Right-to-Work Laws: The Economic Evidence (2018 Update)

May 11, 2018 - 10:30am

Executive Director, Labor Policy

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Right to Work Law: The Economic Evidence
Right to Work Law: The Economic Evidence

In the years since the 1947 passage of the Taft-Hartley Act that permitted states to pass right-to-work laws, numerous studies have examined their economic impact. In 2015, NERA Economic Consulting published a report that 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. 

In its original report, NERA examined the economic effects of right-to-work (RTW) laws by studying the direct and indirect impact of those laws on economic growth, employment, investment, and innovation. Not surprisingly, the report concluded that despite organized labor’s hatred for such laws, they have an overall positive economic impact. 

Three years later, NERA has updated the report with additional data that reinforce its original findings. Specifically, the updated report presents the following information about the economic effects of right-to-work laws:

  • “Private sector employment grew by 27 percent in RTW states between 2001 and 2016, compared to 15 percent in non-RTW states.
  • “On average, the annual unemployment rate in RTW states was 0.4 percentage points lower than in non-RTW states. In concrete terms, if non-RTW states had had the same unemployment rate as RTW states in 2017, approximately 249,000 more people would have been employed.
  • “Output has also grown faster in RTW than in non-RTW states, rising by 38 percent between 2001 and 2016, compared to 29 percent in non-RTW states. Four of the top five states with the largest growth in real per capita output over this period are RTW states.
  • “The gap in manufacturing output is also substantial: Real manufacturing output rose by over 30 percent in RTW states between 2001 and 2016 compared with 21 percent in non-RTW states.
  • “Higher growth rates translated into higher personal incomes: Personal income in RTW states rose over ten percentage points more than in non-RTW states between 2001 and 2016, 39 percent versus 26 percent.
  • “Businesses tend to locate in RTW states, as evidenced by the more rapid growth of firms and establishments.
  • “As of 2017, about four percent of private sector workers in RTW states belonged to unions, compared with about nine percent in non-RTW states.”

As this blog noted in 2015, the economic effects of right-to-work laws have long been debated, and those opposed to them routinely denounce them and cherry-pick data to make their case.  Just as the original NERA report demonstrated, though, after three years the evidence across all indicators continues to suggest that right-to-work laws are good for the economy, notwithstanding arguments to the contrary.

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Executive Director, Labor Policy