The questionable benefits of right-to-work laws

By Richard C. Longworth

As the right-to-work movement makes progress in the Midwest, it’s time to ask if these laws do any good for the states that adopt them, or for their workers. The answer: Not so’s you’d notice.

Certainly, nothing that you can prove. Two broad gauges of worker well-being are unemployment rates and per capita income. In the unemployment rankings, right-to-work (RTW) states are all over the map: some at the top, some at the bottom. On per capita income, they’re mostly at the bottom, but there are a few near the top.

What does this prove? Not much. Certainly, workers in RTW states earn less on average, but many of these states are in the South, where wages are generally lower. Perhaps there’s a cause-and-effect here, but so many other factors apply that it’s hard to draw firm conclusions.

But one thing can be said, and it’s important. Advocates of right-to-work laws who claim they boost a state’s economy and living standards have not made their case.

There are 24 RTW states — that is, states that don’t require workers in unionised businesses to join the union or pay union dues. When it comes to unemployment, these 24 split half and half — 12 of them are among the American states with the lowest unemployment, 12 among those with the highest unemployment. Last December, the state with the lowest unemployment, North Dakota at only 3.2 per cent, was a RTW state. But so was the state with the highest unemployment, Nevada at 10.2 per cent.

These thoughts are prompted by an email I got from a scholar at the University of Iowa, after I wrote a blog on Michigan becoming a RTW state. He noted that I didn’t mention Iowa, which has been a right-to-work state for no less than 65 years. He noted that “we do have a state budget surplus and a low unemployment rate”. He seemed to be saying that Iowa’s budget is balanced and its unemployment low because it’s a RTW state.

That’s a hard case to make. There’s just too much else going on.

First, Iowa, although a RTW state, ranks somewhere in the middle among Midwestern states in its union representation. About 12.4 per cent of Iowa workers are represented by unions. In Wisconsin, a non-RTW state, it’s only 12 per cent. But other now-RTW states are higher (15.5 per cent in Illinois, 14.9 per cent in Minnesota, 13.9 per cent in Ohio).

Iowa’s rank might be somewhat higher if it hadn’t lost thousands of United Auto Worker members when Maytag closed in Newton and Electrolux closed in Webster City. You can argue that Maytag and Electrolux pulled out to escape the unions but, if so, they took their own sweet time to do it — 60 years since the RTW law was passed.

In those years, Iowa’s economy has been up and down, with high and low unemployment, good and bad budgets, booms and busts. This probably has everything to do with the national economy, manufacturing surges, crop prices and the like, and not much to do with union laws.

The same is true of other states. North Dakota’s unemployment rate is the nation’s best, but this has more to do with the oil boom there than with a law it passed 52 years ago.

The rankings on per capita income are clearer. Of the 24 RTW states, no less than nineteen rank in the bottom half among the states on per capita income. But many of these states are in the South, a solid RTW region that used the laws to lure manufacturing from the unionised North 40 or 50 years ago. The campaign worked, turning the South in to the Sun Belt and the industrial Midwest into the Rust Belt. Many of these companies, seeking ever-cheaper workers, have since moved on to Mexico or other low-wage climes.

The Labor Department says that the average industrial salary in RTW states is $738.43 per week, about 10 per cent less than in non-RTW states (and this doesn’t include health coverage and other benefits, which unionised workers are more likely to have). Right-to-work advocates respond that these per capita earnings statistics are meaningless, because prices and the cost of livings are also lower down south and in many other RTW states.

This is true, and leaves us back where we started, with the same question — do right-to-work laws do anything beyond giving employers a nice warm feeling — and the same answer: not so’s you’d notice.

This post was originally published at The Midwesterner. Richard C. Longworth's column "The great untold environment story" appears in the latest issue of American Review, "Second term Agenda." Subscribe now!

20 February 2013