A critical analysis of “right-to-work”
The use of the terminology Right to Work (RTW) is at best misleading. As will be demonstrated, such legislation when proposed in state legislatures does not provide for the protections of rights for workers, rather it limits their abilities to obtain certain benefits which ought to be part and parcel of what is due to them as a results of their efforts in the labor market. Proponents of RTW will contend that such legislation attracts more businesses, increases the number of jobs, and improves union accountability. Opponents will refer to such legislation as right to work for less laws that are anti-union, harm unions’ ability to obtain higher wages, and allows non-union workers to receive the labor benefits obtained through union negotiation without contributing financially to supporting such efforts. This paper will cite research conducted by Elise Gould, Heidi Shierholz, Lawrence Mishel, and Gordon Lafer, researchers at the Economic Policy Institute. The position of these researchers is that the position proposed by the proponents of RTW is erroneous and presents conclusions based on incorrect research methodology. This paper will rely primarily on the extensive work of Gordon Lafer who addresses a broad scope of RTW proponents’ propositions.
In defining the scope of RTW, Gould and Shierholz state that “these (RTW) laws do not guarantee a job for anyone. In fact, they make it illegal for a group of unionized workers to negotiate a contract that requires each employee who enjoys the benefits of the contract terms to pay his or her share of the costs for negotiating and policing the contract. This provision directly limits the financial viability of the unions reducing their strength and ability to negotiate favorable contracts, higher wages, and better benefits”. (epi.org, 2-17-11) Given this perspective, RTW limits the potential for union representatives to obtain more favorable negotiation results not only for their members, but also for other fellow employee who are not dues paying members. In fact, Mishel writes the “ The mean effect of working in a right to work state results in a 6% to 8% reduction in wages for workers in these states, with an average wage penalty of 6.5 %”. (epi. org., 8-21-01) “Median wages for workers in right to work states were $11.45, while wages for those living in non-RTW states were $13.00, indicating that wages were 11.9% lower in RTW states”. (op. cit.)
Economic Policy Institute researcher Gordon Lafer summarizes his conclusions regarding Right To Work laws as follows: “ a) Right To Work laws have no impact in boosting economic growth, b) RTW laws have no significant impact on attracting employees to a particular state, hi-tech firms generally prefer free-bargaining states, c) RTW laws lower wages – for both union and nonunion workers alike, d) RTW laws decrease the likelihood that employees get either health insurance or pensions through their jobs, e) by cutting wages, RTW laws threaten to undermine job growth by reducing discretionary income people have to spend in the local retail, real estate, construction, and service industries:. (epi.com, 9-15-11) In the subsequent pages of his study, Mr. Lafer investigates the potential effects of RTW on the state of Michigan.
RTW laws are not means of solving a state’s unemployment conditions. Lafer cites as example of the statements, reportedly made by the Mackinac Center for Public Policy, that RTW is “the single most important thing that could turn around the State’s economic fortunes” (op. cit) He argues that such assertions reflect “junk science” and faulty methodology. He reminds the reader that policy statements should be founded on scientific, quantifiable data, and not on anecdotal evidence taken from a group of selected incidences. There are variables found in economic settings that differ one from another, and while such settings may have in common the existence of RTW laws, one can not conclude that therefore RTW is the primary factor affecting a dependent variable such as employment levels, or economic investment. Specific statewide resources such as oil in Texas and Louisiana will have different impacts on state revenues than those of incomes derived from tourism, as is the case of Florida and Nevada. It is poor methodology therefore, to assume that simply RTW is the single most important factor without statistical evidence to substantiate these claims, especially when there are many other factors that might be more decisive in determining a particular state’s economic status.
There is no relationship between RTW and economic growth. Lauer restates the position of economic logic, namely that it is misleading to assume that every state’s economy functions in a similar fashion, that they have similar growth patterns, or rates of growth. He indicates with statistical evidence that there is no relationship between a state’s unemployment rates, and whether of not it has RTW legislation. In fact, seven of the ten highest unemployment rates are to be found in states with RTW laws. Regarding Indiana, he states that the Indiana Chamber of Commerce asserted that if RTW was accepted, its personal income would grow at rates similar to the average in RTW states recorded over a period of the past thirty years. (op.cit.) Evidence presented in the Lauer study clearly indicates the Mackinac Center was wrong in its assertion, and that in fact, the two fastest growing states were free-bargaining states that had relatively high rates of unionization. It is Lauer’s position that, “the tremendous variation between RTW states with high or low unemployment rates, and fast or slow growth rates, proves that the average is meaningless, and the real factors driving state fortunes have nothing to do with Right to Work. Other factors such as climate, natural resources, state taxation patterns, air-land-train-port transportation facilities, housing costs, available infrastructure, power costs, educational facilities, worker demographics, and others, may well play a more predominant role in determining a state’s economic status, than the mere fact that they do or do not have Right to Work laws.
The above mentioned factors, or independent variables, must all be taken into consideration before drawing illogical conclusions that RTW can achieve economic success. Florida while it is a RTW state would not appear to be an appropriate location for establishing the steel or auto manufacturing industry. Louisville, Kentucky, a non-RTW state does appear to be appropriate for a UPS cargo terminal because of its geographical location and airport facilities. World economic factors such as the North American Free Trade Agreement, or China’s entrance into the World Trade Organization, can have more impact on agricultural commodities, raw materials, heavy industrial production, and capital investment, than RTW legislation. Lafer cites a Brookings Institute study of large corporations’ location decisions, that states that RTW laws did not figure anywhere in the typical decision process of big business. (op.cit.) One must recall that recently Ford and GM decided to expand its plants in the non-RTW state of Kentucky, while competing with Toyota productions, that is also located in that state.
Does Right to Work laws lower wages and benefits, and threaten economic growth? Lafer’s studies coincide with other researchers previously cited, in that RTW laws do negatively affect worker incomes. A worker in an RTW state earns $ 1, 5000 less than a similar worker in a non-RTW state. The rate of employer sponsored health insurance is 2.6 percent lower for the RTW worker, meaning that two million fewer non- RTW workers would be covered if the same level of employer sponsorship were applicable to them. Lafer cites another study of federal data that found that employees who have a union earn fifteen percent more in wages, and have a nineteen percent better chance of getting pensions through their job than non-union employees in the same industry. The RTW law logic is that with lower salary levels there will be a greater attraction for investors to come to states where supposedly greater investment profits may be obtained. It fails to take into consideration that lower worker income also brings about a decrease in disposable income levels in the community, which in turn leads to a diminishment of funds available for local consumption, taxes, and the maintenance of public facilities. Lafer quotes that,”for every one million dollars in wage cuts to workers, eight hundred and fifty thousand dollars less is spent in the economy”. (op.cit.) An old saying recalls that, “going cheaply will cost you in the long term”.
What conclusions can we draw from all this research? We can observe that the purpose for RTW laws is not to benefit the workers, but rather to trick the general public into thinking that promoting such legislation is actually placing public control over unions, who otherwise would be forcing non-union workers to support their negotiations (even though these non-union workers will benefit from positive union gains). RTW is a means whereby legislators are convinced that these laws will attract new businesses and reduce unemployment. RTW laws are presented as a method whereby production cost can be lowered to the investor through the reduction or elimination of health benefits, pensions, over-time expenses, or labor disruption. What does occur is that as demonstrated, RTW laws are not a major factor in a company’s decision to relocate into another state. Workers both union and non-union do not benefit from RTW laws, in fact quite the opposite will occur. As indicated in this paper, there may be several other major economic factors that affect change in the overall economic situation rather than RTW. Lower wages is one result of RTW, lower levels of worker disposable income is another, and both of these are necessary for maintaining a healthy economy. In attempting to promote RTW, misinformed legislators accomplish nothing more than weakening union influence and progressive labor and social policy. Everyone loses both union and non-union members alike, and the community’s economic development is stymied.