Factory Employee Compensation Growth Almost 1.5 Times as Fast in Right to Work States

Over the past five years manufacturing employment in the 22 states that had Right to Work laws on the books in 2011 has grown by 5.9%, or roughly double the percentage increase in the current 24 states where compulsory union dues were still permitted.   This analysis is based on U.S. Labor Department payroll jobs data recently noted in a Institute commentary published earlier this month (see the first link below).

Now that the U.S. Commerce Department’s 2016 data for employee compensation, which include the cash value of noncash benefits like health insurance as well as wages and salaries, are available (see the second link below), it’s clear the Right to Work advantage remains large when it comes to compensation growth as well as job growth.

From 2011 to 2016, aggregate inflation-adjusted manufacturing employee compensation growth in states that had Right to Work laws on the books for the entire five years was 11.1%, or nearly half again as much as growth in states that were forced-unionism for the whole time. (Indiana, Michigan, Wisconsin and West Virginia, which adopted Right to Work laws between 2012 and 2016, are excluded from this analysis and what follows. Kentucky and Missouri are counted as forced-unionism states here, since they did not become Right to Work until this year.)

The negative correlation between compulsory unionism and factory compensation growth is quite robust. All of the nine bottom-ranking states for 2011-2016 (Connecticut, Delaware, Maine, Maryland, New Jersey, New Mexico, New York, Pennsylvania and Vermont) lack Right to Work protections for employees. But among the 13 top-ranking states for manufacturing compensation growth, nine are Right to Work.

Manufacturing Moves to Right to Work States

Compensation of Employees by Industry (SA6, SA6N)