Right to Work’s ‘Substantial Economic Benefits’

Matthew Lilley (inset): Union contracts often feature “last-in, first-out layoff rules,” which typically “disadvantage” younger employees -- who may reasonably regard such rules as “blind” to their value as individuals.
Matthew Lilley (inset): Union contracts often feature “last-in, first-out layoff rules,” which typically “disadvantage” younger employees — who may reasonably regard such rules as “blind” to their value as individuals. (Credit: Getty Royalty Free / Inset: LinkedIn)

Bans on Forced Dues Linked to ‘Higher Upward Economic Mobility’

For decades, Right to Work states in the southern, midwestern, and western regions of the U.S. have enjoyed economic growth far superior to that typically experienced by states in which employees are forced to join or pay dues or fees to a labor union just to keep their jobs.

Union bosses and their allies can’t claim otherwise.

But they have long argued no one should pay attention to the fact that Right to Work status is correlated with faster growth in jobs and real, spendable income.

Big Labor’s task in trying to distract the public’s focus from forced-unionism states’ comparatively poor economic performance has gotten more difficult over the years, thanks to a growing mountain of economic research.

Right to Work Laws Don’t Stop Anyone From Voluntarily Joining a Labor Union

And a new paper by Duke University economist Matthew Lilley for the nonpartisan Manhattan Institute will undoubtedly make union propagandists’ job harder still.

“Workers, Wages, and Economic Mobility: The Long-Run Effects of Right to Work Laws” was published in September and is accessible on the Internet free of charge to any interested person.

It is based on earlier academic research Dr. Lilley did in collaboration with fellow economist Benjamin Austin when they were both Harvard graduate students. 

Right to Work laws simply protect each employee’s individual freedom to choose whether or not to join and bankroll a union; they don’t prevent anyone who wishes to support a union financially from doing so.

‘Compressed’ Wage Schemes Penalize Most Productive Workers ‘Relative to Others’

But in practice, such laws “reduce unionization rates and union coverage rates,” according to Dr. Lilley.

He argues the most plausible reason why this is so is that “unionization is truly opposed by many employees” who express their opposition, when they can do so without getting fired as a consequence, by refusing to become members, or resigning their membership, and withholding funds from the union.

Workers who believe unionization harms them economically may oppose the “highly compressed wage schemes” typically backed by Big Labor, which “disadvantage” the highly productive relative to others.

They also may oppose “last-in, first-out layoff rules,” which are also a common feature of union contracts, because they “disadvantage recent employees.”

From Dr. Lilley’s vantage point, the stance of workers who don’t want a union, whether they are motivated by economic or other reasons, is worthy of respect.

Research Focus: Neighboring Counties in Right to Work, Compulsory-Dues States

To get an academically sound answer to this question, it is necessary to factor out, to the extent it is possible, the substantial differences between Right to Work states as a group and forced-unionism states as a group with regard to “population demographics, education, economic and social history,” etc.

In their collaborative research, Drs. Lilley and Austin focused their attention on “adjacent pairs of counties” in different states where one county has Right to Work protections for employees and the other does not.

Because demographics, climate, cost of living, and other factors “affecting economic outcomes” tend to have “little variation across short distances,” neighboring counties with contrasting policies on the Right to Work and forced unionism act “as a natural control group,” argues Dr. Lilley.

Because their principal interest was in the “long-term effects” of Right to Work laws, Drs. Lilley and Austin excluded counties located in the five states that adopted and implemented new bans on forced union dues and fees between 2012 and 2017.

Right to Work Boosts Employment, Especially In Manufacturing

The Lilley-Austin analysis showed that Right to Work laws boost overall employment substantially. Right to Work’s impact is particularly strong in the manufacturing sector, which has a long history of heavy unionization.

Specifically, the two economists found a “3.23 percentage-point increase in the manufacturing share of employment” on the Right to Work side of the border among the 373 neighboring counties they analyzed.

As Dr. Lilley notes, “This difference is substantial, equivalent to a 28% increase in manufacturing employment” in Right to Work counties relative to their non-Right to Work neighbors.

He and his partner went on to investigate whether the combination of “stronger labor markets and weaker union presence” in Right to Work states “improves or hinders social well-being and opportunities for future generations.”

Their findings confirmed voluntary unionism’s “substantial economic benefits.”

The overall poverty rate was 1.41 percentage points lower in the Right to Work counties Drs. Lilley and Austin analyzed than in their forced-unionism counterparts.

Childhood poverty rates were 2.29 percentage points lower in Right to Work counties.

‘Workers Do Not Flock to Places Where They Expect They Will Be Worse Off’

As economist Barry Poulson has noted, it’s common sense that jurisdictions with higher real, spendable incomes would “attract more workers” than others do. But Big Labor claims workers are fleeing from states where they’re better off!

Right to Work laws also improve the “economic status of future generations.”

Children from all types of families who are born in Right to Work counties are substantially more likely to end up in the “top economic quintile” than their counterparts in neighboring forced-unionism counties.

National Right to Work Committee Vice President Matthew Leen commended the groundbreaking scholarship of Drs. Lilley and Austin.

He also noted that it requires no expertise in the field of economics to recognize that it is these scholars, rather than academics who stubbornly persist in whitewashing forced unionism, who are on the right track:

“As a rule, workers do not flock to places where they expect to be worse off.

“In the words of Barry Poulson, a past president of the North American Economics and Finance Association, ‘We expect’ that jurisdictions with higher cost of living-adjusted incomes ‘would attract more workers.’

“And that’s exactly what U.S. Census Bureau data show is happening. From 2020 to 2030, these data show, the 23 remaining forced-dues states are on track to lose a net total of nearly 2.5 million people in their peak-earning years — that is, ages 35-54.

“Common sense tells you that wouldn’t be happening if forced-unionism states were economically thriving. Economists like Matthew Lilley and Benjamin Austin simply let you know your common sense is right.”

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