The Building Tradesman Newspaper

Friday, February 25, 2011

Right-to-work states: Still underpaid, underinsured

By The Building Tradesman

The Wall Street Journal’s editorial page – which basically acts as the little instruction book for radical Republicans – plowed headlong into the ongoing “debate” about the economic benefits of right-to-work laws on Feb. 2.

The Journal claimed, without substantiation, that workers in right-to-work states were economically better off than states like Michigan that are more welcoming to unions. Last week, the labor-backed Economic Policy Institute weighed in with some actual numbers that show wages are 3.2 percent lower in RTW states than in non-RTW states.

In the paper, titled The Compensation Penalty of Right-to-Work Laws, the authors suggest “that RTW laws can harm all employees in a state, whether or not they are members of a union. In other words, the anti-union efforts that are currently being undertaken by governors and legislatures seeking to address the economic crises in their states could in fact be anti-worker, and a particularly bad idea when the economy is mired in a stagnant recovery.”

The study, written by EPI economists Elise Gould and Heidi Shierholz, found:

*Wages in right-to-work states are 3.2% lower than those in non-RTW states, after “controlling for a full complement of individual demographic and socioeconomic variables.” Using the average hourly wage in non-RTW states as the base ($22.11), the average full-time, full-year worker in an RTW state makes about $1,500 less annually than a similar worker in a non-RTW state.

*The rate of employer-sponsored health insurance is 2.6 percentage points lower in RTW states compared with non-RTW states. Spread those uninsured workers into non-right-to-work states, and it works out to about 2 million fewer workers nationally would be covered by health insurance.

*The rate of employer-sponsored pensions is 4.8 percentage points lower in RTW states. If workers in non-RTW states were to receive pensions at this lower rate, 3.8 million fewer workers nationally would have pensions.

The researchers said with their use of “a full set of explanatory variables including state-level controls, it is clear that our analysis stands apart as being more rigorous than others of this type.”

Contrast that research with the Wall Street Journal. As we reported in our last issue, the Journal said “right-to-work states outperform forced-union states in almost every measurable category of worker well-being.” The next line didn’t elaborate on that statement, it said: “A new study in the Cato Journal by economist Richard Vedder finds that from 2000 to 2008 some 4.7 million Americans moved from forced-union to right-to-work states.”

With the nation getting older and retiring and right-to-work states usually having warmer climates, that migration is hardly a surprise.

Later in the editorial, the Journal said, “The study also found that from 1977 through 2007 there was “a very strong and highly statistically significant relationship between right-to-work laws and economic growth.” No surprise that states with lower wages experience economic growth, but it still doesn’t account for the Journal’s claim of enhanced “worker well-being” in RTW states.

The Journal also said right-to-work states “experienced a 23 percent faster rise in per capita income over that period” (1977 to 2007). That may be true – but that’s over a 30-year period, and incomes in right-to-work states are still 3.2 percent less than in non-RTW states. They had, and have, some catching up to do.