Among the issues most commonly discussed are individuality, the rights of the individual, the limits of legitimate government, morality, history, economics, government policy, science, business, education, health care, energy, and man-made global warming evaluations. My posts are aimed at thinking, intelligent individuals, whose comments are very welcome.

"No matter how vast your knowledge or how modest, it is your own mind that has to acquire it." Ayn Rand

23 May 2011

The Right to Work: The Economic Advantage

22 states are Right to Work states in which unions cannot make it a condition of work for a worker to join the labor union or pay some fee assessed by the union based on what it claims is its value to the nonmember worker.  Right to Work states since 1990 have demonstrated much greater economic performance in jobs creation and in the growth of state GDP.  Here are the comparisons between highly unionized and union shop states vs. the least unionized and Right to Work states:

The 22 Right to Work states have produced more new private sector jobs than the more populated 28 states fostering the union shop.  The Right to Work states created new jobs in the critical private sector at a rate 2.3 times that of the Union Shop states.  The least unionized states are increasing their state GDPs at much higher rates than the most unionized states. 

Richard Vedder of Ohio University noted in a Cato Journal publication (Winter 2010) that:
In 1970, 28.5 percent of Americans lived in right-to-work states; by 2008, the proportion had risen to nearly 40 percent (to over 121 million).  The population living in right-to-work states more than doubled, compared with a modest 25.7 percent increase in non right-to-work states. Moreover, only a small proportion (about 15 percent) of the increase in the proportion of Americans in right-to-work states is due to states newly enacting right-to-work laws. Indeed, in the last 20 years, only one state (Oklahoma) has adopted a new right-to-work law. Most of the
population gains arose from greater population increases in right-to-work states.
 Professor Vedder made a mistake in his comment about the affect of Oklahoma becoming a Right to Work state in 2001.  Oklahoma only had a population of 3.687 million in 2009.  Using that figure rather than a slightly lower population in 2008, Oklahoma's conversion only produced about 10% of the increase in the  proportion of the U.S. population in Right to Work states. 

Between 2000 and 2008, 4.7 million Americans moved from Union Shop states to Right to Work states.  Moreover, a larger fraction of the population chooses to work in the Right to Work states than in the Union Shop states.  The only four states with over 70% of the working age population working in 2007 were Right to Work states.  The national average then was 63%.  People in Right to Work states appear to prefer working more than those in Union Shop states.  Greater freedom of association on the job should make work more appealing.  That higher work force participation may also be due to the fact that people in the Right to Work states had a 10% greater growth in personal income between 1993 and 2009.  They also gave rise to the creation of 60% of all new businesses, despite having only about 40% of the population at the end of that time period and less earlier.

Public opinion has swung strongly against the unions being empowered to put workers under pressure to join a union as a condition of employment.  Only 11.9% of the work force is now union and the private sector workforce union rate is only 6.9%.  Legislation to become a Right to Work state is being considered in Wisconsin, Indiana, New Hampshire, and Missouri among other states.  For fear of the union hubbub and a desire to emphasize state debt control, Gov. Mitch Daniels decided that the Right to Work bill that had passed the Indiana state lower legislative branch was not a priority.  So it is on hold.

Missouri which was heavily unionized (25%) in 1978 when it last considered becoming a Right to Work state, was only 11.2% union in 2010.  If you count only those who are actually working, only 9.9% are union members.  In other words, if you are a union member, you are more likely than others to be unemployed.  Missouri is largely surrounded by Right to Work states, such as Iowa, Kansas, Oklahoma, Arkansas, and Tennessee.  Only Illinois and Kentucky of its neighbors are Union Shop states.  The legislature is lining up in favor of becoming a Right to Work state, though the Democrat Governor is expected to veto such a bill.  It is being considered for a statewide referendum to get around that.  Testimony by a company site consultant that 75% of the companies coming to him say they would prefer a site in a Right to Work state and 50% say they will not consider a site in a Union Shop state at all, had a telling effect upon the Republican committee heads.

Unions like to point out that family incomes are higher in Union Shop states, but when union dues are subtracted and the lower cost of living of Right to Work states is taken into account, family income is actually higher in the Right to Work states.  Clearly, the trend is solidly in their direction.  Business growth and jobs creation in the Right to Work states and out-migration from the Union Shop states will continue to put pressure on the Union Shop states to allow more freedom of association in employment.  Of course, many will long continue to be held hostage by unions, but they will pay a huge price.

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