The numbers don’t lie – economies are brighter in Right-to-Work states

Michigan is now the 24th state to give individuals the right not to join a union through Right-to-Work legislation. Individual liberty is an important dimension of economic freedom and an essential component of a well-functioning market economy. When individuals are limited in their ability to contract, or sell one’s labor services, economic activity and quality...

Michigan is now the 24th state to give individuals the right not to join a union through Right-to-Work legislation.

Individual liberty is an important dimension of economic freedom and an essential component of a well-functioning market economy. When individuals are limited in their ability to contract, or sell one’s labor services, economic activity and quality of life are diminished.

Restricting individual liberty in the labor market has real consequences. State’s that have Right-to-Work legislation often outperform those that restrict this right.

Here are a few important differences between Right-to-Work and non-Right-to-Work states:

• Right-Work laws have been enacted in 24 states.

• Unfunded pension liabilities are 3.3 percentage points higher for non-Right-to-Work states (58.7 percent) than it is for Right-to-Work states (55.4 percent). When discussing the $2.5 trillion unfunded liability across the 50 states, that difference is about $83 billion.

• On net, roughly 5 million Americans moved from the non-Right-to-Work states to Right-to-Work states from 2000 to 2010. That’s an average of about one person every minute.

• Right-to-Work states experienced population growth of 15.3 percent while population growth in non-RTW states was 5.9 percent between 2000 and 2010.

• Average GDP growth in the United States was 46.6 percent between 2001 and 2010. State GDP grew by 52.8 percent in Right-to-Work states and by 41.7 percent in non-Right-to-Work states.

• Total employment grew by 65.4 percent in the United States from 1977 to 2010. Employment grew by 94.2 percent in Right-to-Work states and by 50.7 percent in non-Right-to-Work states.

• Real personal income grew by 115 percent nationally from 1977 to 2011. Personal income grew by 165.3 percent in Right-to-Work states and by 93.5 percent in non-Right-to-Work states.

• Average wages in 2000 were 6.68 percent higher in Right-to-Work states than non-Right-to-Work states.

Economist Robert Reed found that after accounting for the influence of economic conditions that were present when states adopted Right-to-Work, Right-to-Work states have significantly higher wages than would otherwise be expected.  This finding is robust across a wide variety of model specifications.

• In 2010, 16.9 percent of government employees in Right-to-Work states belonged to a union, compared to 49.9 percent in non-Right-to-Work states.

• 28.5 percent of Americans lived in Right-to-Work states in 1970; by 2008, that percentage rose to nearly 40 percent (to over 121 million).