Jobs to Right-to-Work States
Published on April 12, 2015
Earlier this year, Mercedes-Benz announced that, in order to become more cost-competitive, it was moving its U.S. headquarters from New Jersey, a union-shop state, to Georgia, a right-to-work state. Right-to-work laws, as authorized by the 1947 Taft-Hartley Act and passed by Georgia, prohibit unions and employers form entering into agreements that require employees to join a union and pay union dues in order to get or keep a job. Twenty-five states have enacted right-to-work laws. The remaining 25 states and DC are union-shop states that require an employee to become a member of the union in order to retain a job.
Union leaders maintain that the objective of right-to-work laws is to sow dissension among workers and weaken the labor movement. Proponents of right-to-work laws assert that as a matter of economic freedom, workers should not be required to join a union and that this freedom supports greater economic growth among right-to-work states. Economic data from 2000 to 2013 show that right-to-work states did expand economic growth, as measured by non-inflation-adjusted GDP, by 70.7 percent compared to 59.3 percent for union-shop states.
Digging deeper, it is found that during this same period of time, right-to-work states expanded manufacturing wages and salaries by a median 7.7 percent, while union-shop states experienced a median 3.0 percent decline in manufacturing wages and salaries. In fact, 16 of the 25 union-shop states suffered a decline in manufacturing wages and salaries, while only 6 of the 25 right-to-work states experienced a decrease. Furthermore, the share of manufacturing jobs held by union-shop states fell from 55.1 percent to 53.9 percent over the thirteen year period. But the union-shop states' share of the nation's high-wage heavy manufacturing jobs sank by an even larger three percentage points.
Data show that high wage manufacturing industries, normally dominated by unions such as steel and automobile, are moving to and expanding in right-to-work states. With manufacturing firms becoming increasingly mobile, the pressure to pass right-to-work laws will grow in the years ahead. I expect Missouri to be the next state to leave the union-shop coalition.
-Ernie Goss, Ph.D.
McAllister Chair & Professor of Economics
Creighton University
