*NOTE: This is part 2 of a mini series in the topic of right to work. Click here for Part 1.*

Right to work at the worker level

The economic policy institute published an article back in 2015 and they stated that “there has been surprisingly little examination of the perhaps more important issue of RTW laws’ effect on wages and employer-sponsored benefits.” I heartily concur. This, then, is the catalyst for this particular article – to delve deep into the morass of financial ramifications of right to work laws. Sure, based upon my first article one can certainly ascertain which side of the fence I’m on. Still, if you have read any of my other articles on this website then you are aware I am not opposed to publishing counter viewpoints. There are a host of them contained in various other articles and I plan on doing the same herein.

Image courtesy of info.umkc.edu

After you look over their initial table of data, you read this: “The biggest difference between workers in RTW and non-RTW states is the fact that workers in non-RTW states are more than twice as likely (2.4 times) to be in a union or protected by a union contract. Average hourly wages, the primary variable of interest, are 15.8 percent higher in non-RTW states ($23.93 in non-RTW states versus $20.66 in RTW states). Median wages are 16.6 percent higher in non-RTW states ($18.40 vs. $15.79).” (All wages are adjusted to 2014 dollars using the CPI-U-RS)

I’ll concede that even though the article was posted in 2015 the table contains data for years 2010 – 2012. The article, by adjusting the dollar figures, is updating the information, which means the findings do indeed remain the same. Even so, the data, by all rights, is older than I’d like. So can we learn anything from this?

The first thing I’d say is the data, while old, is still quite relevant. It substantiates the claim made by those against right to work; chiefly, those in right to work states make less. To be sure, there are certain parameters which can be difficult to discern like cost of living, ethnicity, education (I have written extensively why this shouldn’t be), the various job tasks, etc. However, from an experiential side of things, I have met scores of right to work advocates who make less money. Perhaps most telling is that throughout the country, many have said “we wish we were union.” This indicates a number of things, notwithstanding they recognize the higher earnings those in organized labor make.

Indeed, this point is driven home in another post I’ve penned, which is found below:

Why skilled trades have the best game in town

Bloomberg law 2019

I came across this interesting article from Bloomberg law entitled “Are unions really weaker in right to work states?” where they were studying that very claim. Notably, they found “the results reveal a great deal of separation between right-to-work states and non-right-to-work states: Union membership rates, election wins, and strike activity were lower, on the whole, in right-to-work states in 2018. But when it came to earning more than nonunion workers, union members in right-to-work states actually out-performed those in non-right-to-work states.”

Do you know what this means? An increase in union membership and influence increases all – the rising tide lifts all boats mindset – and in it we see an increase of non union wages, too. In contrast, right to work is actively driving down the wages of those in the non union sector in alarming fashion, so much so unions that actually exist in right to work states seem to have an INCREASE in earnings.

This is very interesting. They continue: “Union workers typically draw larger paychecks than nonunion workers: It’s a big part of why they join unions. In 2018, for example, for every dollar the average U.S. nonunion worker earned, the average union worker earned $1.16.

This ratio varies from state to state. In states where labor flexes more power, one would expect union workers’ earnings to reflect that power. And in states where unions are held in check by right-to-work laws, the assumption might be that nonunion workers’ wages would have narrowed that gap.

But our analysis of Bloomberg law’s labor data shows that this is not the case. When all 27 right-to-work states are counted together, the average hourly earnings in 2018 were $25.78 for union workers and $20.92 for a nonunion worker. In other words, for every dollar a nonunion worker earned, a union member earned $1.23. That’s a bigger relative gap, not smaller, than the national average.

Meanwhile, in the 23 non-right-to-work states and the District of Columbia, union workers’ average hourly wage in 2018 was $28.26 and nonunion workers’ was $25.14, which means that union members earned only $1.12 for every dollar earned by nonunion workers. That wage gap is four cents smaller than the national average.”

The ubiquitous claim that right to work increases workers wages in deceitful and dishonest; I find those who advocate for it lacking in merit and substance. Indeed, one is left to conclude whether they actually believe the propaganda they embrace so readily in the face of such facts.

Right to work at the state level

Often, it is argued from an economic perspective that right to work brings an increase in business interest. For example, a study done by Lonnie Stevans from Hofstra revealed that yes, “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.” We would do well to tread carefully here, because what we are talking about is decreasing wages at the expense of those in the workforce. Some would say the business owner incurs the risk and therefore deserves the most reward. I champion this, as a matter of fact. It’s unfortunate this line if often touted against those who are pro labor. Just because those in the pro labor camp argue against right to work doesn’t mean they are anti owner. In fact, there are many union workers who elect to become business owners after having come from the field – and they themselves employ union members.

Another example comes from my new favorite book, “The Math Myth and other STEM delusions” by Andrew Hacker. He writes that “in 2014, a New York Times reporter visited a Wisconsin metal-fabricating firm, where the CEO complained that, of 1,051 recent applicants for openings at the firm, only ten of them could perform the technical operations needed. The firm had the jobs, he said, but couldn’t find qualified candidates. Further down, it was reported that the starting pay on offer was $10 an hour. What wasn’t reported was whether there were skilled people in the area who didn’t apply because they wouldn’t work for a wage very close to what they might get at McDonald’s.” In case you wanted the link to the New York Times piece, it can be found here. Although, I strongly recommend you get the book – it’s THAT good.

It’s incredulous there is someone complaining people don’t have the technical skills you say are necessary and yet offer a measly $10.00. The kicker is, this took place in Wisconsin in 2014, a year before they enacted right to work. This is a common occurrence in right to work states, exemplifies what Lonnie Stevans discovered in his study, and confirms what millions of us already knew.

From a 2011 Heritage article comes this jewel:

Wage Effects Small

“Economic theory does not predict how right-to-work laws affect wages. Unions restrict the supply of jobs in unionized companies. This reduces the pay of nonunion workers—they do not have as many good job opportunities—while raising the wages of union members. The additional business investment a right-to-work law attracts usually raises the demand for labor, increasing wages. Yet unions argue that businesses will cut wages if the risk of union organizing falls.

These factors largely cancel each other. Most studies show that right-to-work laws have little effect on wages in either direction. Right-to-work states do have lower average wages than non–right-to-work states, but this is because they are located primarily in the South, which was once much less developed than the North and still has a lower cost of living.”

First off, his statement that, “unions restrict the supply of jobs in unionized companies. This reduces the pay of nonunion workers—they do not have as many good job opportunities—while raising the wages of union members,” is laughable. In one fell swoop he demonstrates he doesn’t have an understanding of how collective bargaining works – and it’s subsequent affect on those who are not a part of it. Unions negotiate on behalf of their members; you know, the ones who contribute via dues, and as such those employees reap the benefits. A dissenting employee can simply work for a company which will pay him more than what those covered under a collective bargaining agreement make – but this is often akin to finding a unicorn. If a company can pay you less they will.

Moreover, saying unions reduce the pay of nonunion workers is absolutely ridiculous. I have a hard time taking his position seriously when he spouts nonsense such as this. What’s really at the heart of non union workers lower wages is they work for less and often work for employers who pay them less. Again, if an employer can pay you less he will pay you less.

NPR interview 2015

NPR had a transcript of an interview discussing right to work and it’s impact on income and economic growth, and there are a couple things worth highlighting. David Wessel, Director of the Hutchins Center at the Brookings Institution, had this to say: “It’s clear that states with right-to-work laws have lower rates of union membership and weaker unions and tend to have lower wages.” This isn’t something new, though. Again, most of us who have been in the real world readily understand this since reality often hits hardest when closest.

Economic policy institute 2018

In response to the right to work in Missouri campaign in 2018, the economic policy institute released a report, which can be found here, which shares some of the following stats:

• Only 5.2 percent of private-sector workers in RTW states are union members or are covered by a union contract, compared with 10.2 percent in non-RTW states.
• Based on the impact of an RTW law in neighboring Oklahoma, we could expect that nearly 60,000 fewer Missourians working in the private sector would be covered by a union contract if RTW were implemented in Missouri.
• RTW laws have not succeeded in boosting employment in states that have adopted them. In fact, RTW laws have no causal impact on job growth or unemployment, contrary to the claims of its proponents.
• RTW laws are associated with lower wages and benefits for both union and nonunion workers. In RTW states, the average worker makes 3.1 percent less in hourly wages than the average worker with similar characteristics in non-RTW states. This pattern of lower wages in RTW states is also true for women workers and workers of color.
• Through weakening unions, RTW laws hurt the middle class. As union membership has declined in recent decades, the share of overall income received by the middle class is close to a post-WWII low.
• By restricting the capacity of unions to bargain for workers and thus lowering wages and benefits, RTW laws lower tax revenues and reduce aggregate demand.

*As a side note, Missourians soundly voted no on right to work, by a margin of 2 to 1.*

U.S. Chamber of commerce 2018

The United States Chamber of Commerce updated some statistics released from an earlier report concerning right to work. As it is, the Chamber of Commerce is certainly pro business, even if they are staunchly anti union. (A consistent charge leveled against them is they are overwhelmingly pro cheap labor – think immigrants, here) You can access their website, containing highlights from their report, here. Still, there are a couple of points I want to mention as we forge on.

The first point I want to mention is the statement that “higher growth rates translated into higher personal incomes: Personal income in RTW states rose over ten percentage points more than in non-RTW states between 2001 and 2016, 39 percent versus 26 percent.“ This may come as a surprise, but I’ll take them at face value here and concede that yes, let’s say personal income has indeed increased. However, it is telling they do not inform us whether this is the actual workers or does this figure include those business owners also? As Lonnie Stevans stated above, “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.” For my money, I’m inclined to believe those business owners are a large part of that statistic.

This next statement I was initially surprised to see it wrap up their bullet point pros but upon further reflection, I should know better. See if you can see what I mean: “As of 2017, about four percent of private sector workers in RTW states belonged to unions, compared with about nine percent in non-RTW states.” Considering they are not just pro business but also anti union it goes without saying they would proudly announce this finding. It means their anti union campaigns and support are gaining traction. Considering we have already substantiated unionized workers earn more, it’s not hard to see their aim is to reduce wages.

New York Times 2015

A 2015 New York Times article surfaced claiming “Right to work laws are key to economic growth”, and in it we find these quotes: “Perhaps equally important is the potential for right-to-work to attract people. Many states are struggling with a significant demographic problem caused by an aging workforce. As baby boomers retirements accelerate, there are literally not enough young workers to replace them. As a result, employers are struggling to fill job openings, especially those involving skilled positions.”

He goes on to say it is the policies of right to work which drive this. I find this hard to believe for a couple reasons. First, when I can find work for higher wages – indicative of union negotiation – why would someone migrate? Second, I have already pointed out the fallacy with the argument “employers are struggling to fill job openings, especially those involving skilled positions.” Can you hear the cry for a lack of skilled labor? That empty sepulcher which is deliberately kept empty to drive a narrative, as Andrew Hacker wrote concerning above? How do you open up your employment options for cheap? Relocate where right to work is the law of the land, where union membership is not only discouraged but also hampered, and capitalize upon the cheaper labor due to excessive platitudes and mantras. That’s what’s going on here.

Investopedia 2018

While Investopedia is an investment website, I found this little nugget of truth nestled on their page: “Despite its low cost of living, the south was the poorest region in the U.S. in 2018. Below are the 2018 poverty rates by region:

Additional links

In lieu of the wide variety of links I’ve visited but refrained from posting, this section here will serve as the data dump for them. My hope is obviously they will gain some traction in their importance, especially considering the national discussion needing to be had.

Here is an article from the University of Maine, located here. Additionally, there is a nice article found here which outlines a number of indexes, asserting that yes, right to work states are indeed poorer. It is a little dated but nothing has changed on the economic front. There is this interesting article from the New York Times opinion page I found worthy to post. His perspective on both sides reflects his attempt to be objective but it was his take on people who do not want to pay union dues I thought stellar.

There is this article which corroborates Investopedia’s research – the south is the poorest – and nestled comfortably in right to work land.

I mined a bit and found this article from the National Right to Work Committee. I find it fascinating some seek to make a connection between “forced unionism” (their term, not mine) and dependents on government assistance (TANF). Many of the states listed have higher density. Hawaii has long had a depression problem – because of it’s size, reliance on tourism, and distance from the mainland. Two of the states deal with surges on illegal immigration. Alaska, despite it being the largest state, has many of the same problems Hawaii has. Seeking to generalize in such a manner demonstrates the propaganda machine is alive and well.

Conclusion

There is a lot of polemic out there and wading through it all is a task unto itself. Moreover, it’s a comprehensive research thesis in the making. Still, it’s hard to argue with data – even if it is wielded through partisan eyes.

Right to work is lauded by those who support it as an economic engine and bemoaned by others who declare it as a race to the bottom. When you compare data, the collective suffers with decreasing wages while a select few have opened a wage gap that is steadily increasing. Indeed, for those seeking the truth, the data is there supporting the claim that right to work hurts individuals economically at the collective level.

*NOTE: This is part 2 of a mini series in the topic of right to work. Click here for Part 1.*