New Study Questions Wisdom of "Right-to-Work" Laws
PHOTO: A study by the Economic Policy Institute says "right-to-work" laws don't attract businesses to a state. Courtesy of EPI.
December 12, 2012
LANSING, Mich. - Legislatures such as Michigan’s that have passed so-called "right-to-work" laws say that by limiting the power of unions, they will attract businesses to their states. But a new study from the Economic Policy Institute says there's no evidence that it works that way.
Study author and economist Gordon Lafer says Michigan Gov. Rick Snyder was wrong when he said that was the way Indiana attracted business.
"The Indiana Economic Development Commission, although it is a fierce advocate of right-to-work, has not been able to point to even a single company that says that right-to-work was the determining factor that made them decide to come to Indiana."
Lafer says a major company that was cited as bringing jobs to Indiana because of the law denied that "right-to-work" had anything to do with its decision. He says the only proven effect of such laws so far has been to reduce wages.
Lafer thinks Michigan made a mistake in passing its new right-to-work laws. He says studies show that the legislation has a negative impact on workers and a state's economy.
"Its impact is to lower wages by about a national average $1,500 a year, for both union and non-union workers; and to lower the chance of getting health insurance or a pension through your job by about 3 to 5 percent; and to do nothing for job growth."
Lafer says right-to-work laws may have been more effective in the past, but globalization changed all that.
"In the 1960s or 1970s, there were companies leaving places like Michigan for the South or Southwest if they wanted cheap labor. But today, companies that want to get cheap labor are going to China or Mexico. They're not going to South Carolina or to Arizona."
Lafer says job growth depends more on economic recovery than on laws to limit labor unions. Michigan is now the 24th state to pass right-to-work legislation.
See the report at epi.org.