West Virginia is considering becoming the nation’s 26th right-to-work (RTW) state. Adopting RTW legislation would help create new jobs by improving the state’s business climate and economic competitiveness.
RTW legislation is especially attractive now because West Virginia has been hammered by U.S. Environmental Protection Agency rules affecting the coal industry. Those rules have had a devastating effect on private-sector job growth: From January 2011 through August 2015, West Virginia ranked last among the 50 states on that measure.
In November 2015, the West Virginia legislature held an out-of-session hearing on right-to-work. Legislators heard testimony examining the effects of union dues on jobs, investment, and wages. A September poll by West Virginia MetroNews found 60 percent of likely voters in West Virginia support right-to-work.
A study by researchers at West Virginia University found “RTW policy leads to long-run rates of GDP growth which are around .5 percentage point higher than non-RTW states. One-half of a percentage point makes a difference when you consider the average pre-inflation growth rate nationally over the last two decades has been 4.7 percent. West Virginia’s current real GDP is roughly $65 billion. An increase of one-half percent in real growth would equal about $325 million.”
Indiana and Michigan adopted their right-to-work laws in 2012, and Wisconsin became the newest right-to-work state in 2015. Support for the reform has grown even among the membership of several unions. During Michigan’s debate over right-to-work, Heritage Foundation 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.” Union membership in Michigan fell 7.6 percent during the first year of right-to-work.
Opponents of right-to-work contend the reforms force wages down, disadvantage unions, and lower people’s standard of living. But research shows states enacting right-to-work have experienced positive economic effects 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.
Using years of economic data and empirical evidence from each state, the 2015 American Legislative Exchange Council’s annual economic competitiveness study, Rich States, Poor States, ranked West Virginia 19th in economic performance and 36th 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.
Right-to-work laws create new jobs and result in population growth. West Virginia lawmakers should not give up on passing right-to-work legislation and the tremendous economic benefits it brings.
The following documents examine right-to-work laws in greater detail.
The Economic Impact of Right to Work Policy in West Virginia
John Deskins, Eric Bowen, and Christiadi examine the economic outcomes of right to work (RTW) in several states and consider how the adoption of RTW in West Virginia would likely affect the state’s economy. The authors begin with a simple presentation of economic outcome measures for states with RTW policies versus those without such protections.
Unions Charge Higher Dues and Pay Their Officers Larger Salaries in Non–Right-to-Work States
This research paper by Heritage Foundation Senior Policy Analyst James Sherk examines the correlation between union fees, union officials’ pay, and a state’s right-to-work status. Sherk finds union officials’ median pay in states without right-to-work laws is $20,000 more than in states with right-to-work laws.
Research & Commentary: Right-to-Work Policies
Alex Monahan, a former government relations coordinator for The Heartland Institute, says states lacking right-to-work laws should consider implementing them. The evidence shows right-to-work reform has 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 legislation.
Right-to-Work States Lead Way on Income Growth
Using government data, Zachary Woodman, a research intern with the Mackinac Center for Public Policy, finds right-to-work states have had stronger income growth than forced-unionization states over the past few decades.
Unions Hinder Economic Growth and the Free Market
American Enterprise Institute President Arthur Brooks demonstrates unions hamper economic growth by limiting freedom in the marketplace. Brooks concludes, “States should seek to pass right-to-work laws as part of reforms to strengthen their economies and enhance economic growth.”
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 studied many decades of data on right-to-work states – where workers don’t have to join a union to hold a job – and concludes those states enjoy stronger growth in personal incomes, employment, and population. Report coauthor Michael LaFaive discusses 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, debunks the misleading characterization of employees who opt out of unions as “freeloaders.”
Economic Growth and Right-to-Work Laws
This study by the Mackinac Center 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 documents the positive impact of 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 2015
The American Legislative Exchange Council’s annual Rich States, Poor States 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.
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 subject, visit Budget & Tax News at http://news.heartland.org/fiscal, The Heartland Institute’s website at http://heartland.org, and PolicyBot, Heartland’s free online research database at www.policybot.org.
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