In 2012, Right to Work Indiana’s Compensation Growth Outpaced That of Every Midwestern Forced-Unionism State

Compensation of employees by industry (SA06, SA06N)

During the first year Indiana’s Right to Work was in effect, inflation-adjusted private-sector compensation in the state grew by 3.6%, an increase substantially greater than those achieved in any of the then-six remaining forced-unionism states in the Midwest. Image: Dan Page/Inc.

In early 2012, roughly 21 months ago, Indiana legislators approved, and then-Gov. Mitch Daniels signed into law, a measure prohibiting the termination of private-sector employees for refusal to pay dues or fees to an unwanted union.

Big Labor bosses melodramatically proclaimed it was a dark day for Indiana. Passage of the 23rd state Right to Work law would somehow, they insisted, result in smaller Hoosier paychecks.

But both the original data for 2012 reported this spring and the revised data issued at the end of last month show Indiana is moving in the opposite direction from what the union bosses predicted.

Inflation-adjusted U.S. Commerce Department data issued September 30 show that private-sector compensation (including wages, salaries, benefits and bonuses) in the Hoosier State grew by 3.6% last year. The original estimate issued in late March was 2.9%.

Indiana’s gain was substantially greater than those achieved in any of the then-six remaining forced-unionism states in the Midwest. (Michigan, whose Right to Work law was adopted in December 2012, but didn’t take effect until this year, is counted as forced-unionism here.)

Indiana’s 3.6% real increase in private-sector employee compensation was also superior to the national average of 2.8% and the forced-unionism state average of 2.4%.

Yet from 2001 to 2011, Indiana was one of just six states (all forced-unionism) to experience an actual decline in inflation-adjusted compensation. And the Hoosier State’s turnaround isn’t surprising, based on the overall track record of Right to Work states.

From 2002 to 2012, real private-sector compensation increased on average by 14.2% in the 22 states that had Right to Work laws on the books throughout the period. That’s well over double the 6.1% real increase for the 27 states that lacked Right to Work protections for the whole decade.