How’d you like some extra money in your pocket? It might come through an unexpected source: do away with mandatory union contracts. Just yesterday, Indiana took a big step in that direction when the state House approved a right-to-work measure. The Senate and governor are both expected to sign on.
Today, the Center of the American Experiment releases a new report on right-to-work laws, under which workers have the freedom to join, or not join, a union. The report, Minnesota Right-to-Work: How Freedom of Workers in the Workplace Enhances Prosperity, is written by Richard Vedder, Matthew Denhart and Jonathan Robe. For the last 60 years, the U.S. has been divided into 22 states that are right-to-work and 28 that are not. After using some standard economic tools to analyze the performance of the two groups of states, the authors conclude:
The average Minnesota household would have a personal income that is $5,960 to $7,740 had the state enacted right-to-work in 1977. Just think: What would your family do with another $6,000?
Right-to-work states have seen more economic growth than other states. When you compare the two groups of states from 1977 to 2008 (the years for which the authors had comparable data), per-capita income grew more in right-to-work states (63 percent) than in other states (54 percent).
More people have moved to right-to-work states from states that don’t have those laws–almost 5 million, in fact. This suggests that people vote with their feet for states with strong economies. You will, for example, find large numbers of former Midwesterners living in Texas and Florida. They are not only retirees, but people who moved to find work. The Census Bureau tracks population movements, though it doesn’t track people by occupational status. But you’ll find plenty of anecdotal evidence outside the report that people move for jobs.
The report looks at why right-to-work contributes to economic growth, though in short, it’s because it makes the state more attractive to employers. (Go figure!) It also has some very interesting numbers on public-sector union membership. (Outside the Northeast, which state has the highest rate of unionization in the government workforce? It isn’t Wisconsin, which was the first state to extend collective bargaining to public workers.) The report also has a short description of how labor law has evolved over the years, from anti-union to pro-union to what I would call, in the case of right-to-work, neutral-to-unions. (Want to join? Go for it. Want to decline? Go ahead.) One thing I wish the authors had looked at was how unions operate in right-to-work states. They argue, reasonably, that unions in those states have to hustle harder to attract members. So what do successful unions in right-to-work states do?
There’s one other fly in the ointment, and that Minnesota has, historically, had a higher-than-average income as well as higher-than-average income growth–despite not being a right-to-work state. (In fact, per-capita income has grown almost as much here as it has in right-to-work states.) Doesn’t this contradict the idea that right-to-work is good for economic growth?
The authors acknowledge that Minnesota has historically had a higher income than the average state, a fact that might go against the argument for right-t0-work. The difference, they say, is Minnesota’s above-average human capital: higher education levels, a less dysfunctional society, a greater respect for the rule of law, and higher workplace participation. But, they say, the state could have done even better under a right-to-work law.
Working Families in States with “Right to Work” Laws Earn Lower Wages
On average, workers in states with “Right to Work” law earn $5,538 a year less than workers in states without these laws.
“Right to Work” States Spend Less on Education
Right-to-Work states spend $2,671 less per pupil on elementary and secondary education than free-bargaining states.
“Right to Work” States Have Higher Workplace Fatality Rates
According to data from the Bureau of Labor Statistics, the rate of workplace deaths is 52.9% higher in states with Right-to-Work laws.
“Right to Work” Laws Don’t Improve Living Standards – Unions Improve Living Standards
Overall, union members earn 28 percent ($198) more per week than nonunion workers. Hispanic union members earn 50 percent ($258) more each week than nonunion Hispanics and African Americans earn 29 percent ($168) more each week if they are union members.
78 percent of private sector union workers have access to medical insurance through their jobs, compared with 51 percent of nonunion workers. And 77 percent of private sector union workers have access to a guaranteed (defined benefit) retirement plan through their jobs, compared with just 20 percent of nonunion workers.
Only 2.9 percent of union workers are uninsured, compared with 14.2 percent
I expect that as the debate plays out, “for less” will be a significant bone of contention. That’s appropriate. There are many factors in play, including the fact that RTW states started out poorer generally (but are catching up). The analysis attempts to take some of them into account.
So you are using a study from a conservative group that has been anti-union to promote an anti-union bill. And you don’t see an issue with that? Are those states you mentioned really improving? These “Right-to-Work” bills have been around for decades, why haven’t the states that adopted the legislation years ago passed us up? Let’s be honest, the sole purpose of the bill is to weaken collective bargaining, and weaken employee rights.
You may have missed it, Steve, but the Minnesota Free Market is now part of that “conservative group,” so I’m citing “our” report now, too.
Are right-to-work states improving? Yes. It’s in the report. Actually, your question does make me think that it would be worthwhile to track growth in per-capita income on a state-by-state-basis, but that’s more work than I can handle right now. The analysis done by the authors, though, says that right-to-work states, as a group, have had faster rates of growth than other states.
Why haven’t right-to-work states surpassed Minnesota in personal income? Good question. I can’t give a definite answer, but part of it is that Minnesota started out with a higher income, when we look at the time period under study. Another is that–and the authors say this–laws on right-to-work are only one factor in a state’s economic performance. The report doesn’t pretend to say that the presence or absence of right to work is the only or even the most important factor in state’s economic path–only that it IS a factor. It’s also one that the Legislature can change fairly quickly and easily, unlike, say, the work habits that people bring to the job.
I read the report pretty carefully and found it quite shocking… weird internal contradictions and misleading presentation of the data.
- A constant theme is that wage increases are good, if caused by RTW law, but that wage increases are bad if caused by unions. Kinda weird to me. Are you in favor of wage increases or not? Are wage increases good or bad?
- In fact, Gordon Lafer, from U of Oregon (and liberal EPI research organization) calculated individual state-by-state numbers to augment the averages in Figyure 8. Guess what? They’re all over the place. Some RTW states at the bottom and some at the top; some non-RTW states at the bottom and some at the top. In fact the two top-rated states were non-RTW, highly unionized MA and CT. It’s just too nuanced and the report shamefully doesn’t reflect that.
- John, you say that the report doesn’t pretend to argue that RTW is alone or even the most important factor in growth. SOrry. Wrong. See p.2, “Arguably the subgle biggest impediment to improved labor environment in Minnesota is the lack of a right-to-work law.
- There’s lots of “weasel” words (caveats about various statements) in the report… “lack of complete worker freedom to contract individually may be a factor in out-migratio…” (p.3) or “Reed’s study… indicates that the passage of RTW laws mayboost worker wages…” (p.12) for example. But when it comes time to make conclusions and summary statements, all of sudden it clear and non-debatable. RTW increases wages and is good for state economies. Sloppy.
- Sorry that you published this document. Hope you didn’t pay too much for it (Yes, i know, none of my business). But it’s a rehash of previous reports by Vedder and associates.
I’m sure we’ll be seeing a lot more and I will certainly oppose RTW in MN.
Hi again,
I see that previous comments are awaiting moderation. Wondering if the comments were considered out-of-line. I wrote quickly and didn’t revise… I’d like to continue the discussion and will self-moderate to insure thoughtful and respectful comments.
Thanks, Howard
Howard, sorry for the delay. Sometimes it takes me a while to look at the comment queue. Criticism is fine and welcome. I don’t see that you crossed any line.
On a substantive note, you quote from the following sentence:
* * * *
Arguably the single biggest impediment to an
improved labor environment in Minnesota is
the lack of a right-to-work (RTW) law which
guarantees workers the freedom to join, or not to
join, labor unions as they so choose.
* * * *
Please note that it says “labor environment.” It doesn’t say “economic performance” or the more elastic term I used, “economic path.”
See page 14 of the report:
Part of the reason that Minnesota has enjoyed
such relatively high levels of growth, comparable
to the growth rates of RTW states is likely due to
a number of *other* factors which favorably impact
the Minnesota economy.
* * *
In short, RTW is one factor, but it’s not the only factor.
John,
Thanks for your reply and comments. Appreciated. Now, comments about your two points:
- Yes, on p. 14 the authors note that RTW on one among many factors in economic growth. The problem is that the report emphasizes AND PROMISES in various places that an RTW law in MN would spur economic growth and increase wages, without consideration of the other factors.
On p 2, they clearly state that MN workers would have higher wages if MN had passed RTW legislation. Also, the first concludsion in your 1-26-12 press release is that wages would increase with an RTW law.
Your policy conclusion, to pass RTW, isn;t based on the facts at hand. In fact, as you acklowedge, it would be helpful to look at state-by-state wage growth; Vedder et. al, didn’t do that and you know why? It would show that RTW doesn;t necessarily lead to more income growth. RTW states such as Nev, Idaho, Utah, Arizona, Iowa, Kansas, Oklahoma, Georgia, and Texas all has LOWER per capita income growth than Minnesota.
And yet the big message is that we could have done better here with RTW.
- Yes, you are correct that the sentence on page two refers to
“labor environment.” Though continues to say in the same paragraph that RTW states have much higher growth in income… Again, this is highly questionable when we look beyond averages to state-by-state numbers.
I have surgery tomorrow and you might not hear from me till next week.
Howard
And the quote from p. 2, RTW is biggest single factor, is just not supported by any research.
This is illustrative of the internal fallacies contained in the report. And just look at Thompson’s press release.