In the first half of 2010, Texas saw more small-business growth than any other state in the country. During that time, it added 178,000 new jobs — twice as many as any other state. Also, Texas was one of only five states to add manufacturing jobs.
California, on the other hand, lost more than 113,000 jobs from August 2009 to August 2010. And while Texas has seen steady job growth in recent years, California was losing jobs well before the economic downturn began in 2008. Since 2005, California has lost just under 1.3 million jobs.
So what accounts for Texas’ astonishing business and job growth? One major factor in Texas’ success receives little attention — work-force regulations.
Texas has right-to-work laws, meaning the state forbids compulsory union dues as a condition of employment. California does not, and forced unionization means a much more expensive labor force.
According to the Bureau of Labor Statistics, just 5.1 percent of the Texas work force is unionized, compared to California’s 17.2 percent. The national average for total public and private sector unionization is 12 percent.
Americans are “leaving states with heavy union influence and choosing to live in ‘right-to-work’ states with higher job growth,” Hudson Institute economist and Examiner columnist Diana Furchtgott-Roth recently observed.
The result of the 2010 census is that nine congressional seats in forced-unionization states such as New York, Ohio, Michigan, Illinois and New Jersey are being reapportioned to right-to-work states.
The 2010 census is the first time in history California did not gain congressional seats or electoral votes. Texas alone is gaining four congressional seats, more than any other state in the country.
Also, high rates of public-sector unionization prove problematic for private sector job growth and threaten California’s entire economy. California owes $535 billion to its public employee pension plan — more than six times the state’s annual budget and $36,000 in debt for every household in the state.
According to the census, local and state employees in California are paid 33 and 34 percent, respectively, more than the national average. Average annual compensation for a California government job is $90,000.
While Texas has public-sector unions, the state has instituted tight controls. Under Texas law, state employees cannot receive benefit increases unless the pension funds can meet their long-term obligations, and state employees are required to contribute 6 percent of their paycheck to their pensions.
Pay for public-sector workers is 17 percent below the national average. And Texas’ pension funds are 83 percent funded — not perfect, but still the envy of other state pension plans.
“Texas is actually in very good shape, and we were really ahead of the curve to take these matters into hand and deal with them,” said Andy Homer, the government relations director for the Texas Public Employees Association.
The result is that Texas’ state government has been running surpluses. The state has money to spend on improving services and infrastructure that make Texas attractive to businesses — Texas has made significant investments in transportation and its electrical grid in recent years.
But in California, “public employee unions wield immense — even hegemonic — influence over the capital’s Democratic majority,” wrote Sacramento Bee columnist Dan Walters. If it is a choice between government spending on public services or unions, unions win.
The city of Vallejo actually filed for bankruptcy to escape its public employee costs, and other California cities might follow suit. Public employee unions are not just expensive; they are destroying the state’s government.
Mark Hemingway is an editorial page staff writer for The Washington Examiner.