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The Real Impact of Right-To-Work

January 18, 2013
By Walker Bragman

Michigan's “right-to-work”(RTW) legislation has many Americans around the country questioning how similar laws would impact their livelihoods. The Wolverine State is now the 24th to approve such measures. Union members, Democrats including President Obama himself and activists on the left are up in arms over what they call an “attack on organized labor,” citing lower wages as inevitability.

On the other side, conservatives, celebrating what they call “a victory for freedom,” argue that when cost of living is taken into account RTW states actually provide better compensation for workers. Just how valid are either of these claims? A recent study by Darrell Minor of Columbus State Community College in OH may have an answer.

Minor explains that both arguments are flawed. Compensation is an insufficient measure to judge the impact RTW legislation because it fails to account for cost of living, which in turn isn't accurate due to the amount of variation within states. A more appropriate determiner is standard of living. This Minor ascertains by analyzing data from the Bureau of Labor Statistics, the U.S. Census, the Bureau of Economic Analysis, and other public sources to compare Gross Domestic Product (GDP), poverty rates, percentage of state citizens who have basic health insurance, employment rates, home ownership rates, life expectancy rates, and income gap in worker-friendly and RTW states. These figures are strong indicators of living standards.

After reviewing the data he found a strong correlation between high standard of living and worker-friendly states. Conversely, he determined that RTW states correlate to a lower standard of living. Indeed in all areas except for wealth gap and home ownership the difference was drastic; the former were consistently the top performers nationwide while the latter ranked at the very bottom. “To sum up, this study has found that worker-friendly states are significantly healthier, are more productive, have less poverty, and with citizens who enjoy longer life spans” writes Minor,“These findings have broad policy implications in those states where lawmakers are wrongly considering RTW measures, and should inform the good efforts of union members and allies to quell those efforts.” It is worth noting that Minor's study does not look at states before and after passing such legislation, however it is doubtful that such vast differences are a coincidence.

Just to be sure I tested the hypothesis. I used Oklahoma as my sample because it passed a RTW law in 2001 so the before and after effects are clearly visible (I would have also used Wisconsin but much of the bill was struck down by a state court.) Comparing data from the US Census, the BEA, the CDC, the US Energy Information Administration, as well as the tables from Minor's report I was able to see changes in the state's standard of living between 1999 and 2012. As I expected, after the passage of the legislation GDP growth slowed drastically. The percentage of people in poverty from 2001 to 2012 increased at the same rate at which it had been declining over the previous 10 years. Life expectancy before 1999 had also been increasing, but between then and now it went down. The only outlier is percentage of uninsured which did in fact improve, but only by half the amount of New York and Maine, both of which are worker friendly. However, the latter figure is the least significant since several worker friendly states saw increases. I did not look at wealth gap or home ownership since Minor found no correlation between RTW and those numbers. I cannot say for certain whether or not the legislation is the definitive cause of the decline in standard of living, but given Minor's research it is likely a major contributing factor.

So what is likely to happen now that Republicans are pushing this polarizing agenda all across the country? As research suggests, there may be a significant decline in living standards in states with such laws which will create unrest. While the issue has been put on the back burner due to the recent string of mass shootings, there is no reason to believe that it is going anywhere. Protests spring up everywhere these bills are proposed. The events in Michigan are reminiscent of what happened when Gov. Scott Walker (R) passed a RTW bill in Wisconsin. The resulting teacher rallies laid the groundwork for the Occupy Movement which played a pivotal role in the outcome of the 2012 election in which Democrats won the majority of votes cast in all three races. RTW laws could eventually prove to be GOP's Frankenstein monster, as it may hurt the already weakened party in 2014 both for its political and economic ramifications.

January 18, 2013

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