Right-Wing Media Claim Right-To-Work States Boost Wages, Prevent “Forced” Union Membership

WSJ: “Wages [Have Risen] Faster In States That Don't Require Union Membership.” Discussing the NLRB's case against Boeing in a May 13 Wall Street Journal op-ed, economist Art Laffer and Wall Street Journal senior economics writer Stephen Moore compared right-to-work states with so-called “forced union” states and claimed:

As of today there are 22 right-to-work states and 28 union-shop states. Over the past decade (2000-09) the right-to-work states grew faster in nearly every respect than their union-shop counterparts: 54.6% versus 41.1% in gross state product, 53.3% versus 40.6% in personal income, 11.9% versus 6.1% in population, and 4.1% versus -0.6% in payrolls.

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In reality, the stampede of businesses from forced-union states like Washington has accelerated in recent years. A 2010 study in the Cato Journal by economist Richard Vedder of Ohio University found that between 2000 and 2008 4.8 million Americans moved from forced-union states to right-to-work states. That's one person every minute of every day.

Right-to-work states are also getting richer over time. Prof. Vedder found a 23% higher per capita income growth rate in right-to-work states than in forced-union states, which over the period 1977-2007 amounted to a $2,760 larger increase in per-person income in those states. That's a giant differential.

So now the unions concede that this migration is indeed happening, but they say that it is unhealthy and undesirable because workers in right-to-work states are paid less and get worse benefits than the workers in union states. Actually, when adjusting for the cost of living in each state and the fact that right-to-work states were poorer to begin with, a 2003 study in the Journal of Labor Research by University of Oklahoma economist Robert Reed found that wages rose faster in states that don't require union membership. [The Wall Street Journal, 5/13/11, emphasis added]

Fox & Friends Saturday Claims Right-To-Work States Increase Workers' Incomes, Prevent Them From Being “Forced” To Join A Union. On the May 14 edition of Fox News' Fox & Friends Saturday, co-host Dave Briggs and guest host Molly Line interviewed Moore about his Wall Street Journal op-ed. Briggs compared “right-to-work states” with “forced unions states” and asked Moore, “Have unions outlived their purpose, anyway?” Moore claimed that right-to-work laws are “not union busting ... What it means is that if you live in one of those states, you are not required to join the union to work at that plant. I think it's a basic human rights issue.” Line also claimed that personal income has grown “53 percent roughly in the right-to-work states” from 2000-09. From the broadcast:

BRIGGS: We also have some numbers on where this trend is headed, Steve. Gross in-state product now -- right-to-work states make up 54%. Forty-one percent are forced union states. Do you think this is trending obviously towards these right-to-work states? Have unions outlived their purpose, anyway? Are they on the way out?

MOORE: Well, Dave, first of all, there is absolutely no question about this data -- that American businesses, American jobs are definitely moving to these states that are right-to-work. Twenty-two states are right to work. Now, I want to point out something that's really important here, Dave. A lot of people don't understand what it means to be a right-to-work state. It is not union busting. They have unions in states like Texas and South Carolina. What it means is that if you live in one of those states, you're not required to join the union to work at that plant. I think it's a basic human rights issue -- should you be required to join the union. And as you just said, all the jobs and all the factories have tended to move to those states like Texas and South Carolina. And many of the western states are right-to-work as well.

LINE: Steve, you know, one of the arguments that union leaders often make is that their members make more money than people that work at non-union shops. But there are some other statistics that are out as well, looking at states and the variances between right-to-work and union states. And on personal income -- 53% roughly in the right-to-work states, 40% in the forced union states, as far as growth is concerned and population. Eleven percent in right-to-work states -- a bigger population growth than those in the union states, where there is a more of a union shop happening. Does this mean that there is actually an immigration going on across America as people are looking for jobs and following companies?

MOORE: Well, there is no question about that if you look at those states that I just mentioned, states like Texas, and Florida. That's where all the growth is in the economy. You know, it's interesting, with the Boeing example, it hasn't gotten enough publicity, but one of the reasons Boeing wants to relocate this new plant to South Carolina, is that they've had three or four strikes in the last 10 or 15 years at the Boeing plants in Washington state. And the last one, get -- this is an amazing statistic. Get ahold of this. A billion dollars it cost that company because of the last strike. Those are the kinds of costs that American companies, if they are going to compete, cannot absorb. [Fox News, Fox & Friends Saturday, 5/14/11]

Wash. Exam: “Between 1993 And 2009, Right-To-Work States Created Jobs Twice As Fast As States Where Forced Unionism Is Permitted, And Enjoyed 10 Percent Faster Growth In Personal Income.” In a May 18 editorial about right-to-work states, The Washington Examiner claimed:

Businesses often consider government interference when they make decisions about where to locate. One instance of such interference is the National Labor Relations Act of 1935, which established a regimen of special treatment for labor during an era when nearly one in three employees were union members. Today, unions have lost relevance for more than 93 percent of American workers in the private sector, but the distortions of this law remain with us, harming the ability of American businesses to compete. To see its results, we need only look south and west to the success of our nation's 22 right-to-work states.

Section 14(b) of the Taft-Hartley Act of 1947 allows states to pass right-to-work laws, which bar union membership from being used as a condition of employment. In practice, these laws make unions significantly less powerful and less disruptive than did the original NLRA rules, and with tremendously positive economic results for everybody concerned. A recent study by the staff of Sen. Jim DeMint, R-S.C., pointed to some revealing data: Between 1993 and 2009, right-to-work states created jobs twice as fast as states where forced unionism is permitted, and enjoyed 10 percent faster growth in personal income. Right-to-work states account for only 40 percent of the U.S. population but hosted 60 percent of the nation's new businesses during that same period. [The Washington Examiner, 5/18/11]

But There Are No “Forced Union” States -- Workers In Free-Bargaining States Are Not Required To Join A Union

MECEP: “A Right-To-Work Law Is Not Needed To Protect Nonunion Workers ... Under Federal Labor Law, Workers Cannot Legally Be Required To Join A Union.” From a February op-ed posted by the Maine Center for Economic Policy and co-written by the director of the Bureau of Labor Education at the University of Maine:

What is “right to work”? A right-to-work law prohibits employers and employees in a unionized workplace from negotiating a “union security clause.” This clause requires that all workers who receive the benefits of a collective bargaining agreement pay their “fair share” of the costs of union representation. Maine has rejected such a law numerous times in the past.

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Right-to-work laws are essentially unfair. If Maine passed a right-to-work law, nonunion employees in a unionized workplace would have a “free ride.” They would receive the benefits of union representation, in terms of job protections, wages and benefits, without paying for any of the costs.

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A right-to-work law is not needed to protect nonunion workers. Several federal laws already protect the rights of nonunion employees in unionized workplaces, such as the NLRB vs. General Motors Supreme Court decision in 1963, and the Communication Workers vs. Beck decision of 1988. Under federal labor law, workers cannot be legally required to join a union as part of a collective bargaining contract. [MECEP, 2/19/11]

Baker: It “Is Not True” That “In The Absence Of Right-To-Work Laws Workers Can Be Forced To Join A Union.” In a February post for the Center for Economic and Policy Research (CEPR), economist Dean Baker wrote:

“Right to work” is a great name from the standpoint of proponents, just like the term “death tax” is effective for opponents of the estate tax, but it has nothing to do with the issue at hand. It is widely believed that in the absence of right-to-work laws workers can be forced to join a union. This is not true. Workers at any workplace always have the option as to whether or not to join a union. [CEPR, 2/28/11]

Studies Show Right-To-Work States Have Lower Wages And Benefits

EPI: Wages, Employer-Sponsored Health Insurance, And Employer-Sponsored Pensions Are All Lower In Non-Right-To-Work States. From a February briefing paper released by the Economic Policy Institute (EPI):

This briefing paper directly examines the impact of RTW [right-to-work] on the wages and benefits received by workers, both union and nonunion. It does this by examining differences in the wages and benefits workers receive in RTW and non-RTW states. In a regression framework, we analyze the relationship between RTW status and wages and benefits after controlling for the demographic and job characteristics of workers, in addition to state-level economic conditions and cost-of-living differences across states. We find the following:

• Wages in right-to-work states are 3.2% lower than those in non-RTW states, after controlling for a full complement of individual demographic and socioeconomic variables as well as state macroeconomic indicators. Using the average wage in non-RTW states as the base ($22.11), the average full-time, full-year worker in an RTW state makes about $1,500 less annually than a similar worker in a non-RTW state.

• The rate of employer-sponsored health insurance (ESI) is 2.6 percentage points lower in RTW states compared with non-RTW states, after controlling for individual, job, and state-level characteristics. If workers in non-RTW states were to receive ESI at this lower rate, 2 million fewer workers nationally would be covered.

• The rate of employer-sponsored pensions is 4.8 percentage points lower in RTW states, using the full complement of control variables in our regression model. If workers in non-RTW states were to receive pensions at this lower rate, 3.8 million fewer workers nationally would have pensions. [EPI, 2/17/11]

And Right-To-Work Laws Do Not Always Boost Economic Growth

EPI: Oklahoma “Saw No Improvement In Its Unemployment Rate After Passing Right-To-Work ... The Number Of New Companies Coming Into The State Fell By One-Third In the Decade” Since The Law Was Passed. From an April EPI report about potential impacts of proposed right-to-work laws in New Hampshire:

The failure of right-to-work to increase job growth is particularly evident in the case of Oklahoma, the only state to have adopted a right-to-work law in the past 25 years. Unfortunately, Oklahoma saw no improvement in its unemployment rate after passing right-to-work: its manufacturing sector shrank dramatically, and the number of new companies coming into the state fell by one-third in the decade following adoption of the labor statute. And multiple statistically scientific analyses have concluded that right-to-work has utterly failed to enhance job growth in the state.

One of the problems of basing policy on what happened in the 1970s or 1980s is that we now live in a fundamentally different economy--mostly due to the globalization of trade and production. In the 1970s, low wages may have lured manufacturers from the Northeast and upper Midwest to the South. But in 2011, companies looking for cheap labor are going to China or Mexico, not South Carolina.

This, indeed, is the experience of Oklahoma, the one state to adopt a right-to-work law in the post-NAFTA era. Even for those manufacturers seeking cheap labor, the right-to-work advantage has proven no advantage at all when states are competing with the cheapest labor forces on the globe. In the years since right-to-work was adopted in Oklahoma, for instance, more than 160 Oklahoma employers announced mass layoffs, and more than 100 facilities closed their doors in the face of lower-wage competition abroad. It is estimated that, from 2001 to 2008, trade with China alone reduced the number of Oklahoma jobs by more than 20,000. [EPI, 4/5/11]

EPI: “Right-To-Work May Undermine Economic Growth By Restricting Consumer Demand.” From the April EPI report:

Throughout the unemployment crisis of the past two years, as economists looked to ignite job growth, policymakers and business leaders alike have pointed to consumer demand as the key prerequisite for job creation. In 2009, Business Roundtable Chairman Terry McGraw explained that “behind all these diverse and depressing numbers is one central driving fact: demand has collapsed....To find a path out of today's economic quagmire, [we] must jump start that demand.” As we look to support growing sectors of the economy, it is clear that the future depends largely on an economy driven by consumption. Nationally, the top 10 occupations projected to add the greatest number of jobs over the coming decade are almost entirely dependent on either government revenue or consumer spending; they include food service, retail sales, health care, and education.

If states rely on wage-cutting right-to-work laws as a strategy for attracting outside manufacturers, they would undermine wage standards in both manufacturing and other industries, which could inadvertently hamstring job growth by restricting aggregate local economic demand.

For every $1 million in wage cuts to workers, $850,000 less is spent in the economy. Assuming that most of the spending would have gone to rent, food, clothing, and other family needs in local retail and services industries, this constitutes a significant loss of spending exactly when state economies need it most. A loss of $850,000 in local spending translates, on average, into a loss of six jobs in the local community. In this way, weakening union wage standards in order to attract mobile manufacturers raises a concern that job growth might constrict in the much larger industries that have come to dominate most states' economic growth plans. [EPI, 4/5/11]

Stevans: “There Is No Significant Difference In Capital Formation Or Employment Rates” Between States With Right-To-Work Laws And Those Without Them. From a 2009 study by Dr. Lonnie Stevans at Hofstra University:

In this paper, the average differences in business conditions, employment, personal income, wages and salaries, and proprietors' income across states that have enacted right-to-work laws versus those states that did not, are examined assuming that the legislation is endogenous and controlling for state real economic growth, region, and year. Although right-to-work states may be more attractive to business, this does not necessarily translate into enhanced economic verve in the right-to-work state if there is little “trickle-down” from business owners to the non-unionized workers. While the number of self-employed is higher and business bankruptcies lower on average in right-to-work states, there is no significant difference in capital formation or employment rates, ceteris paribus. In addition, per-capita personal income and wages are both lower, yet proprietors' income is higher in right-to-work states. [Berkeley Electronic Press, accessed 5/19/11]