"Right To Work" - A Comparison Of Two States

For years now, the Republicans have been trying to claim that "right to work" laws are good for American workers. To put it mildly, that is a ridiculous lie. Those laws are good only for corporations (and other businesses that want to hurt labor unions, and actually hurt workers.

Ross Eisenbrey and Teresa Kroeger at the Economic Policy Institute have written an excellent article comparing two states -- Indiana (which has a "right to work" law) and New Hampshire (which does not). Here is what they had to say:

In 2011 and 2012 two states, New Hampshire and Indiana, debated the same bill: so-called “right-to-work” legislation, pushed by corporate lobbyists and the American Legislative Exchange Council (ALEC), designed to weaken unions financially and pave the way for greater corporate dominance of state politics. New Hampshire’s governor vetoed the bill in 2011. Indiana, by contrast, enacted it in 2012. It is instructive to compare the two states. By almost any measure, the economy of New Hampshire is stronger and its citizens are better off, on average, than the citizens of Indiana. Right-to-work did not improve the Indiana economy relative to New Hampshire’s, and no one should be fooled into thinking that passing right-to-work now will improve the New Hampshire economy.

So-called “right-to-work” laws prohibits unions and employers from agreeing to collective bargaining agreements that require employees covered by the agreement to pay their fair share of the costs of negotiating and enforcing it. The only right that “right-to-work” creates is the right for free riders to get the benefit of higher union wages and protections against unfair discipline without contributing any dues or fees for that privilege.

EPI published two reports critical of the New Hampshire legislation, one in 2011 and another in 2012, pointing out that the only real purpose and effects of these laws are lowering wages and weakening unions. As the figure above suggests, such laws do nothing to create jobs, and they don’t give anyone a right to work, but they are associated with lower wages—lower on average by more than 3 percent, or $1,500 per worker.

Now, New Hampshire’s legislature is once again debating a right-to-work bill. The bill’s sponsors make claims it will improve New Hampshire’s business climate and bring new jobs to the state, but there is no truth to this. Job growth in Indiana since it passed right-to-work has been no better than in New Hampshire.

At 2.7 percent, New Hampshire has the nation’s lowest unemployment rate. Indiana’s unemployment rate is 4.2 percent.

Wages are far higher in New Hampshire than Indiana. The median hourly wage was $16.50 in Indiana and $19.17 in New Hampshire over the first 11 months of 2016. The mean hourly wage was $21.27 in Indiana but $25.21 in New Hampshire.

New Hampshire has the lowest poverty rate in the country: 8.2 percent. Indiana’s poverty rate is 14.5 percent, and ranked 26th. According to the U.S. Department of Commerce Bureau of Economic Analysis, in 2015, Indiana had a per capita personal income (PCPI) of $41,940. This PCPI ranked 36th in the United States and was 87 percent of the national average, $48,112.  New Hampshire’s per capita income was 33 percent higher than Indiana’s: $55,905, ranked 9th in the nation, and 116 percent of the national average.

It is important to consider whether right-to-work is somehow an advantage to a state with regard to the economy of the future, which most economists agree will be a knowledge-driven economy. The Kauffman Foundation and the Information Technology and Innovation Foundation have been ranking states in a New Economy Index for many years based on factors such as economic dynamism, employment in high-value-added manufacturing, educational attainment of the workforce, and technological innovation capacity. Measured before and after Indiana passed its right to work law, Indiana’s rank fell from 35th in the nation in 2010 to 38th in 2014. New Hampshire ranked number 11 in both 2010 and 2014. Only two of the top 15 states are right-to-work. . . .

Simply put, there’s no rationale for passing this legislation, except to weaken unions politically and decrease the ability of workers to bargain for higher wages and stronger workplace protections.