Right-to-Work Laws: Is There Economic Justification for Them?

Report Jobs and Labor

Right-to-Work Laws: Is There Economic Justification for Them?

June 21, 1977 4 min read Download Report
David A.
(Archived document, may contain errors)

17 June 21, 1977 RIGHT TO WORK LAWS Is There Economic Justification For Them During the 19 76 Presidential e-lection, candidate Jim my Carter stated that as President if he' was faced..with a bill to repeal Sec tion 14 (b) of .the Taft-Hartley Act, he would sign. it. This section allows states. to ban compulsory union membership. Now with. the Presidency and the' Congress in the hands ' of the same party, one would think that repealing 14('b) would be a relatively simple act.

Surprisingly that is not the case. Of the twenty st,ates that have right-to-work statutes, ten of them (Alabama, Arkansas, Florida Georgia, Louisiana, Mississippi North-Carolina, South Carolina Tennessee,..and Texas all Southern, went for President Carter in the ,fall election. In fact, at the same time that Arkansas went 2-to-1 for Carter, it beat back by the same ratio Amendment 59 which would have repealed Right - to-Work in that Stake. It is gen erally 'considered that elected officials in the South, most of whom are Democrats, are not supportive of a-rep.ea1 of 14 (b mot only for ethical reasons, but for the simple fact that they do not want-to run for re-electio n with the record of having a fellow Soukherner and Democrat (Carter) repealing Right-to-Work A much more. practical reason for Southern Democratic support is the booming'prosperity that these Right-to-Work states are enjoying.

Manufacturing jobs are flow ing into the South, Southwest, and the West and these states are becoming Meccas of prosperity as opposed to the declining industrial The Sunbelt is Right-to-Work country 8, states of-,the Great Lakes and Northeast The Fantus Study: An Economic Barometer o f the States In a 221-page report published in August, 1975 by the Fantus Com pany, a subsidiary of Dun and Bradstreet, Inc titled A Study of the Business Climate of the States it was, disclosed that the fol lowing states had the most favorable .business climate NOTE: Nothing written here is to be construed as necessarily re flecting the views of the Heritage Foundation or as an attempt to aid or hinder the passage of any bill before Congress.

1. Texas

6. North Carolina 2. Alabama

7. Florida 3. Virginia

8. Arkansas 4. South Dakota

9. Indiana 5. South Carolina 10. Utah With the exception of Indiana all of the above states have Right to-Work laws On the other hand, the ten states with the most unfavorable busi ness climate are 1. Washington

6. Delaware 2. Oregon

7. Michigan 3. Minnesota 8. Massachusetts 4. Pennsylvania 9 California 5. Connecticut 10. New York None of the above ten states have a Right-to-Work law It should be pointed out that the purpose of the study was to put together information about the business environment in those states in which clients of the Fantus Company might invest money in new and expanding business enterprises. The Fantus Company, Inc is the oldest and largest plant location consulting firm in the world and their re ports onlthe business climates of states are based on state taxes, programs, and laws effecting business, and the legis lative and regulatory environment of the state Right-to-Work and New Jobs: Is There A Connection?

Another indicator of the economic vitality in Right-to-Work states is the increase in manufacturing jobs over a given period as op posed to non-Right-to-Work states. From figures provided by the U.S. Department of Labor, we observe the following Table I N ET INCREASES IN MANUFACTURING JOBS. 19.64-74 Right to Work States 1. Texas 288,000 1-

1. Alabama 2. North Carolina. 232,900 8. Virginia 3. Tennessee 157,800 go Mississippi 4. Florida 136,600

10. Arkansas 5. Georgia 105,000

11. Iowa 6. South Carolina 97,300

12. Arizona 94,900 79,900 92.,400 77,000 65,900 52,600 #3 13. Kansas 14. Nebraska 15. Utah 16. South Dakota 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 California Ohio Indiana Kentucky Minnesota Illinois Michigan Wisconsin Oklahoma Colorado Miss our i Or egon Pennsylvania Louisiana Was hi ng to n New Jersey Right to Work Law 46,600 17 North Dakota 24,800 18. Nevada 11,600

19. Wyoming 7,500 TOTAL Non-RTght To Work States 298,100 158,500 104,500 99,500 96,100 94,600 80,300 76,700 59,300 53,400 47,100 45,70 0 37,300 33,600 33,100 15,800 17 18 19 20 21 22 23. 24 25 26 27. 28 29 30 31 effective July 9, 1976 Source: U.S Department of Labor Idaho New Mexico Delaware Connecticut Rhode Island New Hampshire Vermont West Virginia Alaska Montana Maine Hawaii Maryland - D.C Massachusetts New York TOTAL A few facts should be noted from this table. While there 5,800 5,500 70 0 1,587,900 15,600 11,600 10,800 9,800 9,800 8,500 7,900 4,400 3,900 I 3,000 1,100 2,400 6,000 32,400 1,165,600 213,600 was a net increase of 1,587,90 0 persons employed in manufacturing jobs during the decade of 1964-74 in the Right-to-Work states, there was at the same time a smaller gain in the other states even though they com prise 70% of the total U.S. population. This is compared with the RTW (Rig h t-to-Work) states that pulled a 57.7% net increase in manu facturing jobs during that decade Of the top ten states in the creation of these new jobs, six were RTW while four states suffering net losses were non-Right-to-Nork New York 213,600 jobs Massachu setts 32,400 Maryland-D C 6,000 and Hawaii 2,400.

Even though Louisiana had a net increase in manufacturing jobs of 33,600 during the 1964-74 decade, its rate of growth was much slower than neighboring states with RTW laws--"Louisiana lost 1,100 manu factu ring jobs from April 1975 to April 1976, while Mississippi gained 18,900 manufacturing jobs in the same period. The fact that Louisiana has no Right to Work law probably played a big role in that situation I Right to Work would create more manufacturing j o bs This busi ness about Right to Work signaling a return to 'slave wages' is unfounded Robert Reid, Labor Analyst, Louisiana Department of Employment ,Security, as quoted in New Orleans State$ Item July 9 1976. #4 Observers in Arkansas made a similar stat e ment--"During the decade 1963-73 Arkansas gained 82,000 new jobs in manufacturing, easily outdistancing neighboring states without Right to Work baws r.+ine Bluff Commercial. On July 9, 1976, Louisiana became the twentix Right-to-Work state after having b e en approved in both the Senate 25-14) and the House of Representatives (59-46 I One more example of Right-to-Work' s contribution toward the cre ationof jobs is dramatically shown by a comparison between Califor nia and Texas. California, a non-Right-to-W o rk state, led the nation in 1964-74 with the creation of 298,000 manufacturing jobs Texas, a RTW state, was second with 288,000 jobs. However, it should be'pointed out that whereas California had more in number it posted a gain of only 21% compared to 53% in Texas. Also as re gards to population, in 1964 California ranked second whLle Texas was sixthf however, in 1974 California ranked first and Texas third.

One of the charges levied against Right-to-Work is that in those states where RTW laws are in force, that state's economic growth is impeded. Once again data from the U.S. Department of Labor and Commerce seem to prove otherwise.

Table I1 UNION ARGUMENTS REFUTED I Some union officials and their ,advoc.a-kes cha.rge_that a state siecono+c:.Gg?oyth is-'

The question remains: What will be the economic effect of the re peal of 14 (b Before the Congress tampers with Section 14(b) of the Taft-Hartley Act, it would be prudent for them to cansider the possible connection betwee n Right-to-Work laws and increased eco nomic growth I David A. Williams Economics/Taxation c y e


David A.