‘Right to Work’ Laws Increase Poverty, Decrease Productivity

On February 1, 2012, Indiana governor Mitch Daniels signed a “right-to-work” (RTW) provision in the state’s labor laws, making Indiana the twenty-third RTW state in the nation and the first in more than a decade to pass a law undermining the ability of unions to organize and represent their members. As I write this, efforts are under way in at least a half-dozen other states, including Ohio, Maine, Michigan, Minnesota, and Oregon, to follow the Indiana example and further limit the rights of unions nationwide.

In RTW states, unions are prohibited from including in their contracts “union security clauses,” which require all employees in the bargaining unit either to join the union or pay a portion of its dues. Worker-friendly states, on the other hand, allow provisions for the union to be the exclusive bargaining agent for those workers who are eligible for membership, and also require all eligible employees to pay at least a portion of the union dues.

Despite the eagerness to adopt these laws, the question of whether RTW laws actually benefit a state economically has remained largely unanswered. In this paper, using the most recent data available from public sources, I have analyzed a spectrum of seven measures for standard of living, including Gross Domestic Product GDP), poverty rates, life expectancy rates, and “income gap,” and determined whether there are differences in these measures between the 22 RTW states (not including Indiana, which joined them after this data was collected) and the 28 worker-friendly states.

The results clearly show the adverse consequences of RTW laws on people living in those states, and should inform the good efforts of union members and allies to quell the ongoing efforts to spread these laws nationally. Dr. Martin Luther King, Jr. once said, “In our glorious fight for civil rights, we must guard against being fooled by false slogans as ‘right to work.’ It provides no ‘rights’ and no ‘works.’ Its purpose is to destroy labor unions and the freedom of collective bargaining.” The evidence presented here shows that Dr. King was absolutely right.

An Analysis of the Data

The GDP, or the total amount of goods and services produced in a year, is probably the most accessible single measure of standard of living. A high GDP positively correlates with a high standard of living, and changes in living standards can be swiftly observed in corresponding changes in the GDP.

According to 2009 data, the GDP per capita for worker-friendly states collectively was $43,899, while the GDP per capita for the RTW states was $38,755 or 13.3 percent lower. It is worth emphasizing that GDP represents goods and services produced, and is not the same as per capita income. Thus, the initial analysis of this measure indicates that the worker-friendly states appear to be significantly “more productive” than the RTW states.

Poverty rates: Obviously a state with a high standard of living would be expected to have fewer residents living in poverty. Using U.S. Census income data, and applying it to the two groups of states, we find again that RTW states have a lower standard of living. Eleven of the 15 states with the highest poverty rates are RTW states, while nine of the 11 states with the lowest are worker-friendly. Furthermore, the percentage of the 2008 population living in poverty in RTW states was 14.4 percent, while the percentage in worker-friendly states was 12.4 percent. To put this difference in perspective, if the rate of poverty in RTW states was extended across the nation, an additional 3,670,000 American men, women, and children would be living in poverty today.

Health insurance: One would expect that a state with a high standard of living would have more of its citizens covered by basic health insurance, giving them access to preventive care and swift medical treatment. And, once again, the Census data show that the worker-friendly states have a higher standard of living. Fully 11 of the 13 states with the lowest uninsured rates are worker-friendly states, while 11 of the 15 states with the highest uninsured rates are RTW states. The median uninsured rate for worker-friendly states is 12.6 percent, while for RTW it is 15.7 percent. Again, to put this in perspective, if the rates of non-insured citizens in RTW states were spread across the country, then an additional 8,640,480 Americans would be uninsured and suffer a lack of access to affordable health care.

Life expectancy: While there may seem to be little reason for a correlation to exist between RTW laws and the life expectancy of citizens in those states, life expectancy data from the Harvard School of Public Health was included here because it is a very common measure of standard of living. And, as it turns out, the data reveal a surprising trend. Of the 13 states with the highest life expectancy rates, 10 are worker-friendly states. Conversely, of the 12 states with the lowest life-expectancy rates, only two are worker-friendly states. In worker-friendly states, citizens can expect to live 77.6 years (the median), while citizens in RTW states can expect to die at 76.7.

To read on (and to see the author’s state-by-state tables for each standard of living), visit www.nea.org/thoughtandaction.