Rare News Desk
Michigan shook the world when its legislature voted to become a Right to Work (RTW) state.
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That was a little over a year ago. Now, several states are now fighting over RTW laws. Oregon just tossed an RTW initiative off its ballot in November, but that seems a temporary setback only.
Ohio continues to debate RTW and related “workplace freedom” laws. Pat Sink, an Ohio unionist, said that Big Labor would work hard to “educate voters to the dangers of this controversial movement” and thereby “ensure that we have a chance to defeat it once and for all.”
A point opponents of RTW legislation like to trot out is that income is lower in RTW states as opposed to non-RTW states. President Barack Obama calls RTW really “the right to work — for less money.”
Is that true? And, if so, how much less money?
The actual income gap between non-RTW and RTW states is 3.2 percent, which translates to a $1,500 gap in favor of states with compulsory union laws.
But the debate hardly ends here. The cost of living in non-RTW states is higher than in RTW states. Some of this is due to the prevalence of unions, as employers have to pass added labor costs onto the consumer.
The average cost of living in non-RTW states is 104 percent of the national average, compared to 93 percent in RTW states. The National Institute for Labor Relations calculates the average weekly salary of someone in a RTW state as $638, as opposed to $632 in a non-RTW state in 2001.
Earnings, after adjusting for the cost of living, are essentially equal.
While earnings are about equal, the rates of job creation are anything but. RTW states have greatly outperformed non-RTW states. Over the past three decades, RTW states have surpassed rivals in total employment growth and per-capita income.
On paper, non-RTW states may have slightly higher earnings. They also have higher unemployment.
When unions raise labor costs for business, it leaves less capital to be reinvested later on. Artificially high wages that union employees enjoy today come at the expense of future economic growth, as investment drives production.
Historian Thomas Woods argues the “damage that unions have inflicted on the economy in recent American history is actually far greater than anyone might guess.” He points out that a 2002 joint National Legal and Policy Center-John M. Olin Institute study found “labor unions have cost the American economy a whopping $50 trillion over the past 50 years alone.”
That same study found union employees earn 15% more than non-union employees. Nice work if you can get it, we might say. But the trick is, we can’t, because unions kill jobs. Another finding was that the U.S. economy is about 30-40% smaller than it would have been if labor unions didn’t drive up wages for a privileged subset of jobs.
The campaign for RTW is about revoking that privilege and trading it in for more jobs and more economic growth, at a time when both are sorely needed.
