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Right to Work Laws Promote Economic Growth

Posted by Steve Markowitz on July 21, 2014

The so-called “right-to-work” laws make it illegal for workers to be forced to join a union, even if one represents the plant in which they work.  In states that do not have right-to-work” laws, union membership can be made a requirement of employment in those factories.

Pro-unionists argue that once a plant votes for union representation, all workers in that plant should be forced to pay dues to that union whether or not the individual employee desires the representation.  The opposing argument revolves around the rights of individual workers to choose or not to choose to join the union.

Those favoring compulsory unionization or closed shops often proffer to view that this requirement is for the overall good of not only the company workers as a group, but also overall society.  This is in keeping with a made union argument that somehow unions not only promote the overall economic good by raising worker compensation, but also help companies be more efficient in some undefined manner.  The video clip below of Barack Obama on a stump speech in front of the union audience repeats this argument.

IRreview.com has published economic facts that bring into question the soundness of the unions’ and Obama’s economic argument.  The following facts are listed from a study by The Competitive Enterprise Institute relating to economic activity between 1977 and 2012:

  • Median income for a family of four has decreased by approximately $13,100 in forced-unionism states. In addition, the greater the union membership percentage, the more depressed the state’s economic growth.
  • States with right-to-work laws have had an overall net gain in population growth compared to a net loss in other states. Populations move to more prosperous states.
  • During this period, nationwide the employment growth rate was 71%. However, in right-to-work states that number increased by 105% with non-right-to-work states growing by only 50%.

The Competitive Enterprise Institute study is interesting at various levels.  First, it bolsters the argument that right-to-work laws play a part in a state’s economic success.  In addition, it helps demonstrate that there are unintended consequences when the government interferes with the natural operations of the marketplace, in this case the labor marketplace.  While compulsory union shop laws may initially have been made for the benefit of workers, they have had long-term detrimental effects on employment and compensation.  It is likely that these compulsory laws’ largest benefactors have been the professional workers who work for organized labor including their executives, i.e. union bosses.

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