“Right to Work” Laws and Jobs

Ontario Conservative leader Tim Hudak claims that passage of an anti union “right to work” (RTW) law (making mandatory union dues illegal) would create jobs, especially in hard-hit manufacturing.

With companies like Caterpillar moving to get ever cheaper labour, it seems semi plausible that anti union laws might attract footloose new investment , albeit at the expense of workers. US studies show a significant negative impact of about $1500 per year on wages in RTW states.

But US experience, in fact, shows that trends in overall employment, including in manufacturing, vary widely among both RTW and non RTW states, and that there is no consistent pattern linked to RTW laws. Basically labour law is only one modest factor among many influencing the  production and investment decisions of firms.

A study by Gordon Lafer and Sylvia Allegretto for the Economic Policy Institute finds that manufacturing employment in Oklahoma fell precipitously – by about one third – in the decade after that state adopted a right to work law in 2001. This is especially telling since Oklahoma was the only US state to switch to RTW status in recent years (not counting Indiana which has just adopted a RTW law.)

A methodologically sophisticated study by Michael Hicks, Director of the Center for Business and Economic Research at Ball State University, finds no significant link between RTW laws and manufacturing employment trends.

A telling factoid for this debate is that RTW North Carolina – which has the lowest unionization rate in the US at just 4.1% – has lost one third of its manufacturing jobs over the past decade, and currently has a well above average unemployment rate of 9.4%.

Meanwhile, non RTW Massachusetts, Vermont and New Hampshire, which have significant high tech industries, all have well above US average unionization rates (15.4%, 13.5% and  12.5%) and well below average unemployment rates (6.0%, 4.7% and 5.1%.)