The National Labor Relations Act of 1937 (Wagner Act, or NLRA) fundamentally altered the relationship between employers and employees in the United States. Key measures of the NLRA encouraged collective bargaining, protected the exercise of freedom of association, prohibited several unfair labor practices by employers, and allowed employers to make employment contingent on union membership. The latter policy aided the growth of labor unions with nearly unmitigated power until it was curtailed by the Taft-Hartley Act (THA) in 1947: Section 14(b) of the THA allowed 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 of employment. Since the Taft-Hartley Act was adopted, 24 states have enacted right-to-work laws, including Indiana in 2012 and Michigan in 2013. Missouri is the latest state to consider such a policy.
Many union employees have expressed interest in opting out of union membership. In 2012, when Michigan was considering right-to-work legislation, policy analyst James Sherk noted, “Polling shows a quarter of Michigan’s government employees would opt out of unions under a right-to-work law.”
Opponents of right-to-work policies argue allowing employees to choose whether to join a union or not reduces the union’s influence and creates “freeloaders” who share in the benefits of the union without having to pay dues. However, Sherk points out, “The National Labor Relations Act does not mandate unions exclusively represent all employees, but permits them to electively do so. Under the Act, unions can also negotiate ‘members-only’ contracts that only cover dues-paying members. They do not have to represent other employees.”
Despite the purported harm of right-to-work laws, states that have enacted right-to-work 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.”
States with right-to-work laws experience growth not only in economic performance but also in population. U.S. Census Bureau population estimates show, “More than 4.7 million Americans moved from the non-right-to-work states to right-to-work states from April 1, 2000, to July 1, 2008.” In addition to population considerations, a recent study indicated state and local revenue growth in right-to-work states over the past decade was 57.8 percent versus 55.4 in states without right-to-work.
States that do not have right-to-work policies should consider implementing them. 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.
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.
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 discussed the findings of the report in this Heartland Institute podcast.
The Right-to-Freeload Myth
James Sherk, senior policy analyst for labor economics at the Heritage Foundation, examines the misleading characterization of employees who opt out of unions as “freeloaders.”
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.
Right-to-Work Laws: Liberty, Prosperity, and Quality of Life
Economist Richard Vedder examines the positive impact right-to-work laws. He concludes, “Americans generally prefer freedom to coercion, high incomes to low ones, and individual decision making to collective resolution of issues. For these reasons, they generally do not like laws that constrain their labor market behavior and force them to join collectives of other workers to negotiate their wages and working conditions.”
Rich States, Poor States 2014
The American Legislative Exchange Council (ALEC) released its annual Rich States, Poor States report in April 2014. The report is an economic competitiveness study 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. The report presents a forward-looking measure of how each state can expect to perform economically based on 15 policy areas that have proven to be the best determinants of economic success.
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 https://heartland.org/publications-resources/newsletters/budget-tax-news, and PolicyBot, Heartland’s free online research database, at www.policybot.org.