Commentary
That’s What We Said
Right-to-work studies confirm Mackinac Center findings
West Virginia was in the news recently for becoming the nation’s 26th state to adopt a right-to-work law. One product of the debate is that there is new evidence of these laws’ positive effect on workers and state economies. The evidence comes from statistics of various measures of economic well-being.
In the run-up to the legislative vote on right-to-work in West Virginia, the state hired economists from West Virginia University to examine the economic impact of adopting the law. The study these economists produced in 2015, called “The Economic Impact of Right-to-Work Policy in West Virginia,” concluded that right-to-work laws raise state gross domestic product (the value of goods and services produced in a state) and employment, among other items. The study’s data set ran from 1990 to 2010 and covered the 48 contiguous states. Specifically, the authors found:
- Over the long run, employment growth is 0.4 percentage points higher in right-to-work states;
- Over the long run, state GDP grows 0.5 percentage points higher in right-to-work states; and
- Contrary to union claims that right-to-work means “right to work for less,” the data do not show an effect on wages or salary rates.
The study represents one more independent, scholarly treatment that finds positive effects from right-to-work laws. Its headline finding — that stronger employment growth is associated with right-to-work — supports the Mackinac Center’s own research on the subject, published in 2013.
The WVU scholars came to these conclusions using a slightly different methodology — they tried to separate out (or, control for) a longer list of factors in order to isolate and analyze the impact of right-to-work laws. In comparison, the Mackinac Center’s study, authored by Michael Hicks and Michael LaFaive, looked at fewer factors directly but used data from 48 states covering a considerably longer time — from 1947 through 2011 — and analyzed these data for three separate periods over those 64 years. Instead of looking only at wages, it also looked at personal income growth and population changes. During the last of the three periods examined, 1991 to 2011, our study found that states with right-to-work laws had:
- 0.43 percentage points higher average annual employment;
- 0.67 percentage points higher annual real personal income growth; and
- 0.56 percentage points greater annual population growth.
The big difference between the two studies had to do with what they found about wages and income. The WVU study found no connection between wages and right-to-work, while the Mackinac Center found that the policy was associated with faster income growth. (On a technical note, “wages,” as used by WVU, and “personal income,” as used by the Mackinac Center, are not the same thing, but obviously are closely related.)
There’s no clear hypothesis for these differing findings — they may just be a function of the studies choosing different variables to include or exclude in their statistical models. For example, the Mackinac Center report included population growth, because migration is a terrific method for measuring quality-of-life changes. People move for many reasons, and no one denies economic self-interest isn’t high on the list. The 2013 study found a positive relationship between right-to-work laws and population changes. Specifically, from 1947 through 2011, the presence of a right-to-work law was associated with an average annual population growth rate 0.54 percentage points higher than non-right-to-work states.
In addition to the West Virginia study, the Mackinac Center’s original statistical model from its 2013 right-to-work study has been updated and expanded and has undergone an entirely new peer-review process. This new work has been published in the winter edition of the Cato Journal, a peer-reviewed quarterly publication from the Washington-D.C.-based Cato Institute.
The new analysis includes manufacturing productivity (from 2004-2011) across right-to-work states and non-right-to-work states and finds that the absence of a right-to-work law negatively impacts firm and industry productivity.
In these two studies, think tank scholars and university scholars agree: Right-to-work is associated in positive ways with important measures of economic well-being.
|
Like CapCon on Facebook
Follow CapCon on X
That’s What We Said
Right-to-work studies confirm Mackinac Center findings
West Virginia was in the news recently for becoming the nation’s 26th state to adopt a right-to-work law. One product of the debate is that there is new evidence of these laws’ positive effect on workers and state economies. The evidence comes from statistics of various measures of economic well-being.
In the run-up to the legislative vote on right-to-work in West Virginia, the state hired economists from West Virginia University to examine the economic impact of adopting the law. The study these economists produced in 2015, called “The Economic Impact of Right-to-Work Policy in West Virginia,” concluded that right-to-work laws raise state gross domestic product (the value of goods and services produced in a state) and employment, among other items. The study’s data set ran from 1990 to 2010 and covered the 48 contiguous states. Specifically, the authors found:
The study represents one more independent, scholarly treatment that finds positive effects from right-to-work laws. Its headline finding — that stronger employment growth is associated with right-to-work — supports the Mackinac Center’s own research on the subject, published in 2013.
The WVU scholars came to these conclusions using a slightly different methodology — they tried to separate out (or, control for) a longer list of factors in order to isolate and analyze the impact of right-to-work laws. In comparison, the Mackinac Center’s study, authored by Michael Hicks and Michael LaFaive, looked at fewer factors directly but used data from 48 states covering a considerably longer time — from 1947 through 2011 — and analyzed these data for three separate periods over those 64 years. Instead of looking only at wages, it also looked at personal income growth and population changes. During the last of the three periods examined, 1991 to 2011, our study found that states with right-to-work laws had:
The big difference between the two studies had to do with what they found about wages and income. The WVU study found no connection between wages and right-to-work, while the Mackinac Center found that the policy was associated with faster income growth. (On a technical note, “wages,” as used by WVU, and “personal income,” as used by the Mackinac Center, are not the same thing, but obviously are closely related.)
There’s no clear hypothesis for these differing findings — they may just be a function of the studies choosing different variables to include or exclude in their statistical models. For example, the Mackinac Center report included population growth, because migration is a terrific method for measuring quality-of-life changes. People move for many reasons, and no one denies economic self-interest isn’t high on the list. The 2013 study found a positive relationship between right-to-work laws and population changes. Specifically, from 1947 through 2011, the presence of a right-to-work law was associated with an average annual population growth rate 0.54 percentage points higher than non-right-to-work states.
In addition to the West Virginia study, the Mackinac Center’s original statistical model from its 2013 right-to-work study has been updated and expanded and has undergone an entirely new peer-review process. This new work has been published in the winter edition of the Cato Journal, a peer-reviewed quarterly publication from the Washington-D.C.-based Cato Institute.
The new analysis includes manufacturing productivity (from 2004-2011) across right-to-work states and non-right-to-work states and finds that the absence of a right-to-work law negatively impacts firm and industry productivity.
In these two studies, think tank scholars and university scholars agree: Right-to-work is associated in positive ways with important measures of economic well-being.
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.
More From CapCon