The disturbing cost of right-to-work laws
Mar 02, 2015
The national spotlight is on Wisconsin again as political leaders in Madison debate the merits of making us a right-to-work state. Unfortunately, many involved in this discussion are not fully aware of the negative implications of such a law.
As opposed to what the term implies, right-to-work actually has nothing to do with the right of a person to seek or accept gainful employment. Rather, right-to-work laws prohibit a labor union and private sector employer from negotiating union security clauses that regulate the collection of union dues.
In non-right-to-work states, such as Wisconsin, employers and unions enter into a private contract that requires every person benefiting from the contract to pay union dues. In right-to-work states, payment of dues is optional for workers represented by the union. There are now 24 states with right-to-work laws; most of those states are in the South and the West.
Proponents of right-to-work laws advance two major arguments. First, they claim right-to-work laws make a state more attractive to business investment. Second, that passage of a right-to-work law will lead to job growth.
Most evidence, however, suggests that right-to-work legislation, by itself, is not much of a factor in where firms locate. Studies have consistently found there are several key factors that business decision-makers consider and compare when deciding among alternative investment sites. In annual surveys of small manufacturers conducted by Area Development magazine, including the most recent last month, right-to-work never ranked in the top 10 factors influencing location decisions. Issues such as transportation infrastructure, ease of permitting, existing workforce, state and local tax policy and several others were considered more important to site selectors.
Another argument for right-to-work is the claim that it creates more jobs. But numerous studies have shown it is not right-to-work laws that matter, but rather the â€œpro-business packageâ€ offered by right-to-work states that seems to matter. The 24 states with right-to-work laws have very different economies, and their economic fortunes are mostly explained by the unique features of their economies and state economic development policies.
The facts also show that right-to-work legislation puts downward pressure on wages. According to U.S. Department of Labor statistics from 2013, the average wage for all occupations in right-to-work states was nearly $4 an hour lower than in the remaining states. At the same time, right-to-work legislation erodes the quality of a stateâ€™s labor force by encouraging the best and the brightest to migrate to states where wages are higher.
Another finding relates to income and spending. Right-to-work laws reduce wages, which negatively impacts income and spending, causing both to decline. Reduction in income also negatively affects the amount local government collects in tax revenue, resulting in lower sales tax receipts. Thus, right-to-work laws undermine the ability of state and local governments to raise adequate tax revenues to pay for public services.
Right-to-work also makes for less-safe workplaces, including increases in on-site injuries and even fatalities for construction workers,according to Roland Zullo, a Michigan economist. In Wisconsin, unions spend significant resources on occupational safety and negotiate job safety procedures beyond those contained in OSHA regulations.
Wisconsin could attract more businesses by investing resources in its workforce and numerous other assets to improve their quality. Businesses will be willing and able to pay higher wages and further expand employment opportunities.
Simply stated, right-to-work legislation would provide no discernible overall economic advantage to Wisconsin, but it does impose significant social costs.
Right to Work: Wrong for Wisconsin
Source: Milwaukee Journal Sentinal