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Examining Right-To-Work Laws Impact On Income And Economic Growth


Let's slow down the news for a moment. We're going to examine a single phrase that was mentioned in a news story earlier this week. The phrase involved right-to-work laws in Kentucky - 25 states have those laws. They let employees opt out of labor unions, limiting union power. Our story said income and job growth have increased more quickly in right-to-work states. So let's look more deeply into that assertion with David Wessel. He's director of the Hutchins Center at the Brookings Institution and a regular guest here. Hi, David.


INSKEEP: So again, here's the phrase. Our story from Kentucky said income and job growth have increased more quickly in right-to-work states since World War II. Is that true?

WESSEL: I did a quick check of the government data for the past 24 months, and it shows that employment grew by 4.6 percent in states with right-to-work laws and only 3.7 percent in states without those laws. Now, your report relied on a tally of government data done by the Mackinac Center for Public Policy - a conservative think tank in Michigan. And it found a 43 percent gain in total employment between 1990 and 2011 in right-to-work states versus 19 percent in other states. And it also found much faster growth in personal income in right-to-work states. But those correlations do not prove that right-to-work laws are the reason or even a reason that some states added more jobs than others. It's really, really hard - maybe even impossible - to single out the effects of this just one law.

INSKEEP: Why would that be?

WESSEL: Well, because there's simply too many other things going on at the same time. I mean, think about what happened after World War II. There was a huge shift of population and employment to the states in the South - many of which have right-to-work laws. But a lot of other things were going on. There was the spread of air conditioning, differences in the price of energy, improvements in transportation, housing price divergences, different zoning and environmental regulations, tax rates, quality of education and so on. It's really hard to tease out this one factor.

INSKEEP: OK, so it's true that right-to-work law states have grown more quickly than other states. It is impossible to say if there's any connection between the two things, though. Is there any impartial scholarship that does try to pinpoint the effect of right-to-work laws?

WESSEL: There is some. It's clear that states with right-to-work laws have lower rates of union membership and weaker unions and tend to have lower wages. Now, there's a long academic literature trying to identify the effects of right-to-work laws. In a 1998 peer-reviewed article by Thomas Holmes of the University of Minnesota, he described the academic evidence on the proposition that pro-business policies help build jobs as mixed. His comparison of states, some with right-to-work laws, some without, found substantially more manufacturing job growth in those with right-to-work laws. But he stressed that his results don't mean that adopting such a law and doing nothing else would do much for employment. More recent research suggests his estimates might be overstated. In a 2009 analysis, by a Hofstra professor, found little or no gain in employment or growth in states with right-to-work laws.

INSKEEP: David Wessel, thanks very much.

WESSEL: You're welcome. Transcript provided by NPR, Copyright NPR.