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Among the contentious issues in the world of labor, right-to-work laws are perhaps the most debated, as unions loathe them above almost anything else. There is little question that right-to-work laws have a downward effect on unionization rates, but a recent report by NERA Economic Consulting also concludes that these laws have an overall positive economic impact as well.
As the report points out, the 1947 Taft-Hartley Act permitted states to adopt right-to-work laws, and immediately afterwards 10 states chose to do just that. In the years since then, 15 more states have followed suit, with the most recent one being Wisconsin, which adopted right-to-work in March 2015.
Over those years, numerous studies have examined the economic effects of right-to-work laws, and the NERA report sought to distill that large body of research and present data about economic performance in both right-to-work and non-right-to-work states. Specifically, the report examined the direct and indirect impact of right-to-work laws on economic growth, employment, investment, and innovation. Based on that comparative data, the report offers the following observations:
- “Private sector employment grew by 17.4 percent in RTW [right-to-work] states between 2001 and 2013, more than double the 8.2 percent increase in non-RTW states.
- “On average, the annual unemployment rate in RTW states was 0.5 percent lower than in non-RTW states. In concrete terms, if non-RTW states had had the same unemployment rate as RTW states in 2014, approximately 402,000 more people would have been employed.
- “Output has also grown faster in RTW than in non-RTW states, rising by more than 30 percent between 2001 and 2013, compared to 20 percent in non-RTW states. Seven of the 10 states with the largest growth in real output over this period are RTW states.
- “The gap in manufacturing output is even greater — real manufacturing output rose by 35 percent in RTW states between 2001 and 2013, compared with 19 percent in non-RTW states.
- “Higher growth rates translated into higher personal incomes: personal income in RTW states rose by nearly twice as much as in non-RTW states between 2001 and 2013 — 27.7 percent vs. 15.3 percent.
- “Businesses more often choose locations in RTW states, as evidenced by the more rapid growth of firms and establishments.
- “As of 2014, about four percent of private sector workers in RTW states belonged to unions, compared with about nine percent in non-RTW states.”
The economic effects of right-to-work laws have long been debated, with those opposed to them seemingly disinclined to believe that they provide economic benefits where they are adopted. As the NERA report makes clear, the evidence across all indicators suggests that right-to-work laws actually are good for the economy, despite what labor unions would have us believe.