Right to Work Is Good for Business and Workers

Research shows right-to-work states experience greater manufacturing growth compared to states without such laws. That is because many businesses consider RTW, which makes union dues payments voluntary, a business-friendly provision akin to low taxes and make the presence of the law a priority when planning on where to locate its work site.

One reason is that RTW laws tend to lower union presence. This is positive because higher levels of unionization drive up costs.

As noted in the Competitive Enterprise Institute’s study, “An Interstate Analysis of Right to Work Laws,” evidence shows that “unionization increases labor costs, perhaps 10 percent or more from what would otherwise be the case. In turn, those increased labor costs make a given location a less attractive place to invest new capital resources and thus create jobs.”

James Sherk, senior policy analyst at the Heritage Foundation, makes note of this in a recent article: “As economic development consultant David Brandon explains, ‘More than half of our companies either make it [RTW] a threshold or a very important factor in making a decision on where to locate a factory and other operations.'”

Brandon also comments, “About 35-to-40 percent of manufacturing enterprises in the automotive industry insist on operating in a right-to-work state. Another 20-to-25 percent say it is a very important factor and will be used as a second- or third-tier factor in site selection. More than half of our companies either make it a threshold or a very important factor in making a decision on where to locate a factory and other operations.”

That assertion is further solidified in a recent annual report released by the Japan Automobile Manufacturers Association entitled, “More American Than Ever,” which highlights where Japanese automakers are located in America, how much they invest in those locations and how many Americans they employ.

The report shows that in 2013 Japanese automakers employed 59,494 employees in the U.S. At least 35,631, or 60 percent, of those employees reside in RTW states (the report does not specify the state where 1,025 workers are employed). It is important to note that there are 26 non-RTW states compared to 24 RTW.

JAMA members also invest more in its plants that are located in RTW states. In 2013, Japanese automakers spent $21,793,000,000 in its RTW locations compared to only $18,812,000,000 in forced-unionism states.

Mounting evidence that RTW laws spur greater investment from businesses is just one reason why a number of states are considering enacting RTW legislation this upcoming year. Probable candidates to do so include Wisconsin, New Mexico, and West Virginia.

Other benefits from enacting RTW include greater worker choice by freeing employees from forced union dues payments and that RTW contributes to higher worker income. As CEI’s RTW analysis suggests, workers in states without RTW had an estimated loss in per capita income between $2,500 and $3,500.

Last, although RTW nets positive results for workers and business, many state legislators are squeamish about supporting RTW legislation because of the inevitable union backlash. But they shouldn’t fear. Three recent polls show that Americans support RTW work by more than a 3-1 margin (see polls, here, here, and here.) Further, in Michigan, which passed RTW legislation in 2012, all state legislators that voted for RTW were reelected. in addition to Governor Rick Snyder.