Best Available Evidence Indicates Right to Work Laws Foster Faster Growth in Employee Compensation

As I noted in a post on this web site last week, the editors of the Milwaukee Journal-Sentinel’s (MJS) editorial page admit that state Right to Work laws protect employees’ “freedom to choose whether to be in a union.”  But judging by the rest of their January 6 editorial opposing consideration of any Right to Work measure by Wisconsin legislators this year (see the link below), employee freedom just isn’t a big deal for the MJS team of pundits.  The only important question regarding Right to Work, they imply, is whether or not it will boost the Wisconsin’s economy.

Right to Work supporters strongly disagree with this perspective, as I pointed out last week.  And a new poll commissioned by the Wisconsin Policy Research Institute shows that, while a plurality of Wisconsinites think a Right to Work would be good for the state economy, citizens say they would vote for Right to Work by a 62%-to-32%, or nearly two-to-one, margin.  Obviously, many Badger State residents believe protecting the individual employee’s Right to Work is the right thing to do, even though they aren’t sure what the economic impact will be.

But the fact is, the best available evidence indicates that a Right to Work law would help fatten the pocketbooks of Wisconsin employees even as it protects their freedom.  In the 22 states that have had Right to Work laws on the books for at least a decade, jobs, wages and salaries, and access to important work-based benefits like health insurance have on average grown far more rapidly than in the 26 states where employees may still be compelled to bankroll a union as a job condition today.

For example, according to inflation-adjusted U.S. Commerce Department data, total private-sector employee compensation in the 22 states that had Right to Work laws on the books from 2003 through 2013 grew by 15.1%, nearly double the aggregate 8.2% growth in the 26 states that lacked Right to Work laws for the whole period.  (Since Indiana’s and Michigan’s Right to Work laws took effect only in 2012 and 2013, respectively, they are excluded from the averages.)

Of the 12 states with the slowest compensation growth over the past decade, 10 (Connecticut, Delaware, Illinois, Kentucky, Maine, Missouri, New Jersey, Ohio, Rhode Island and Wisconsin) are still forced-unionism today, and two (Indiana and Michigan) lacked Right to Work laws until very recently.  Meanwhile, nine of the 12 states with the fastest compensation growth have longstanding Right to Work laws.

As eminent statistician and retired Yale professor Edward Tufte has written, “Correlation isn’t causality, but it sure is a hint.”  The decades-long positive association between Right to Work status and job and compensation growth is undeniably evidence of a causal relationship.  Anticipation that enactment of a Right to Work law will lead to faster paycheck growth is not the primary reason the Wisconsin public overwhelmingly supports such a law, but it is a good reason.

And the fact that there is a strongly negative correlation between forced unionism and compensation growth is strong evidence that, contrary to the gauzy claims of union-boss allies such as the Big Labor-funded Economic Policy Institute (EPI), compulsory unionism brings no economic benefits to workers.

To establish that their claims are correct, EPI researchers would have to show that, if they didn’t permit forced union dues and fees, the 26 states still controlled by Big Labor today would have even slower compensation growth relative to Right to Work states than they do now.  But the EPI’s anti-Right to Work studies have never even tried to make this argument.

Because they fail to confront the actual data regarding relative compensation growth in Right to Work and in forced-unionism states, the EPI’s researchers offer no meaningful evidence to back up their contentions that union monopolies somehow benefit workers financially.  Yet, sadly, the MJS editorial page editors chose to rely on the EPI, without considering Commerce Department and other federal data, to make their assessment of the likely economic impact of a Wisconsin Right to Work law.  The newspaper’s readers deserve better.

Lawrence Mishel, president of the Big Labor-backed Economic Policy Institute, and his colleagues never even consider federal data showing that state Right to Work laws are strongly correlated with faster employee compensation growth. Image: Chip Somodevilla/Getty Images News

At best, right-to-work is a questionable idea