The False Social Concerns About Right-to-Work

In the Detroit Free Press, Stephen Henderson expresses concern that right-to-work states are doing worse than forced unionism states in a number of social trends.

This past decade has not done well for decreasing poverty rates around the nation, and there’s likewise been an increasing rate of people that lack health insurance. The data is not entirely clear on whether these trends are in favor of right-to-work or forced unionism states, however.

The Census Bureau's American Community Survey has the most up to date information on poverty rates. Using the one-year estimates for 2004 through 2011 — the earliest available on the Census Bureau’s poverty data page — shows very similar increases between right-to-work and forced unionism states. When accounting for the size of each state, the average right-to-work state's poverty rate increased by 20.1 percent while the average forced unionism state’s poverty rate increased by 23.4 percent.

Thus, it is not true that, at least over this period, right-to-work states have a higher growth in poverty rates.

There is a wide variation among the two groups of states, with increases in rates increasing between 0.1 percentage points to 4.8 percentage points in right-to-work states and between 0.6 percentage points to 5.2 percentage points in forced unionism states. Michigan had the distinction of increasing its poverty rate the most over the period.

Obviously, there are more factors that lead to state-level poverty than whether or not union employees are required to pay dues or agency fees. A simple regression using right-to-work as a dummy variable and comparing to the growth in the poverty rate from 2004 to 2011 shows no significant relationship between having or lacking a right-to-work law and a growing poverty base.

So even though the average right-to-work state had a smaller increase in poverty rates, it's unlikely that right-to-work was much of a factor.

The number of people without health insurance displays similar trends over the same time frame. On average, right-to-work states saw their rates on uninsured increase by 17.7 percent while forced unionism states increased by 15 percent. These averages show a different direction in trends from the growth in poverty rates, but the difference between the two groups is slight. There’s an even wider range on the changes in states. Some, like Massachusetts and Mississippi, saw its rate of uninsured decrease, though the typical state saw it increase.

The simple regression with right-to-work and the 10-year change in the percent of people lacking health insurance yields similar results: No relationship between having a right-to-work law or not and the growth of the uninsured population.

On factors like GDP and personal income, however, the simple regression shows a much stronger relationship.

Michigan passed right-to-work last week and residents should not expect this to increase the number of people without health insurance or the number of people in poverty. But residents can expect positive economic effects from this law.

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.