Growth in Private-Sector Employment, Household Expenditures Far More Rapid in Right to Work States


Late last month, the Institute released its spring 2017 update of its triannual fact sheet comparing Right to Work and forced-unionism states according to an array of key economic criteria. In this blog post and several others to be published over the course of the next couple of weeks, I will take a closer look at the data presented in the latest edition of “Right to Work States Benefit from Faster Growth, Higher Real Purchasing Power

The first item in the fact sheet gauges 2005-2015 growth in private-sector, nonfarm employment as measured by the U.S. Commerce Department. The BEA most recently reported these data on September 28, 2016, with new estimates for 2015 and revised estimates for 1998-2014. (See the first link below for more information.) Data for 2016 will not be available until this fall.

(Unlike the establishment jobs data collected by the U.S. Labor Department, BEA data track self-employment and contractual employment as well as payroll jobs.)

The most recent 10-year BEA employment trend shows, as such data long have done, a wide advantage for states that protect employees from being fired for refusal to pay dues or fees to an unwanted union over states where the law permits such unjust firings.

All of the top four — and eight of the top 10 — states for 2005-2015 private-sector employment growth were Right to Work for the entire decade. Meanwhile, the seven bottom-ranking states for employment growth — Maine, Missouri, New Hampshire, Ohio, Rhode Island, Vermont, and West Virginia — all lacked Right to Work laws for the whole 10 years.

Yale professor emeritus and renowned expert in the presentation of statistical data Edward Tufte: “Correlation is not causation but it sure is a hint.” Image: A.J. Chavar/Washington Post

(Indiana, Michigan and Wisconsin, which adopted Right to Work laws from 2012 to 2015, are excluded. West Virginia, which became the 26th Right to Work state in 2016, and Kentucky and Missouri, which became Right to Work this year, are counted as forced-unionism here, since statistics for 2016 and 2017 are not yet available.)

Overall, BEA-reported private-sector, nonfarm employment in Right to Work states grew by 15.4% fr0m 2005 to 2015. That’s 48% above the average for forced-unionism states.

Faster growth in job and income is clearly a key reason why inflation-adjusted expenditures on housing, health care, food, clothing, cars, gas and other services and goods are rising far more rapidly in Right to Work states than in forced-unionism states.

New and revised BEA data issued last October show that, from 2005 to 2015, real personal consumption expenditures grew by 21.9% in the 22 states that were Right to Work the entire time. That’s 38% greater real PCE growth than what was experienced in the aggregate by the 25 states that still allowed forced unionization as of 2015. (See the second link below for more information.)

The hard, objective data from the Commerce Department help show why H.R.785 and S.545 are extraordinarily important pieces of legislation.

Respectively introduced by Reps. Steve King (R-Iowa) and Joe Wilson (R-S.C.) in the U.S. Congress’ lower chamber and by U.S. Sen. Rand Paul (R-Ky.) in its upper one, this legislation, otherwise known as the National Right to Work Act, would simply repeal all federal labor-law provisions that currently authorize compulsory union dues and fee payments as conditions of employment.

When forced-dues repeal becomes law, private-sector employees in all 50 states will have the freedom to choose as individuals whether or not to join or pay dues to a union, without facing job loss as a consequence of their decision.

While restoring workers’ personal freedom is the primary purpose of King-Wilson-Paul, of all the economic reforms Congress may consider this year and in 2018, it would probably have the strongest positive impact for jobs and incomes.

As Yale professor emeritus and eminent statistician Edward Tufte has observed, “Correlation is not causation but it sure is a hint.” The very strong correlation between Right to Work status and faster job growth, decade after decade, “sure is a hint” that banning forced union dues is economically beneficial.

And federal forced-dues repeal would spur faster job growth nationwide. Businesses based in current Right to Work states would share the benefits as their major out-of-state customers and suppliers were freed from the burden of compulsory unionism.

Total Full-Time and Part-Time Employment by Industry (SA25, SA25N)

Personal consumption expenditures