Setting the Record Straight on Right-to-Work and Wages

January 07, 2013 J

By Casey Given

One of the most dizzying economic debates today surrounds right-to-work’s effects on workers’ wages. A simple Google search on the subject reaps a plethora of conflicting data about whether right-to-work laws increase or decrease worker compensation. The National Institute for Labor Relations Research, for example, reports that residents of right-to-work states earn $2,100 more on average each year than residents of other states. By contrast, the Economic Policy Institute claims the exact opposite, estimating the right-to-work residents earn $1,500 less. Who is right in this fog of contradictory data?

Granted, this is no simple riddle to solve. Considering that taxes and the cost of living varies drastically from state to state, economists must make complicated calculations to estimate which type of states really make more. It’s obvious that a worker in industrialized New Jersey would make more than one in rural Nebraska considering how much more they have to pay to get by, but that does not necessarily mean that those in the Garden State are better off without right-to-work.

Although these factors make it difficult to determine the specifics of how much right-to-work affects wages, one statistic at least can clear up the question of whether the impact is positive or negative – namely, percentage of growth in personal income by state. This statistic is neutral to variables like as taxes and cost of living that make calculations on this subject so complicated. Rather, the economic debate on right-to-work’s effects on worker compensation can be settled simply by determining if such states grow faster than their union shop counterparts.

The answer, drawn from Bureau of Economic Analysis data, is a resounding yes. From 2001 to 2011, personal income in right-to-work states grew by 19.1% after adjusting for inflation. This rate is greater than the national average of 14.8% and that of union shop states at 10.7%. The simple fact is employees’ wages in right-to-work states are growing almost twice as fast as their union shop counterparts.

This statistic is just one of many encouraging numbers about right-to-work’s contribution to a state’s overall competitiveness. The population in right-to-work states has grown 9.2% faster than union shop states over the same time period. Real gross domestic product has grown 7.7% faster. Perhaps most revealing, right-to-work states created 997,800 new private sector jobs in the past decade, while union shop states lost 2,294,000.

So, when you hear union advocates like President Obama claim that right-to-work is really “the right to work for less money,” look at the facts yourself. Right-to-work economies are growing faster than their union shop counterparts, from their total employment all the way down to individual workers’ wages. When workers are given choice instead of being forced to unionize, businesses can bargain more competitively with unions – allowing both parties to reach an agreement that is best for both workers and management while keeping the company afloat. Such positive effects ripple through the economy, attracting more citizens and commerce to right-to-work states that respect workers’ choice and allow businesses the freedom to bargain without being bullied by Big Labor’s legal monopoly.

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