The Building Tradesman Newspaper

Friday, October 21, 2011

Attractions offered by right-to-work states may be as simple as nice weather

By The Building Tradesman



LANSING – There are several Republican-backed right-to-work bills and proposals that are floating around the state Capitol. One would allow local governments to institute right-to-work “zones” in their corner of the state. Another would make RTW a statewide law. Last month, a state Republican leader advocated “right-to-teach” legislation in an effort to specifically break the Michigan Education Association.

With Michigan on the front lines of the right-to-work debate, the Economic Policy Institute is helping organized labor in our state fight back with information. The labor-backed think-tank issued an extensive briefing paper Sept. 15 titled “Right to Work – The wrong answer for Michigan’s economy.” The full 20-page report can be accessed at www.epi.org.

Following is our second excerpt of the study, which further debunks proponents of right-to-work.

“Referring to the right-to-work states as a coherent group, as if they’re all having passed a certain law means that their economies all function in similar fashion, is misleading.

“It implies that labor laws play a dominant role in shaping these states’ economies. But people don’t refer to the 27 states that offer tax credits for child care as “the child-care tax credit states” because that would wrongly imply that these states are, above all, linked together by their common child-care policies.

“The same is true for right-to-work policies. The 22 states with right-to-work laws have very different economies, and their economic fortunes are mostly explained by the unique features of their economies and state economic development policies.

“Texas, for instance – the single largest right-to-work state – has a very large oil and gas industry. Florida and Nevada have large tourism industries and attract large numbers of both young people and retirees drawn to the climate. It is factors such as these – along with a host of state policies other than labor law – that determine a state’s economic fortunes.

“The average growth rate of these 22 states misleads us into assuming that all states in this group grow in a similar fashion, when in truth they have hugely divergent track records.

“As the following analyses show, there is tremendous variation between right-to-work states with high or low unemployment rates, and fast or slow growth rates, which proves that the average is meaningless and the real factors driving state fortunes have nothing to do with ‘right to work.’

“The Mackinac Center (a Michigan-based conservative think-tank) argues that since the average unemployment rate is lower in states with right-to-work laws than in free-bargaining states, if Michigan adopts a right-to-work law, its unemployment rate will improve in line with the average of all right-to-work states.

“However, these averages are highly deceiving. The actual state-by-state unemployment rates show that there is no relationship whatsoever between a state’s unemployment rate and whether or not it has a right-to-work law.

“First, while Michigan’s unemployment rate is troubling, it is not the highest, but in fact is lower than that of two states with right-to-work laws (Nevada and Florida) and even with that of a third, South Carolina.

“If right-to-work laws guarantee low unemployment, why are Nevada and Florida worse off than Michigan? When we look at the broader pattern of unemployment in the states, the relationship between unemployment and state labor laws is even harder to discern. Seven of the 10 highest-unemployment states are states with right-to-work laws. How can that be true, if right to work is the path to low unemployment?

“Put another way, if Michigan adopts a right-to-work law, how can we tell whether it will end up with an unemployment rate as low as North Dakota’s, or as high as Nevada’s?

“Indeed, both the highest and the lowest unemployment rates in the country are found in states with such laws. Clearly, then, something other than right to work explains relative growth rates in the states.

“The misleading ‘averages’ of 22 very different states are also used by others to obscure the reality of state-by-state data. For example, a January 2011 Indiana Chamber of Commerce report promoting a right-to-work law for Indiana focused on the fact that personal income in the 22 right-to-work states grew faster on average than in the 28 free-bargaining states. Based on these numbers, the Chamber asserted that if Indiana adopted a right-to-work law, personal income there would grow at a rate similar to the average of right-to-work states over the past 30 years.

“At first glance, the Chamber’s argument may seem convincing. ‘States with right-to-work laws have experienced above-average economic growth…while states without such laws have seen below average growth,’ the report said. As with the claims about unemployment rates, a reader might conclude that all right-to-work states enjoyed rapid economic growth (measured in this case by the growth in per capita income), while all free-bargaining states had sluggish growth – that if the states were lined up in order of growth, we’d find all the right-to-work states up front and all others at the back of the line.

“In reality, this is far from the case.

“The two fastest-growing states between 1977 and 2008 were Massachusetts and Connecticut – both free-bargaining states with relatively high rates of unionization. In fact, 10 free-bargaining jurisdictions (nine states plus the District of Colombia) all enjoyed growth over this period that was superior to three quarters of the right-to-work states.

“If states with right-to-work laws can experience either dramatic employment growth or steep declines, and if both right-to-work and free-bargaining states can foster booming job markets, then it is clear that something in these states’ economies, demographics, or policies other than right-to-work laws must be driving their job growth.

“The economic fortunes of the 22 states with right-to-work laws are mostly explained by the unique features of their economies and state economic development policies. The average growth rate of these 22 states misleads us into assuming that all states in this group grow in a similar fashion, when in truth they have hugely divergent track records. The tremendous variation between right-to-work states with high or low unemployment rates, and fast or slow growth rates, proves that the average is meaningless and the real factors driving state fortunes have nothing to do with “right to work.”

“To the extent that these 22 states share any common economic trends, their growth is explained by factors other than labor law.  There is no reason to believe that Americans move from one state to another because of right-to-work laws, as most Americans have likely never heard of something called ‘right to work.’ Rather, the evidence points to other factors.

“One factor is the weather. The right-to-work states are concentrated in the South and Southwest, and it is likely that the climates of Florida, Nevada, Arizona, and similar states draw many migrants. The single most important factor is the cost of housing, according to U.S. Census data. For example, many Californians have moved to Oregon, a free-bargaining state that happens to have much more affordable housing prices. Thus, higher job growth may be concentrated in those warmer-weather states that happen to have right-to-work laws, but it has nothing to do with those laws.”