A new proposal in Illinois would ban local governments from adopting right-to-work (RTW) laws. This effort goes against the growing nationwide trend of states and local governments adopting right-to-work policies. Since 2012, four states have enacted right-to-work legislation, and currently, 28 states now have right-to-work laws. RTW laws empower employees with the option to join or refuse to join a union, pay fees or other charges to a union, or pay any third-party or charity instead of paying a union.
The Illinois proposal would prevent local governments from implementing RTW rules similar to those adopted in the village of Lincolnshire in 2015, which are currently being considered by state courts. Illinois’ rejection of RTW puts it at a disadvantage compared to all of its regional neighbors.
States enacting RTW policies have experienced positive economic progress across the board. Regionally, Indiana, Iowa, Kentucky, Michigan, Missouri, and Wisconsin have passed RTW and experienced far greater job growth than Illinois has over the same period. According to the National Right to Work Legal Defense Foundation, since 2009, Michigan has added 163,000 manufacturing jobs, Indiana has added 90,000, Ohio has tallied 83,000, and Wisconsin has added 43,000.
Cities seeking to narrow this competitive-disadvantage gap should be given the opportunity to do so; mandating municipalities to maintain forced unionism stymies their ability to attract new businesses and grow.
According to Watchdog.org, “[F]rom January 1995 through August 2015 six of the 10 states with the worst private-sector job growth were states without right-to-work laws.” Two of the remaining four states with low private-sector job growth, Indiana and Michigan, passed right-to-work laws in 2012. Over the same period, seven of the top 10 job-producing states had right-to-work laws in place, according to data provided by the U.S. Department of Labor.
Opponents of right-to-work legislation contend the reforms force wages down, disadvantage unions, and lower people’s standard of living, but research shows right-to-work states have experienced positive economic growth across the board. Critics of right to work also argue RTW erodes union membership, but this has also been proven false. According to the Illinois Policy Institute, in Indiana, union membership has grown by 58,000 since right-to-work laws were implemented. By comparison, Illinois has only seen 11,000 in union membership growth.
Right-to-work states have enjoyed greater success attracting new and existing businesses. The Heritage Foundation cites one report in Site Selection Magazine by Ron Starner, Mark Arend, and John McCurry as evidence of the positive effects of RTW laws on a state’s business climate. Starner, Arend, and McCurry found, “[R]oughly half of all major businesses refuse to consider locating in jurisdictions with compulsory dues.”
Greg Hinz of Crain’s Chicago Business spoke to Jim Schultz in May 2015, former head of the Illinois Department of Commerce and Economic Opportunity, about the effect of Illinois’ anti-right-to-work stance. Schultz argued “over 1,100 businesses have blacklisted Illinois for not having a Right-to-Work law.” Hinz also pointed to a CNBC poll that found two-thirds of the members of CNBC’s Global CFO Council believe right-to-work laws are “important” or “very important” in deciding where to locate business operations.
Right-to-work laws create new jobs and foster economic and population growth. Illinois lawmakers should allow cities to consider implementing right-to-work legislation, a decision that is sure to reap significant economic benefits.
The following documents examine right-to-work laws in greater detail.
SB 1905 Designed to Ban Local Right to Work in Illinois
Jim Long of the Illinois Policy Institute examines a new bill in the Illinois General Assembly that would ban local governments from adopting right-to-work laws, even though right to work benefits workers and employers.
Right to Work: Updated Trends and Implications for New Hampshire
This paper from Americans for Prosperity-New Hampshire examines the extant literature regarding the economic and demographic effects of right-to-work legislation, and it attempts to rebut the prevailing counter argument made in support of union security agreements. The authors predict what would reasonably be expected to happen should New Hampshire adopt legislation that promotes worker freedom, and the results are very positive.
New Evidence on the Effect of Right-to-Work Laws on Productivity and Population Growth
In this article from the Cato Institute, Michael J. Hicks, Michael LaFaive, and Srikant Devaraj expand on work completed by Richard Vedder, distinguished professor of economics emeritus at Ohio University and senior fellow at The Independent Institute that shows the effects of right-to-work (RTW) legislation on employment and economic output in individual states. Vedder found RTW laws have a positive impact on jobs and output, because firms and workers move to states with greater economic freedom. Hicks, LaFaive and Devaraj extended Vedder’s work by examining the impact of RTW laws on productivity and population growth.
An Interstate Analysis of Right to Work Laws
This paper from the Competitive Enterprise Institute, authored by Richard Vedder and Jonathan Robe, “presents a labor economics analysis of the effect of right to work laws on state economies, and ranks states’ per capita income loss from not having a [right-to-work] law.”
Did Right-to-Work Laws Impact Income Inequality? Evidence from U.S. States Using the Synthetic Control Method
Jeffrey Jordan, Aparna Mathur, Abdul Manasib, and Devesh Roy of the American Enterprise Institute examine right-to-work laws in four states, Idaho, Louisiana, Oklahoma, and Texas, and they found right-to-work laws have no impact on economic inequality.
Right-to-Work Laws Don’t Lower Private-Sector Pay
James Sherk of The Heritage Foundation argues right-to-work laws have no negative impact on private-sector wages. “RTW laws do appear to slightly reduce the pay of government employees, easing constraints on hard-pressed state budgets,” he writes.
Ten Principles for Improved Business Climates
Maintaining a good business climate has never been more important. Thanks to the Internet, the collapse of communism around the world, and advances in shipping and logistics, capital and labor are much more mobile than in the past. Businesses must bid for customers and workers, not only from local competitors but also from businesses in other communities, in other states, and even in other countries. Small changes in taxes, regulations, and other cost-drivers may lead to businesses losing customers and possibly failing or relocating.
Economic Growth and Right-to-Work Laws
This study by the Mackinac Center measures the impact of right-to-work laws on states’ economic performance. It uses average annual growth rates in employment, real (inflation-adjusted) personal income, and population to measure the economic well-being of right-to-work states. The results show right-to-work laws have a statistically significant and economically meaningful positive impact, though results vary.
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