Right to Work Boosts Manufacturing Growth

Employee Freedom a Vital Component of America’ s Prosperity

(Click here to download the July 2014 National Right to Work Committee Newsletter)

Even before the Great Recession of 2008-2009 brought a long period of consistently low national unemployment rates in the United States to an abrupt end, concerns about a secular employment decline in the manufacturing sector were widespread.

However, as many economists have pointed out, the decline of U.S. manufacturing employment is primarily a result of worldwide output growing faster than demand, rather than the relatively small secular decline in American firms’ market share of the worldwide demand for manufactured goods.

In fact, new and revised data from the U.S. Commerce Department’s Bureau of Economic Analysis (BEA) show that, from 2003 to 2013, the country’s real manufacturing GDP in “chained” 2009 dollars grew from $1.642 trillion to $1.940 trillion, or 18.1%. Meanwhile, the real overall GDP of the U.S. grew by 16.6%, or just a little over 90% as much.

nl03Nine of the Top 12 States For 2003-2013 Factory Output Gains Are Right to Work

Total 2003-2013 GDP growth in the 22 states that had Right to Work laws on the books throughout the period was 21.5%, significantly greater than the national average and 6.8 percentage points greater than the average for states lacking Right to Work protections throughout the period.

In the manufacturing sector, Right to Work states’ growth advantage was even wider.

From 2003 to 2013, Right to Work states’ real manufacturing GDP increased by 26.1% — or almost double the forced-unionism average.

Nine of the 10 states showing the greatest declines in manufacturing GDP lack Right to Work laws. But nine of the 12 states with the greatest manufacturing GDP gains are Right to Work.

National Right to Work Committee Vice President Matthew Leen said counterproductive work rules imposed and perpetuated for decades by Big Labor bosses wielding forced-unionism privileges are a key factor behind the state manufacturing GDP data.

“In industry after industry,” Mr. Leen explained, “union bosses have negotiated contracts requiring rigid job classifications that waste time and money, ultimately to the detriment of workers’ paychecks and job security.

“Starting in the late 1980’s, it became increasingly apparent that companies under rigid union monopoly-bargaining rules like the Big Three automakers were being crushed by union-free domestic competition, which is very often based in Right to Work states.

“Within the past few years, manufacturing union bosses have finally responded by grudgingly allowing some reforms of work rules and inefficient health-insurance and pension systems. But for the most part it has been too little, too late.”

Nearly Half of America’s Factory Output Now Generated In Right to Work States  

Mr. Leen continued: “Thanks partly to the adoption of the 23rd and 24th state Right to Work laws by Indiana and Michigan in 2012, a record 47.6% of the entire U.S. manufacturing output last year occurred in states that had prohibited compulsory union dues and fees.

“As recently as 2003, just 36.3% of the manufacturing production in the U.S. occurred in Right to Work states.

“And last year alone, real manufacturing GDP in the now-24 Right to Work states grew by 4.3%, more than double the 1.9% average for forced-unionism states.

“Unlike the factories of America’s past, the new facilities springing up in Right to Work states located in Southern, Rocky Mountain and Plains States, and now in the Great Lakes region as well, do not typically employ vast numbers of people.

“But the highly productive jobs located in such sites are enabling millions of workers to provide well for themselves and their families, especially when Right to Work states’ low aggregate cost of living compared to that of forced-unionism states is taken into account.”

Mr. Leen rejected the notion that, because manufacturing provides a significantly smaller share of American (and global) jobs than in the past, it is no longer important:

“The manufacturing sector remains a vital component of our national prosperity. As Commerce Department data show, it is a sector that over the past decade has grown at a significantly faster clip than the economy on the whole.

“And Right to Work states have played an absolutely critical role in enabling this sector to continue growing and prospering.”