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How Right to Work Helps Unions and Economic Growth

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How Right to Work Helps Unions and Economic Growth

August 27, 2014

With steadily declining membership, unions are shifting their public relations and political contributions into overdrive in hopes of wooing new members to their cause. Many of these political contributions have been spent opposing Right to Work (RTW) laws, which give workers the right to not join a union even if their workplace is unionized.

This is a mistake. States with RTW laws have faster economic growth, and union membership is growing in RTW states. According to Bureau of Labor Statistics data, from 2004 to 2013 total union membership rose by 0.5 percent in RTW states but declined by 4.6 percent in non-RTW states.  RTW is win-win for the economy and for unions.

Twenty-four states have RTW laws today. Over time, people and assets have migrated from non-RTW states to RTW states, causing their economic growth to increase. New research by the Competitive Enterprise Institute suggests that states that have relatively recent or no RTW laws experienced slower economic growth over the past 35 years.

Researchers Richard K. Vedder and Jonathan Robe examined economic growth in RTW states versus non-RTW states from 1977-2012, while controlling for outside factors, such as the rate of population growth and the percentage of the employed in manufacturing, that might alter their results. They concluded that RTW laws alone created an extra 11.5 percentage points of economic growth per state over that time period. Vedder and Robe then examined how much economic growth each state had lost as a result of its non-RTW status. Below is a map displaying how much each state lost in per capita income because it did not have RTW.

 

 

 

 

As with any economic research, these results are not definitive.  However, they suggest that RTW attracts businesses, which then create jobs, adding to economic growth.  

Although conservative Alaska has seen the largest loss of per capita income growth ($5,238), its particular situation should not be extrapolated to other states because its climate and size make it difficult to grow a business. Connecticut, California, New Jersey, Illinois, Hawaii, and Maryland immediately follow Alaska, leaving many liberal strongholds with the most to gain from passing RTW laws. It is likely that small-government states, such as Kentucky and Montana, are offsetting their non-RTW status with other policies that increase growth.

Idaho and Oklahoma, displayed in yellow on the map, passed RTW laws in 1985 and 2001, which is why their per capita income loss is significantly smaller than the others.

Although Michigan and Indiana became RTW states in the past three years, their delay has economically hurt their residents. If Michigan and Indiana had instituted RTW prior to 1980, as was the case with other RTW states, Michigander and Hoosier families would likely have been thousands of dollars better off today. Michigan’s per capita income is $3,460 lower today than it might have been if RTW was in place in 1977, while Indiana’s per capita income is $3,119 lower.

If unions want to gain more members and make them better off, they should flip their anti-RTW position and give workers the right to choose whether or not to join.

 

Jason Russell is a research associate at Economics21 at the Manhattan Institute for Policy Research. You can follow him on Twitter here.

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