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.