Employee Compensation Growth Is Faster in Right to Work States

When National Public Radio reporter Lisa Autry acknowledged in a report on labor policy last year that “income and job growth” have long been “faster” in Right to Work states than in forced-unionism states, militantly pro-forced unionism listeners howled in protest. But, as U.S. Labor Department and U.S. Commerce Department data have shown again and again, Autry was just telling the truth. Image: WKU (Western Kentucky University) Public Radio

Union bosses and their hard-core followers often get angry when you tell the truth about the relative economic performance of Right to Work states and forced-unionism states. Just ask Lisa Autry of WKU Public Radio, a station affiliated with National Public Radio (NPR) and located in western Kentucky.

Last year, in a report concerning efforts to pass a law prohibiting forced union dues and fees in the Bluegrass State, Autry stirred up a controversy simply by citing a well-established fact, that is, “income and job growth” have long been “faster” in Right to Works states than in forced-unionism states.

Militantly pro-forced unionism listeners protested so vociferously that NPR actually did a follow-up report in which it named a Western Kentucky University (WKU) economist as Autry’s source. But all any economist or ordinary citizen has to do to confirm that job and income growth are faster in Right to Work states is look at the data supplied by the U.S. Labor Department and the U.S. Commerce Department.

Since a National Right to Work Committee blog post last week looked at private-sector job growth in Right to Work states vs. forced-unionism states, we will now focus on income growth, and specifically on the growth of private-sector employee compensation (including wages, salaries, benefits and bonuses).

Today the Commerce Department’s Bureau of Economic Analysis released for the first time annual state data for private-sector compensation in 2015, as well as revised data for previous years.

After adjusting for inflation using the Consumer Price Index, from 2005 to 2015, the 22 states that had Right to Work laws on the books for the entire decade experienced real compensation growth of 16.9%, or 38% more than the aggregate increase for the 25 states that lacked Right to Work protections for the whole period.

(Indiana, Michigan and Wisconsin, which adopted Right to Work laws from 2012-2015, are excluded. Since the 26th state Right to Work law was adopted in West Virginia just this year, it is counted as forced-unionism here.)

Seven of the top 10 states for private-sector compensation growth over the decade are Right to Work states. But among the 11 states with the least compensation growth, eight are forced-unionism states.

State-by-state compensation growth in any given year may largely reflect where the various regions of the country are in their business cycles. But the fact that Right to Work states consistently lead forced-unionism states by a substantial margin in compensation growth over 10-year periods can’t easily be dismissed. And this is just one of many important pieces of evidence indicating that state Right to Work laws are economically beneficial.

Compensation of Employees by Industry (SA6, SA6N)