Although their clout has declined markedly over the past 30
years, unions remain a major influence in the lives of millions of
Americans. One in eight Americans belongs to a union, and in 28
states workers can lose their jobs if they do not become a union
member. Even in firms with voluntary membership, unions
represent both unionized and non-unionized employees at the
bargaining table, meaning it often makes sense for workers to
join in order to have a say in the entity that negotiates their
wages and workplace conditions.
When workers join a union, they get more than collectively
negotiated terms of employment, however. They also get a
leadership that pursues its own priorities outside of negotiating
employment conditions, priorities which may or may not reflect
union members' wishes. For all their influence in the workplace, it
is not clear whether unions actually represent their members'
values. While it is true that union members elect their leaders,
union leaders appear to pursue an agenda disconnected from the
concerns of their members.
One way to test if unions represent their members'
priorities would be to give workers the option to choose whether or
not to support a project backed by their union. If support
remained at the same level, it would indicate that the union
leadership's priorities matched those of the members. Decreased
support would demonstrate that the unions' priorities do not
reflect their members' wishes.
Just such an experiment has taken place over the last decade.
Many unions are heavily involved in political activism, spending
their members' mandatory dues to elect candidates favored by
the union leadership. However, several states have passed "paycheck
protection" laws that require unions to obtain written permission
from their members before they can spend membership dues on
political causes. In these states, the union's political activism
becomes essentially voluntary for its members.
A detailed examination of union spending in states in which
political donations are voluntary reveals that union leaders choose
to spend far more on politics than their members would prefer. In
- Paycheck protection legislation has a clear negative
effect on public sector union contributions to candidates for
state legislative offices. These laws reduce union campaign
donations by approximately 50 percent. The odds of random
chance explaining these results are less than one percent.
- Paycheck protection laws do not affect donations from
other economic sectors, nor do they have an effect on contributions
from other industries. Paycheck protection laws appear to have a
causal effect in reducing union campaign contributions.
- There is not enough evidence to determine if paycheck
protection laws reduce the political influence of unions. Anecdotal
reports, however, suggest that union leaders have found
loopholes in paycheck protection laws that allow them to
continue spending their members' dues on political activism without
their consent. The fact that unions must use these loopholes
nonetheless demonstrates that union members do not support their
union's political agenda.
Many union leaders are pursuing an agenda that their members do
not support. This fact suggests that America's workers would
be well served by giving them greater freedom in deciding whether
or not to belong to a union, and union members should be given
greater sway over how their dues are spent by their leaders.
Organized Labor Influential in Many
Most of the news coverage of organized labor in recent years has
focused on how dramatically union membership has fallen, or on
discord in the labor movement and the splintering of the AFL-CIO.
While unions are less influential than they were a generation ago,
they still exert an enormous influence in the lives of millions of
Americans. One in every eight American workers belongs to a
union. In 28 states unions can negotiate contracts
that require companies to fire workers who do not join the union. Even
when a worker has the choice to opt out of union membership, it
often makes sense to remain a member. Unions are legally the
employee's sole representatives, representing a firm's union and
non-union members alike. The only method a worker has of
influencing critical decisions like strike votes, contract
ratification, or negotiation strategies is to join the union and
work to influence it from within. For many American workers, union
membership is still either mandatory or their only practical
Membership in a union involves more than voting to accept a
contract or go on strike, however. Unions charge their members
annual dues, averaging $125 per member in 2004. Unions
use only a portion of that money to represent their members.
America's 10 largest unions used an average of only 30 percent of
their dues to represent their members and negotiate with employers.
They spent the other 70 percent on activities like lobbying,
political activities, gifts, grants, overhead, and compensation for
their staff. These other activities might or might not
reflect the priorities of the union's membership.
On the one hand, there is a strong presumption that unions
pursue the priorities of their members because those members elect
the union leadership. If they did not approve of the job their
representatives were doing, they could simply elect new
leaders. On the other hand, union leaders do little to inform
their members of many of their activities, and it is doubtful
whether union members would approve of many of the decisions of
their leaders. Gerald McEntee, president of the American
Federation of State and County Municipal Employees earns
$580,000 a year-courtesy of the dues paid by his union's far less
compensated members. The president of the National Education
Association earns $439,000 a year. That is almost ten times what
the average teacher earns. It is questionable whether union members
really want their elected leaders to earn salaries several times
larger than those paid to members of Congress. Unions also spent
over $7 million in 2005 to hold conferences and workshops at
resorts, including the Pheasant Run Resort & Spa near Chicago
and the Palm Springs Riviera Resort in California, a use of funds
which also may not reflect their members' priorities.
Misplaced union priorities extend beyond six-figure salaries and
comfortable retreats for union bosses, however. Evidence suggests
that the causes unions champion do not line up with their members'
concerns. Unions have vocally campaigned against outsourcing
and for stronger measures to improve job security. However only 9
percent of U.S. workers say that they fear their job will be
shipped overseas, while workers say they are satisfied with their
job security by an 82 percent to 15 percent margin. These numbers make
little sense if unions are pursuing their members' agendas.
More evidence of a disconnect between union leaders' activities
and their members' priorities comes from unions' political
activities. Unions generously spend their members' mandatory
dues on politics. In 2005, a non-election year, the AFSCME spent
almost 20 percent of its budget on political activities and
lobbying. The AFL-CIO spent 30 percent of its budget on the
same causes. Despite the fact that almost two in five
union members voted for President George W. Bush in the 2004
elections, both these unions gave over 97 percent of their
donations to Democratic candidates. Do millions of union
workers really want such a large portion of their dues to be spent
on politics? Would Republican union members really want their
dues spent to elect Democrats?
If so, then why would unions feel the need to mislead their
members about where their dues go? The AFL-CIO Web site proclaims
that the union's political program consists of encouraging
"… union members to register to vote. We also research
working families' concerns about current issues, and put together
information showing where candidates for all levels of elected
office stand on those issues." Nowhere does the site
mention the hundreds of thousands of dollars in members' dues
the AFL-CIO leadership has given directly to political candidates
running in the 2006 elections. The AFL-CIO also implies
that it does not spend mandatory union dues on political
causes, claiming that "partisan political activities are paid for
by voluntary donations from union members." This is not true.
Union dues, not just voluntary donations, fund virtually every
union's political agenda, including the AFL-CIO's. However, the
AFL-CIO seems eager to hide this fact from its members, a decision
which makes little sense if union leaders believe those members
share their agenda.
Paycheck Protection Legislation Tests
Union Leaders' Priorities
Anecdotal evidence suggests that union leaders pursue priorities
that differ markedly from their members' concerns. If so, that
would suggest that policymakers should either make it easier for
workers to decline to join a union, or for union members to
opt out of supporting those activities that they find
objectionable. However, anecdotes are not facts. Although it
appears unlikely, union members could well support the high
salaries, policy concerns, and intense political activism of
their leaders. To determine whether or not unions pursue
priorities that their members support, there would have to be a
situation in which union members had the option of declining to
support their union on an issue while still remaining in the union.
If support for that priority remained the same, it would
demonstrate that-at least on that issue-the union accurately
reflected the views of its membership. If support fell
substantially it would show that-at least on that issue, and
potentially on others-union leaders felt free to ignore the
desires of their members when setting their union's priorities.
For the most part, union members do not have this option. Unions
do not allow their members to selectively fund union conferences at
the local Holiday Inn but not at the Soaring Eagle Casino and
Resort in Michigan. Nor do union members have the option of
declining to support a campaign to raise the minimum wage while
backing their union when it fights for broader health care
coverage. In almost all cases, members only have the choice to take
it or leave it and cannot selectively back out of union activities
they object to. However, a few states have passed legislation that
gives workers the option of not funding their union's political
activities. These laws provide an opportunity to test whether or
not unions pursue their members' priorities.
Unions generously spend their members' dues on political
activities, donating millions of dollars to like-minded candidates.
In 2004 unions gave $61 million to federal candidates.
Unions pay for virtually all of this political spending out of
their members' mandatory dues. Under the Supreme Court precedent
established in Communication Workers v. Beck (1988), workers
cannot be forced to donate to political causes, and are entitled to
demand a refund of the portion of their dues spent on politics.
However, unions erect multiple roadblocks in front of workers
who want to exercise their Beck rights. They implement
bureaucratic obstacles, such as accepting such requests only 30
days out of the year, making it difficult for workers to formally
request a refund of their dues. Often unions refuse to honor those
requests unless workers file charges with the National Labor
Relations Board. In many cases they also require members
to resign from the union if they do exercise their Beck
rights. So while workers theoretically have
the ability to opt out their union's political campaigns, in
practice that option is usually closed to them.
In response to these concerns, several states have passed what
are known as "paycheck protection" laws to enforce workers'
Beck rights. Rather than forcing workers to navigate union
roadblocks to obtain their dues refund, paycheck protection laws
require unions to obtain annual written consent from their members
to spend their dues on political causes. The union must refund the
portion of dues spent on politics of any member who does not agree
in writing to have his or her dues spent for that purpose. Thus
paycheck protection allows every member of the union who wishes to
engage in political activism to do so, while ensuring that workers
who either object to that activism or would rather spend their
money in other ways have the freedom to opt out.
The existence of these laws provides the opportunity to
test how closely union leaders hew to their members' priorities. If
analysis shows that union members continue to support their
leaders' political campaigns when doing so becomes completely
voluntary, it would show that union leaders are simply reflecting
the desires of their members. On the other hand, a significant
decrease in union campaign contributions would demonstrate that
unions pursue an agenda and priorities that differ from those of
their members. To test union responsiveness to member concerns,
this paper undertakes regression analysis to determine what happens
to union campaign donations after workers have the choice of
Data Sources and Description
Six states have passed paycheck protection legislation, although
in Ohio, courts enjoined the law and it never took effect.
Washington State, Michigan, and Wyoming passed paycheck
protection laws that applied to all unionized workers in those
states, while Idaho and Utah passed paycheck protection laws
that applied only to public sector unions. This report focuses on
the effects of paycheck protection on public sector union campaign
donations to state candidates in order to maximize the number of
states included in the analysis.
Campaign finance data come from the Institute on Money in State
Politics, a non-partisan, non-profit organization that compiles a
database of state campaign donations. The Institute provides
data from state campaign-contribution disclosure forms, and records
the source and size of donations to candidates for public office.
(The Institute does not have data on campaign spending by outside
interest groups, only on donations made directly to
campaigns.) The Institute's data allow the construction of a
panel dataset of campaign contributions made by public sector
unions to candidates for state office by state and election
The Institute on Money in State Politics initially began as
a project to study campaign finances in select western states; it
received additional funding to expand into a national
organization in the late 1990s. Consequently the geographic
scope of the data available from the Institute increases over time.
The Institute has information on campaign donations by public
sector unions for only nine states in the 1990 election cycle. Its
coverage expands to all states by the 2004 election cycle.
Additionally, the number of races covered in each state expands
over time. In Utah, for example, the Institute had data on
donations to candidates for the state legislature only in the
1990 election cycle. By the 2004 election, it also had information
on donations to candidates for governor, other statewide
offices, and judicial posts.
This introduces a spurious upward trend in total campaign
donations caused by the Institute's ability to examine more races,
not by a true increase in campaign spending. This also makes
campaign finance data not directly comparable between states, as
the reports record the total amount given to campaigns for
different races. To correct this problem, Heritage Foundation
researchers collected campaign contribution data for only
state legislative races, even when information about races for
other offices existed. In the case of Utah, for example, only
information on contributions to candidates for the state House and
state Senate were collected for each election cycle, although by
1998 data on other state races were available. In this way the
magnitude of total campaign contributions are directly
comparable across states and election cycles.
This results in an unbalanced panel dataset of state-level
campaign donations made by public sector unions to state
legislative candidates, with individual observations at the
state-election cycle level. Data on donations made in 18 other
sectors of the economy were also collected for use in robustness
checks on the results, which will be presented later. In order to
make meaningful comparisons between campaign donations in
large and small states, these data are expressed in terms of total
spending per 1,000 residents using annual population data from the
Bureau of Economic Analysis (BEA). All monetary figures are also
adjusted for inflation.
To account for paycheck protection laws a variable is
created that is set to 1 if a paycheck protection law is in
effect in that state during that election cycle and set to 0
Factors other than paycheck protection laws can be expected to
affect campaign donations and should be accounted for in any
analysis. States with greater proportions of union members probably
see more union spending, so the proportion of the workforce of each
state that belongs to a union is included as a control.
Similarly, states with larger public sector workforces probably see
more donations by public sector unions, so BEA data on the
proportion of personal income in each state spent on state
government wages and salaries are included in the analysis.
States with wealthier residents may see more campaign
contributions because potential donors have more to give, so
personal income per capita data from the BEA are included for each
state-election year. Election spending may rise during
gubernatorial or presidential election cycles. Even though only
state legislative races are examined, a dummy variable set to 1 if
a presidential or gubernatorial election occurred that cycle and 0
otherwise was added. Similarly, variables were added indicating the
proportion of each state legislative chamber up for re-election
that cycle. Demographics may account for campaign contribution
levels, so the proportion of state residents who are white and the
proportion with bachelor's degrees or higher were included.
Finally a year variable was included to account for potential time
trends in campaign contributions over election cycles.
Appendix A contains a table of descriptive statistics for
The basic specification of the model is presented in equation 1.
For each state s and cycle t we have
The union contribution data are expressed in logs to ease the
interpretation of the results. When the dependent variable is a log
value, then the regression coefficients on the independent
variables reveal the percent change in the dependent variable
associated with a unit change of the independent variable. So
β1 reveals the percent change in public sector union
contributions associated with the enactment of paycheck
Two different models are used to estimate β1: the fixed
effects model that eliminates fixed differences between states and
the random effects model that does not. For completeness both
results are reported, although econometric tests show that the
fixed effects estimator is preferred. Appendix B explains the
differences between these estimators in greater detail.
Table 1 reports the results from the basic specification in
column A. Paycheck protection laws have a clear and negative effect
on public sector union campaign contributions to state legislative
candidates. This effect is highly statistically significant.
Paycheck protection laws are associated with reductions in public
sector union donations of over 50 percent. The odds of this
reduction resulting from random chance and not a true correlation
with paycheck protection laws are less than 1 percent. It
appears that union members opt out en masse when they have the
option of not funding their leader's political priorities.
However, all but one of the states that passed paycheck
protection laws are in the western United States. It could be that
unions in western states are weaker and give less to candidates for
state office than do those in other states. Perhaps what looks like
the effect of paycheck protection laws actually reflects regional
differences in campaign contribution levels. To test this
possibility the regressions were run again with only western states
included in the analysis. The results from these regressions are
reported in column B of Table 1. The results are broadly similar to
those reported in column A. The magnitude of the reduction in
public union donations rises slightly, to a decrease of over 60
percent. It appears that the correlation between lower union
campaign contributions and paycheck protection laws does not simply
reflect a regional effect.
Correlation does not necessarily imply causation, however.
Large numbers of sick people reside in hospitals, but that does not
mean hospitals make people sick. Similarly it could be that instead
of paycheck protection laws causing union spending to drop,
paycheck protection laws are passed in states where organized labor
has little influence and spends less anyway.
A number of states have come close to passing paycheck
protection laws, or in the case of Ohio, passed them and seen them
struck down by the courts. If paycheck protection laws pass when
unions are already weak, that would suggest unions are also weak
when paycheck protection laws come close to passing. Column C
presents regression results where attention is restricted to the
five states that passed paycheck protection and the four states
that came close to enacting paycheck protection laws. If
paycheck protection is simply a result and not the cause of
decreased union expenditures, then the effect ought to
disappear when the only states studied are those where unions
are weak. As Table 1 indicates, paycheck protection laws still show
statistically significant decreases in public sector union spending
on the order of 50 percent.
It could be the case that the states which passed paycheck
protection saw fewer political donations overall after the law was
passed for reasons that had nothing to do with the legislation
itself. These estimates cannot rule this out. To test this
possibility Table 2 presents regression results examining
the effects of paycheck protection laws on campaign contributions
from the 18 economic sector divisions used by the Institute for
Money on State Politics.
There are obvious reasons why paycheck protection laws
would affect union campaign contributions. But it is hard to
see how they would affect contributions from most other sectors of
the economy, such as donations from farmers or businesses. If
paycheck protection laws are associated with changes in
campaign contributions in areas where they would be expected to
have no effect, it would suggest that something other than the new
laws might be causing public sector union donations to fall.
Table 2 shows that this is not the case. The vast majority of
the estimates are statistically insignificant. Most of those
that are significant are in sectors where a causal effect of
paycheck protection laws makes sense.
The results show that paycheck protection laws have a
significantly negative impact on contributions from labor unions.
This does not come as a surprise: 48 percent of all union members
in the United States work for the government, and three of the five
enacted paycheck protection laws also applied to private sector
unions. This finding simply confirms the previous results.
They also have a large negative effect on contributions from
unknown sources, though these unknown sources could well be poorly
reported contributions from unions.
Three other estimates in Table 2 are statistically significant:
the random effects estimate of candidate contributions to
their own campaigns and both the random effects and fixed
effects estimates of contributions from lawyers and lobbyists.
These are sectors which should not be affected by paycheck
protection laws. However, Table 2 presents 36 coefficient
estimates. Random chance will guarantee that three to four of those
estimates will show statistical significance at the 10 percent
level, even when no true correlation exists. Therefore the
statistical significance of donations from these sectors- sectors
where a causal connection with paycheck protection laws is hard to
see-probably results from normal statistical variation. The
overwhelming majority of the estimates show no statistically
significant effect. It appears that paycheck protection laws do not
reduce contributions from doctors, farmers, real estate agents, or
most other donors. They do reduce donations from organized labor,
the one sector of the economy directly affected by the laws.
These regression results provide strong statistical evidence
that paycheck protection legislation reduces campaign
contributions by public sector unions. Appendix C discusses
additional robustness checks performed to ensure that these
results are reliable. Given the choice, it appears that workers
would rather spend their money on something other than their union
leadership's political ambitions.
Effect on Union Political
Although union campaign contributions fall by approximately 50
percent when workers get a say in how their money is spent, that
does not necessarily mean that union political activity also
drops. The Institute on Money in State Politics collects data only
on how much money unions give to other candidates or to political
parties, so-called hard money. It does not provide any information
about how much unions spend directly on politics. Many of the state
paycheck protection laws permit unions to spend their own money on
advertising campaigns near elections, get-out-the-vote drives,
and otherwise campaign directly, so long as they do it
No database of union spending of so-called soft money exists, so
it is impossible to say if paycheck protection laws actually
prohibit union leaders from spending dues on priorities their
members do not share. Circumstantial reports certainly suggest that
union leaders simply ramp up their unconstrained soft money
spending when their members have the option of opting out of hard
money donations. The Washington State teachers union
responded to the paycheck protection law passed in 1992 by
sending members' mandatory dues to the Community Outreach Program,
from which teachers did not have the choice of opting out. The
COP then spent millions of dollars of teachers' dues on political
causes, effectively sidestepping the law.
Unions may well have found ways to circumvent the intent of most
of the paycheck protection laws passed by the states, finding ways
to spend their members' dues on politics even when their
members object. There is simply not sufficient
information on union soft money spending to draw conclusions
about whether or not paycheck protection reduces union
political activity. What is clear is that paycheck protection laws
reduce the direct union contributions to candidates.
Many American workers belong to unions as a matter of necessity.
Some would lose their job if they left their union; others join
because they want to participate in the union that negotiates their
wages and benefits. All of these workers pay mandatory union dues
that are spent by the union leadership. The priorities of these
union leaders often seem out of step with those of their
members. Six-figure salaries, activism on causes that do not
concern most workers, and heavy political involvement do not appear
to resonate with most union members.
Paycheck protection laws, which require workers to agree to
have their union dues donated to political campaigns, provide an
opportunity to test how closely unions reflect their members'
wishes. The results are clear and unambiguous. Union campaign
spending falls by 40 to 50 percent once workers get a say in how
their dues are spent. Unions are not spending their members'
mandatory dues in accordance with those members' wishes.
Unions may well use loopholes to get around these restrictions, but
the fact that they need to use loopholes shows how out of touch
they are with their members' priorities.
Union leaders are pursuing an agenda that union members do not
support. Union members need to have more options in order to ensure
that unions pursue their priorities. Congress and the states should
pass more effective paycheck protection laws that close the
loopholes unions have used to continue spending their members' dues
even over their objections. Workers who find that unions still do
not pursue their priorities should not be forced to belong to a
union in order to keep their job. Workers should not be forced to
serve their union's priorities, but unions the priorities of their
James Sherk is a Policy Analyst in
Macroeconomics in the Center for Data Analysis at The Heritage
Foundation. The author thanks Heritage Foundation interns Ben
Keefer and Kevin Kellert for their invaluable contributions to
Fixed Effects vs. Random Effects Estimators
When conducting regression analysis it is important to be
aware that the error terms may violate traditional assumptions. The
error terms will not be independently identically distributed if
there are other unobserved state-specific factors that affect
campaign spending but were not included in the control variables.
In that case, the error terms correlate across the same state over
time. If, for example, public sector unions have less social
support in a heavily conservative state like Idaho, then their
donations will probably be smaller than average. These factors
could interfere with the regression analysis.
Using panel data provides an opportunity to control for
state-specific factors such as this, as long as those factors are
fixed over time. Econometricians use two basic models to
correct for this potential problem. The first is a random
effects model (RE). Under the assumption that the
state-specific effects are uncorrelated with the explanatory
variables, the random effects estimator provides an efficient
estimate of the coefficient. In other words, it provides the
estimate most likely to distinguish a true correlation in the data
from statistical noise.
However, the assumption that the unobserved effect has no
correlation with the other explanatory variables is rather heroic.
Consider the case of Idaho again. It may well be that more
conservative states with smaller public sectors (and thus public
sector unions) are more likely to pass paycheck protection laws. In
that case the unobserved effect of being heavily conservative will
be correlated with the passage of paycheck protection laws, but
also with lower union contributions, which could give the
appearance that paycheck protection laws lower union spending when
there is no true effect.
In the case where the unobserved effect is believed to be
correlated with the explanatory variables, the fixed
effect model (FE) is appropriate. This estimator subtracts from
each state observation its average value over time. Removing
the average removes any fixed effect in the data and the FE
estimator is unbiased even when state-specific fixed effects are
correlated with the explanatory variables. However, the FE
estimator is less efficient than the RE estimator, making it harder
to claim a correlation is statistically significant.
It should be noted that the FE and RE are identified off of
different sources of variation. Most of the variance that the RE
estimator exploits comes from the difference in contribution levels
between states that passed paycheck protection laws and those that
did not. By contrast most of the variation the FE estimator
utilizes comes from the difference in contribution levels over time
in the states that passed paycheck protection laws.
To test whether the RE or FE model is an appropriate
specification, econometricians use a Hausman test. This test
compares the coefficients from an efficient but potentially biased
model (the RE estimator) and compares them with the coefficients
from an unbiased but inefficient model (the FE estimator). The test
indicates whether or not the coefficients from the two models
differ systematically from each other. If they do not, that
supports using the more efficient RE estimator. If they differ,
that indicates that bias does affect the RE model and an unbiased
but less efficient estimator should be used.
A Hausman test was performed on the paycheck protection
coefficient in the RE and FE models presented in Table 1. The
test rejects the null hypothesis of no systematic difference
between the coefficients, with a p-value of 0.057. This supports
the FE specification. For the sake of completeness, however, RE
results are also presented throughout this report.
Additional Robustness Checks
In addition to the results presented in the main body of the
paper, additional robustness checks were performed to ensure the
reliability of these results.
Dropping One State at a Time
Since only a few states have passed paycheck protection
laws, these results could be driven by an outlier while paycheck
protection had little effect in the other states. To ensure this
did not account for the results, the regressions were re-run,
omitting in turn each state that had passed paycheck protection
laws from the sample. If only one state explained the results, this
procedure would reveal that.
The results from these regressions were broadly similar to those
performed previously and were statistically significant at the 5
percent level in every case. They are presented in Columns 1
through 5 of Table 4. The point estimates were slightly more
dispersed than previous estimates, but still clustered around a 40
to 60 percent decrease in union donations after the paycheck
protection laws passed.
The panel dataset used is unbalanced, with more states being
added over time as the Institute on Money in State Politics
received funding to examine additional states. There should be
no relation between the Institute's fundraising and states
passing paycheck protection laws, so the unbalanced nature of
this panel should not affect the final results. Nonetheless,
to test to ensure that the results held with a balanced panel the
basic FE and RE regressions were run on the reduced set of states
for which data on public sector union contributions were available
in every election cycle between 1990 and 2004.
Column 6 of Table 4 presents the results from this regression.
The RE results are significant at the 1 percent level. The FE
results were barely significant at the 10 percent level.
However, the reduced significance is hardly surprising when the
sample size has been reduced by three-quarters. These results are
taken as evidence that using an unbalanced panel does not drive the
estimates presented here, but that these results still hold
when using a balanced panel.
The robust standard errors generated by the STATA software used
to calculated these results do not correct for serial correlation.
I re-estimate the model using a heteroskedasticity and
auto-correlation robust OLS estimator, the results of which
are presented in Column 7 of Table 4. The results are significant
at the 1 percent level, and similar in magnitude.
Two other robustness tests were performed. Time effects were
modeled with a linear year variable. Column 8 of Appendix C shows
the results when eight election cycle dummy variables were used in
place of a linear time trend. The fixed effects estimator
remains statistically significant at the 3 percent level,
while the random effects estimate is now statistically
insignificant. As the Hausman test rejects the RE
estimator in favor of the FE estimator, this is not taken as a
cause for concern.
As a final test, each explanatory variable besides paycheck
protection was omitted from the sample, and the regressions were
run again. In all cases the paycheck protection variable remained
significant at conventional levels.
Based on data provided by the U.S.
Department of Labor, Bureau of Labor Statistics, at /static/reportimages/2670B9C7E176FCF2F61AB299CCAD3F49.pdf
(July 5, 2006).
 Based on dues paid by the 10 largest
unions by membership in the United States. The data come from LM-2
forms filed with the Department of Labor and are available from the
author upon request. The unions included in this list are theUnited
Food and Commercial Workers, the Service Employees International
Union, the International Brotherhood of Teamsters, the United Auto
Workers, the Laborers International Union of North America, the
National Education Association, the American Federation of
Teachers, the American Federation of State and County Municipal
Employees, the International Brotherhood of Electrical Workers, and
the Communication Workers of America.
 Author's calculations based on data
compiled from the Department of Labor by UnionFacts.com at http://www.unionfacts.com/
unions (July 5, 2006). Note that the Communication Workers
of America did not report the proportion of dues spent on
representational activities and so this figure is the average value
for the remaining nine unions.
 AFL-CIO, About Us: Union
 Note that five states did not hold
elections to state office in the 2004 election cycle: Alabama,
Louisiana, Mississippi, New Jersey, and Virginia. Alabama holds
elections to the state legislature every four years. The other four
states hold their elections in odd-numbered years. Since no
state that passed paycheck protection legislation holds elections
to state office in an odd-numbered year, the data were restricted
to include only even-numbered election cycles.
 State legislative races were selected
for two reasons. First, they were typically among the first races
for which the Institute collected data, so using them increased the
number of useable data points. Second, most states hold legislative
races every election cycle, making them a more consistent measure
of campaign donations than contests for gubernatorial or other
statewide offices, which are typically held every other election
 The Consumer Price Index for All Urban
Consumers-Research Series was used to express all monetary values
in 2004 dollars.
 The paycheck protection variable is set
to 1 for the following state-election cycles. Idaho: 1998, 2000,
2002, 2004. Michigan: 1998, 2000, 2002, 2004. Utah: 2002,
2004. Washington State: 1994, 1996. Wyoming: 1998, 2000, 2002,
2004. Washington State's law remains on the books, but is
essentially ineffective after an agreement between the state's
largest teachers union and the Washington State Attorney General in
early 1998, and is thus coded as a 0 for cycles after 1996.
 Data on racial composition and
educational attainment came from the Census Bureau. The author was
unable to locate education data for 1992 for use in the 1991-1992
election cycle, and so used data from 1991 instead.
 To see this, note that when
log(Y) = Xβ + ε we have that the
derivative of the log of Y with respect to X is given by
β = d[log(Y)] / dX = dY / Y /
dX and that dY / Y / dX is the percent change in Y given
a unit change in X.
 The log specification is presented here
solely for ease of exposition and does not materially affect the
results. Calculations performed using the level, not the log, of
campaign contributions are available from the author upon
 Note that observations are weighted by
the square root of the state population size. Alternative
specifications tested included using the population size as
weights, and not weighting the data. Neither alternative
specification materially affects the results presented here.
 The states included in this analysis
were Arizona, Colorado, Idaho, Nevada, New Mexico, Oregon, Utah,
Washington, and Wyoming.
 Voters in California and Oregon
defeated paycheck protection ballot initiatives in 1998, with 53
and 51 percent "No" votes, respectively. Nevada had a paycheck
protection initiative on the state's ballot which was leading in
the polls before being removed from the ballot by the courts. Ohio
enacted a paycheck protection law in 1995, and again in 2005, but
court rulings prevented it from taking effect.
 Results were omitted for public
subsidies for campaigns. No state recording taxpayer contributions
to campaigns has also enacted paycheck protection legislation, and
thus identification of a paycheck protection effect on public
subsidies is impossible.
 For additional information on random
effects and fixed effects estimators see Jeffrey Wooldridge,
Econometric Analysis of Panel and Cross Section Data
(Cambridge, Mass.: The MIT Press, 2001), Chapter 10.
 These states are Alaska, Idaho,
Montana, Nevada, Oregon, Washington State, and Wyoming.
 Note that while the use of logs or
levels of campaign contributions does not generally affect the
results presented in this paper, that is not the case here.
The FE estimates of the level of contributions in the balanced
panel sample are only significant at the 18 percent level,
below conventional significance thresholds.
 The RE estimator is only statistically
insignificant when the log of public sector union contributions is
used. Both the FE and RE estimators are significant at the one
percent level when the level of public sector union contributions