Implemented in 1947, the Taft-Harley Act (THA), Section 14(b), allows states to adopt right-to-work laws. Right-to-work laws give employees the freedom to choose whether to join a labor union and pay union dues as a condition for employment in a unionized company. Since the Taft-Hartley Act was adopted, 24 states have enacted right-to-work laws, including Indiana in 2012 and Michigan in 2013. Kentucky remains one of the 26 states without a right-to-work law protecting workers’ freedom.
Opponents of right-to-work laws contend they lead to lower wages, hurt unions, and lower people’s standard of living. But states that have enacted right-to-work policies have experienced positive economic progress across the board. A study by the Mackinac Center for Public Policy found, “According to the Bureau of Economic Analysis, right-to-work states showed a 42.6 percent gain in total employment from 1990 to 2011, while non-right-to-work states showed gains of only 18.8 percent.” The study also found inflation-adjusted gross personal income in right-to-work states increased 86.5 percent between 1990 and 2013, versus 51.3 percent for forced-unionization states.
Kentucky borders two states, Indiana and Tennessee, that have experienced economic prosperity as right-to-work states. According to the Indiana Chamber of Commerce, 45 companies have communicated to the Indiana Economic Corporation that Indiana’s enactment of right-to-work will factor into decisions they make about where to locate new and current projects. All new auto plants built in the United States during the past several decades were built in right-to-work states, including one by Hyundai, which declined Kentucky’s offer of land and tax incentives and instead located in Montgomery, Alabama—a right-to-work state.
Using years of economic data and empirical evidence from each state, the 2014 American Legislative Exchange Council’s annual economic competitiveness study, Rich States, Poor States, ranked Kentucky 28th in economic performance and 39th in economic outlook. The study found right-to-work states outperformed their forced-unionization counterparts, providing their citizens with critical economic opportunities and a path to greater prosperity.
Kentucky lawmakers should consider implementing right-to-work and remove other barriers to economic growth, such as high taxes (particularly on capital and income) and burdensome regulations. As the experience of other states shows, right-to-work has positive effects on states’ economies, workers, and population growth.
The following articles examine right-to-work policies from multiple perspectives.
Research & Commentary: Right to Work Policies
In this Research & Commentary, Alex Monahan, government relations coordinator for The Heartland Institute, suggests states that do not have right-to-work policies should consider implementing them. Analyzing the experience of other states, the evidence shows right-to-work has had positive effects on states’ economies, workers, and population growth.
Right to Work Increases Jobs and Choices
James Sherk, senior policy analyst in labor economics at The Heritage Foundation, argues states can reduce unemployment and increase investment by adopting right-to-work.
Right-to-Work States Lead Way on Income Growth
Zachary Woodman, a research intern with the Mackinac Center for Public Policy, analyzes government data and concludes that, over the past few decades, right-to-work states have had stronger income growth than forced-unionization states.
When Will the ‘Right to Work’—and Prosper—Come to the Bluegrass State?
Bluegrass Institute President Jim Waters calls on legislators to support a right-to-work policy, arguing it would bring the state far more economic prosperity. Waters notes, “During the past decade, the right-to-work states grew faster in nearly every respect than their union-shop counterparts.”
Rich States, Poor States, 2014 Edition
Rich States, Poor States is an annual economic competitiveness study authored by economist Dr. Arthur Laffer; Stephen Moore, chief economist at The Heritage Foundation; and Jonathan Williams, director of the Tax and Fiscal Policy Task Force at the American Legislative Exchange Council. Using several years of economic data and empirical evidence from each state, the authors identify policies that can lead a state to economic prosperity.
Michael LaFaive: Right-to-Work States Have Stronger Growth
The Mackinac Center for Public Policy has studied many decades of data on right-to-work states—where workers don’t have to join a union to hold a job—and has concluded those states enjoy stronger growth in personal incomes, employment, and population. Report coauthor Michael LaFaive of the Mackinac Center discusses the findings of the report in this Heartland Institute podcast.
Economic Growth and Right-to-Work Laws
This study measures the impact of right-to-work laws on state 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.
Unions Hinder Economic Growth and the Free Market
American Enterprise Institute President Arthur Brooks explains how unions hamper economic growth by limiting freedom in the marketplace. Brooks notes, “States should seek to pass right-to-work laws as part of reforms to strengthen their economies and enhance economic growth.”
Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other tax topics, visit The Heartland Institute’s Web site at http://heartland.org, Budget & Tax News at http://news.heartland.org/fiscal, and PolicyBot, Heartland’s free online research database, at www.policybot.org.
If you have any questions about this issue or The Heartland Institute, contact Heartland’s State Government Relations Manager, Logan Pike, at 312/377-4000 or at [email protected].