What a Right-to-Work Law Will Mean For Indiana
Indiana appears to be on the verge of passing a state right-to-work law. Such a law would prevent workers from being compelled to provide financial support to a union in their workplace in order to remain employed.
If Indiana state government passes a right-to-work law, and if the state’s experience is similar to that of the other 22 right-to-work states, the state can expect a variety of benefits:
1. A right-to-work law will mean more jobs for Hoosiers
From 2000 to 2010, employment in right-to-work states increased 2.3 percent, compared to a 4.0 percent decline in non-right-to-work states. Indiana saw employment decrease 6.9 percent over the same period. That means Indiana lost roughly 207,000 jobs over the past 10 years. In contrast, 1.2 million jobs were created in right-to-work states.
2. A right-to-work law will mean good wages
That’s because more jobs mean better wages. It’s basic economics. When more jobs are available, companies have to be ready to pay more to attract the workers they want. That works with or without a union.
Between 2000 and 2010, personal income grew 57.5 percent in right-to-work states, compared to 40.5 percent in non-right-to-work states. Indiana saw personal income grow a paltry 35.4 percent over the same period.
The difference remains when you look at disposable personal income (the money you have left to spend after taxes). From 2000 to 2010, disposable personal income increased 65.3 percent in right-to-work states, compared to 49.4 percent in non-right-to-work states. Indiana managed a meager 41.8 percent increase over the same time period.
Then there is the cost of living, which tends to be lower in right-to-work states. A study by the Missouri Economic Research and Information Center found that in 2009, after adjusting for the cost of living, annual per-capita disposable income was $35,543 in right-to-work states, compared to $33,389 in non-right-to-work states. That equates to a $2,154 premium each year for those living in right-to-work states.
The bottom line is that wages are just fine in right-to-work states — and they’re growing faster, too.
3. A right-to-work law will not affect worker safety
Right-to-work opponents claim that right-to-work laws threaten worker safety, but occupational injury and death statistics tell a different story. Occupational injuries in right-to-work states, as reported by the U.S. Bureau of Labor Statistics, were 3.5 per 100 employees in 2009, compared to 3.9 workers in non-right-to-work states. The fatalities in right-to-work states are slightly higher than in non-right-to-work states: 4.3 vs. 3.1 per 100,000 workers. But this translates to about 2,200 total occupational deaths in right-to-work states compared to 2,400 total occupational deaths in non-right-to-work states per year.
Unions can play a role in worker safety, but they aren’t the only way workers can protect themselves. A host of state and federal safety regulations protect workers in both union and nonunion companies. Fatal occupational injuries are rare in both right-to-work and non-right-to-work states.
4. A right-to-work law will not harm unions
Right-to-work opponents accuse right-to-work legislation of being veiled union-busting, but the real union busters are the unions themselves. If unions continued to satisfy workers, one would expect their membership to at least remain constant, but between 2000 and 2010, union membership declined by 9.5 percent in non-right-to-work-states and 9.2 percent in right-to-work-states. Not only is membership falling in both instances, but non-right-to-work states see their membership declining at a faster rate than right-to-work states. There are even cases where unions gained membership in right-to-work states like Nevada or Texas.
A right-to-work law doesn't prevent unions from forming when workers really want them. Instead, it simply says that a worker cannot be forced to financially support a union he or she does not want. Union officials need not fear being left without the money they need to function. Workers are smart enough to support a union when it works hard for them. In every right-to-work state, more than three-quarters of workers who are represented by a union join the union and pay dues voluntarily.
5. A right-to-work law will take Hoosiers where the rest of the nation is heading
Workers are slowly leaving states like Indiana for better jobs and better wages. Right-to-work states experienced large population gains of 15.3 percent from 2000 to 2010, compared to 5.9 percent in non-right-to-work states. Indiana did a little better than most non-right-to-work states, with a population gain of 6.4 percent over the same period. But again, this number pales in comparison to the gains seen in right-to-work states. A growing population means new opportunities and more customers for local businesses.
Americans are not afraid to move when they see a better opportunity. This is why Michigan would be at a further competitive disadvantage should Indiana become a right-to-work state. Existing businesses, entrepreneurs and investors will be drawn to states with inviting labor climates and minimal regulatory interference from the state. Gov. Rick Snyder and the Michigan Legislature should take their cue from Indiana’s leadership and embrace the right-to-work concept. The alternative is losing more population, jobs and tax revenue to the Hoosier state.
Paul Kersey is director of labor policy at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in full or in part is hereby granted, provided that the author and the Center are properly cited.
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.