Right-to-Work Laws Boost States’ Economies

by Iain Murray

Today, my colleagues in the labor team at CEI released the second installment in our three-part series, “The High Cost of Big Labor,” that looks at how the 24 states with right-to-work laws, which give workers the right to not join unions or pay union dues as a condition of employment, compare to the other states. In “An Interstate Analysis of Right to Work Laws,” authors Richard Vedder and Jonathan Robe find states with right-to-work laws perform better on multiple economic measures, from income growth to economic growth, compared to states without such laws.

As my colleague Aloysius Hogan summarized,

The evidence is clear that right-to-work laws improve the wage and economic conditions of a state’s workforce. Income levels, for example, would now be higher by some $3,000 per person, or $13,000 for a family of four, if non-right-to-work states had adopted such laws several decades ago. The financial impact of that gap is obviously substantial. Lawmakers should pass right-to-work laws if they want to raise the standard of living for the workers and families in their respective states.

States without right-to-laws allow labor unions to sign collective bargaining agreements that force workers to join a union or at least pay dues. The resulting higher union presence, the report explains, tends to increase the adversarial relationship between workers and employers and make a state less attractive for businesses to locate there.

The top ten states most negatively affected by the lack of a right-to-work law are: Alaska, Connecticut, California, New Jersey, Illinois, Hawaii, Maryland, Wisconsin, New York, and Michigan.

Other facts and figures include:

Real total personal income grew by 165 percent in right-to-work states over a 31-year span, outpacing the national average of 123 percent growth.

From 2000–2009, approximately 4.9 million people migrated from non-right-to-work states to those states with right-to-work laws.

The overall effect of a right-to-work law increases economic-growth rates by 11.5 percentage points.

Finally, we should note that early evidence from Michigan, which adopted right to work only recently, shows that the state is following the same trends.

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