From 2003-3013, Real Private-Sector Compensation Growth in Right to Work States Was Nearly Twice as Great as in Forced-Unionism States

Citing data released by the U.S. Commerce Department’s Bureau of Economic Analysis earlier the same day, on March 25 James Hohman of the Mackinac Center for Public Policy  reported that, in the aggregate, personal income (unadjusted for inflation)  grew by 2.8% last year in the 24 states with Right to Work laws on the books, compared to growth of just 2.4% for the 26 states that still lack such laws.

As Hohman noted, over the long term, Right to Work laws “have been associated with [greater] inflation-adjusted personal income growth, population increases and job growth.”  (See below for a link to the entire commentary.)

However, the Right to Work advantage last year was substantially wider with regard to growth in employee compensation (including wages, salaries, benefits and bonuses) than it is with regard to all kinds of personal income (including, e.g., investment income and government transfer payments, as well as compensation).

After adjusting for inflation using the CPI-U, private-sector compensation in Right to Work states grew by 2.8% last year, or a full percentage point more than the 1.8% aggregate increase for forced-unionism states.

Looking at the longer term, from 2003 to 2013, Right to Work states experienced overall real compensation growth of 16.0%, nearly double the 8.7% average for forced-unionism states.  (Indiana and Michigan, whose Right to Work laws took effect in February 2012 and March 2013, respectively, are not included in either group of states.)

Seven of the top 10 states for private-sector compensation growth over the decade are Right to Work states.  But among the 14 states with the least compensation growth, just one had a Right to Work law prior to 2012.

State-by-state compensation growth in any given year may largely reflect where the various regions of the country are in there business cycles.  But the fact that Right Work states consistently lead forced-unionism states by a wide margin in compensation growth over 10-year periods can’t easily be dismissed.  And this is just one of the many important pieces of evidence indicating state Right to Work laws are economically beneficial.

In 2013, the year the Michigan Right to Work law took effect, inflation-adjusted compensation (including wages, salaries, benefits and bonuses) for the Wolverine State’s private-sector employees increased by 2.8%, nearly double the 1.5% average for the five remaining forced-unionism states in the Midwest. Image: Eric Allie/Cagle Cartoons

Right-to-Work States See Larger Gains [Mackinac Center]