Prior to the Kennedy retirement announcement yesterday, the big story was the Supreme Court’s decision in Janus v. AFSCME to strike down compulsory public-sector union dues. The government-employee unions now will have to work harder to convince members that their unions are worth supporting. Having published several reports showing that public-sector workers receive greater compensation than their private-sector counterparts, Andrew Biggs and I have joked that perhaps the unions should redirect their funding to us. While the labor-oriented think tanks try to argue that public workers are underpaid — which might suggest unions are doing a lousy job — we prove just how effective unions are!
All kidding aside, there is indeed a correlation between compulsory union dues and public-sector compensation. Based on data from the report that Andrew and I wrote in 2014, state workers in compulsory states were paid 17.0 percent more on average than comparable private workers, while state workers in non-compulsory states were paid just 5.6 percent more. This chart with state-by-state numbers illustrates the correlation well. (The chart is not readable when shrunk down for this space, but click on the link to see the full-size version.) So to the extent that there is a causal relationship here, the Janus decision can be expected to reduce the public-sector compensation premium in the long run.