I included Virginia because it is a right to work state with a large segment that works in the District of Columbia, which is not a right to work venue.

Of these variables, two rose to the level of statistical significance: the presence of a right to work law and the percentage of 25-to-44 year olds with BAs. Right to work laws raise cost of living-adjusted wages by $4,290, controlling for other kinds of deregulation, workforce education, and the other factors.  Other kinds of labor deregulation are not as important as right to work laws in improving per capita disposable personal income.  The only factor that has a greater effect is the education level.

[1] Since 2016 income and cost-of-living data are being cited, Kentucky and Missouri, which adopted their Right to Work laws only this year, are counted as forced unionism states here.

Tuesday, May 9, 2017

La La Land

I just saw La La Land, which is one of the best musicals ever.  Looking at the AFI  rankings, I would say that it as number four, below Singin' in the Rain, West Side Story, and The Wizard of Oz.




The film is about careers. Musicians and actresses are in among the most competitive fields, but many lines of work involve the setbacks in the story of Sebastian (Ryan Gosling) and Mia (Emma Stone).  This is the first HR musical.  

Several of the great musicals of the mid-twentieth century, such as Singin' in the Rain and A Star Is Born, were also about entertainment careers, but none had the realism of La La Land.  Besides the Academy Award-winning acting of Emma Stone, music of Justin Hurwitz, and direction of Damien Chazelle, part of the film's appeal is its realism about 21st century American careers and the trade-offs that many Americans make.

"Someone in the Crowd," posted above, is a paean to networking, which I have discussed with my students for 26 years. Business values have become so infused in our culture that they have become the subject of our best art, just as heroic valor was the subject of the best classical art. 

Can College Students Learn to Disagree?

My op-ed “Can College Students Learn to Disagree? The Importance of Contrasting Ideology with Prudence” just came out in Frontpagemag.  It contrasts  recent experiences with my speaker program at Brooklyn College and the Mill Series at Lafayette College with the recent riots at Berkeley and elsewhere.

My friend and coauthor Dan Klein just emailed and mentioned that I mix up Karl Polanyi with Michael Polanyi.  The republic of science concept was in Michael Polanyi's article.  
Dan suggests that Russell Kirk's objection to ideology is misguided. Dan suggests using "fanaticism," "dogma," or "foolishness" in place of "ideology." Dan points out that we libertarians are as ideological as leftists.

I agree with Dan in terms of political tactics, although I don't think that colleges should play an ideological role.  There should be some effort to reflect the spectrum of views in American society.  The claim that "science is settled" is most often code for insistence on left ideological positions that are not only not settled but nonsensically tendentious.  

Universities' substitution of ideology for prudential debate will end in their diminished role, especially if the Republican approach proves to become more economically successful than the Democratic. 

With respect to politics, the ideological approach is more tactically effective than the conservative approach, which is why after many decades of both conservatism and leftism, the nation has changed just as the leftists have hoped: in  the direction of socialism. The conservatives have lost every step of the way.  Part of the reason is their rejection of libertarianism, without which they lack the numbers to win elections.  The Trump administration may overturn some of the Obama administration's gaffes, but he is unlikely to leave a legacy of an opposing ideology. In that he is like the Tafts, Goldwater, and Reagan.
The error of conservatism is that compromise inevitably leads to the end toward which an opposing party with a consistent, unitary aim favors.  Conservatism only works if there is a level playing field with diverse interests that counterbalance each other. Instead, America has a soft socialist progressivism that aims in one direction, with every other interest counterbalancing each other and compromising with each other. 

The result is that the one interest with a consistent, unitary aim wins over time, and the party or parties that are conservative and believe in compromise and gradualism lose  over time.  The approach of National Review and other conservatives to vote for the lesser evil in time leads to the greater evil anyway.  At some point socialism needs to be overturned with radical, ideologically motivated steps. 

Wednesday, April 26, 2017

My Afternoon at Lafayette College

Professor Brandon Van Dyck and his student Abdul invited me to speak at Lafayette College as part of their Mill lecture series.   About fifty students and several faculty members attended my talk, and students both in favor of and opposed to political correctness were in the room and spoke reasonably and frankly.   It is to  Lafayette’s credit that it has allowed Professor Van Dyck to initiate the program, although I am told that some of the faculty have attacked it.  One of the points that Professor Van Dyck and others made during the discussion is that some professors at Lafayette have criticized the program and its speakers without attending any of the lectures.        

My topic covered a combination of the Langbert, Quain, and Klein article “Faculty Voter Registration in Economics, History, Journalism, Law, and Psychology,”  which appeared in Econ Journal Watch last year, as well as some recent findings on which I’ve been working.  The recent findings concern liberal arts colleges, which I’m starting to conclude have more variance in their partisanship than do research institutions but for the most part are as one sided as the social science departments of research institutions.

I found it gratifying to meet a number of conservative students at Lafayette who question the left orientation of their education, but I found it even more gratifying that several left-oriented students attended the talk and were willing to debate with me and with Professor Van Dyck.

Students who defended colleges’ left orientation raised these points:

                1. In research on faculty voter registration, nearly half the population is either not registered or not affiliated with a party, so nonresponse threatens the validity of the Langbert, Quain, and Klein findings.

                2. Students who protested Charles Murray’s appearance and other conservative speakers’ appearances at Middlebury College and elsewhere have the right to protest their institutions’ allowing such speakers to appear because the institutions are private, and the students have the right to see that their tuition money is used in ways of which they approve.  Moreover, Herrnstein and Murray’s book The Bell Curve is racist.

                3. The one-sidedness of faculty voter registration does not matter because left-oriented professors can fairly depict both sides.

                4. Republicans are often opposed to science, and many question the anthropogenic global warming hypothesis.

Nonregistration as a Threat to Validity

First, although the research I’m doing is archival and not survey based, the problem of nonregistration parallels that of survey nonresponse. 

As this article by the American Academy of Political and Social Science says, nonresponse threatens the validity of most social science survey work. As I pointed out to the student,   left-oriented observers raise this issue with respect to this research more frequently than they do with studies done byNeil Gross, studies done to support left-oriented positions, or neutral studies, such as those of the US Census.  I have never heard a news reporter comment on the nonresponse rate for the unemployment statistic survey, which in most years is four or five times greater than the unemployment rate.  The nonresgistration rate in our research is less than the proportion that we have found to be registered.

That said, since all social science survey research is threatened by nonresponse, it is important to triangulate or to find multiple methods of measuring the same variable.  Studies of the left orientation of faculty have included opinion surveys, which of course also suffer from nonresponse but a different kind of nonresponse.  As well, both opinion surveys and voter registration studies of faculty political affiliation are being done on multiple kinds of samples.  The different forms of studies do not find appreciably different results. 

As results from different kinds of studies and from different kinds of samples accumulate, the results become more certain and better understood.  My point is that virtually no survey work ever done does not suffer from nonresponse, and nonresponse is important only if it correlates with the findings. If there is no correlation between nonresponse and partisan affiliation, then nonresponse has no importance to the study.  If there is a correlation that is strong enough to change the findings, then we may fairly ask why the findings do not appreciably change when different populations are surveyed and different methods are used.

Charles Murray

With respect to the second point, which concerns Charles Murray’s not being allowed to speak, colleges should be forums for open debate.  They are not ideological or political advocacy organizations that permit only one viewpoint.  The left protested the McCarthyism of conservative politicians because McCarthyism did not permit the views of communists to be openly expressed. It is telling that now left academics and students advocate that views of conservatives should not be allowed to be openly expressed. 

Religious institutions that permit only one religion to be advocated openly state that the religion is fundamental to their mission, but secular colleges do not claim to be political advocacy organizations in part because Section 501(c)(3) of the Internal Revenue Code predicates institutional tax exemption on not engaging in lobbying or ideological advocacy.  Political organizations are not entitled to tax exemptions.  Hence, if students wish to claim that their institutions are at root political advocacy organizations, they will need to pony up the difference in tuition cost between exempt and nonexempt institutions.

More importantly, the purpose of universities should be to teach citizenship, rational debate, and learning rather than closed minded advocacy.  If Middlebury and other colleges teach advocacy instead, then public support for them should be revisited.

I read Herrnstein and Murray twenty years ago. I do not recall any racist claims in their book, although I was once called to the carpet of a departmental chair because of a student’s claim that Saul Alinsky’s Rules for Radicals is racist. (I recount the incident here.) My recollection of Herrnstein and Murray is that they make the general point that IQ is important to a wide range of public policy issues.  In my own field, human resource management, IQ has been repeatedly shown to be a valid predictor of job performance.  

Merriam-Webster defines bigot as follows:

A person who is obstinately or intolerantly devoted to his or her own opinions and prejudices; especially :  one who regards or treats the members of a group (as a racial or ethnic group) with hatred and intolerance.
Although the racial variety is the most common application, one can be a bigot in a variety of ways, and students who, in the face of science, violently object to well-reasoned, scientifically supported findings because of obstinate commitment to their own prejudices are themselves bigots. Middlebury and all other educational institutions should encourage students to think scientifically and reasonably and to abhor bigotry of all kinds.

Teaching Both Sides

With respect to the third point, the ability of faculty to teach both sides of a question, I have worked in higher education for 26 years, and I have never had a departmental colleague who could give a fair exegesis of libertarian economic theories like those of Hayek and von Mises.  I have no doubt that many economists can, but many cannot.  The same is true of classical liberal ideas. The most influential economic writer was Adam Smith, but I have repeatedly heard his statement, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices,” misinterpreted to mean that Smith supported economic regulation.  The statement is made at the end of a chapter in Wealth of Nations that criticizes gilds and argues that regulation does not work.

A good example of the incompetence of many left-oriented academics with respect to (Lockean) liberal thinkers is a book I reviewed in 2012 for Frontpagemag, my Brooklyn College colleague Corey Robin’s The Reactionary Mind: Conservatism from Edmund Burke to Sarah Palin. Robin misunderstands, misconstrues, and appears not to have read the von Mises material that he claims to critique.  If a left-oriented professor like Robin who claims to be able to write a book on conservatism botches his understanding of von Mises, I doubt that many left faculty can do a good job. 

Global Warming

With respect to the last point, I am not enough of an expert in geology to comment on climate change, but I did say that the claim that “science is settled” is profoundly anti science.  As Popper points out in his Logic of Scientific Discovery, theories are never proven; they are only disproven or falsified. As I pointed out to the student who raised this point, those in the church who believed that the science was settled imprisoned Galileo.  The politicization of science, as the Democrats have done with respect to global warming theory, is more profoundly anti science than the doubts raised by global warming skeptics.  
One of the few professors in the room was a science professor who rejoined that he was a global warming denier.  He said that the evidence is not nearly strong enough to have policy implications. Amen.