Economy
5:25 pm
Thu December 13, 2012

Do Right-To-Work Laws Help Or Hurt The Economy?

Originally published on Thu December 13, 2012 8:01 pm

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Transcript

ROBERT SIEGEL, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

AUDIE CORNISH, HOST:

And I'm Audie Cornish. When lawmakers in Michigan approved right-to-work legislation this week, they revived a debate over whether such laws help or hurt a state's economy. Such laws prevent unions from requiring dues - or a fee - from workers, and supporters say this lures companies and boosts economic growth. To opponents, it weakens unions and lowers wages.

Right-to-work laws are now on the books in nearly half of all states. And to find out what kind of effect they've had, we turn to Tim Bartik. He's a senior economist at the nonpartisan Upjohn Institute for Employment Research, in Michigan. Tim, welcome to the program.

TIM BARTIK: Thank you for having me.

CORNISH: So right to work, for those who are opponents, is a partisan term - and very polarizing issue. Do economists have hard proof that these laws really create jobs, or boost a state's economy?

BARTIK: Well, I would say the evidence is quite uncertain. I mean, you can find studies that show some positive effects on employment growth. On the other hand, other studies find no such effects. You can find some studies that find negative effects on a state's wages; other studies find no such effects. And the reason why we have trouble finding a consistent effect is that there simply hasn't been enough variation, over time, in which states have right-to-work laws. Over most of the history of right to work - it's been something that many Southern states, and some Western states, have. It's very difficult to disentangle what's due to right to work, and what's due to other characteristics of those states.

CORNISH: But help us understand that. I mean, so many states have adopted these laws. And a lot of them - the bulk of them did so, you know, shortly after World War II. That's many decades of data. Why is it so difficult to hash out?

BARTIK: Well, it's true that the South has, on average, grown faster than the North since World War II. I would say that most regional economists think that the South's growth is due to more fundamental economic forces - for example, the development of air-conditioning, which made manufacturing easier to do in the South, made the South a more desirable place to live; the development of the highway system, which allowed for manufacturing to use truck transportation more, and to decentralize more.

So I don't think that really, right to work is seen as the fundamental driver of the South's growth. On the other hand, did it have some effect? It's a little hard to say. There hasn't been much variation. Not too many new states have adopted right to work, over the past 40 or 50 years.

CORNISH: One state that has, is Indiana; and the governor of Michigan points to that neighboring state as an example of right to work boosting a state's economy. Again, any evidence there, to back up that claim?

BARTIK: It's simply too recent to tell. I mean, the other states people point to, where we do have some evidence, are Idaho, which adopted right to work in 1985; and Oklahoma, which adopted it in 2001. Unfortunately, the studies - they're all over the map. And another thing to point out is, it's not clear how much you can generalize from Idaho and Oklahoma, to the rest of the country.

CORNISH: Unions argue that these laws drive down their membership, and wages. But what's the evidence there?

BARTIK: Well, there's certainly evidence that right-to-work laws tend to reduce unionization rate. That is true. We've found some significant evidence of negative effects on wages in the non-union sector. And that actually makes sense because one affect that unions have is that if your company might be unionized, you might want to increase your wages to avoid that. And one thing that right-to-work laws do is make it harder to organize unions, and easier to decertify them. And therefore, if your company is less likely to be unionized, you might be less inclined to raise wages to avoid being unionized.

CORNISH: Tim Bartik, thank you for speaking with us.

BARTIK: Thank you.

CORNISH: That's Tim Bartik, senior economist at the Upjohn Institute for Employment Research in Kalamazoo, Michigan. Transcript provided by NPR, Copyright NPR.