Upjohn Institute economist on right to work laws

Dec 10, 2012

So-called “right to work” legislation is now on the fast track in the Michigan legislature. Governor Snyder says the state needs what is being called the “Workplace Fairness and Equality Act” to boost Michigan’s economic recovery. But Upjohn Employment Institute Senior Economist Tim Bartik says the research on “right to work” laws is inconclusive. He recently spoke with WMUK’s Gordon Evans.

The Evidence Bartik says it’s hard to pin down the causes of economic development and growth. Historically right to work laws have been in southern states and some western states. Bartik says the political climate that leads to right to work laws also leads to lower business taxes, less regulation. He says that could also boost business activity and may hold down wages. Bartik says an argument often made in support of “right to work” legislation is that states with right to work laws have grown faster since World War II. But he says the south, where most of those laws have been on the books for a long time, has grown faster than the rest of the nation since World War II. Bartik says correlation doesn’t mean causation, and factors like the wide-spread use of air conditioning and different modes of transportation that helped decentralize manufacturing must also be considered as causes of growth in the South. 
Tim Bartik
Credit Upjohn Institute for Employment Research
Michigan will become the second Great Lakes state with a “right to work” law. Indiana governor Mitch Daniels signed a law this year prohibiting mandatory union membership in that state. Bartik says the evidence is also mixed on how much “right to work” laws lure jobs across the border from neighboring states without such laws on the books.  Wages Bartik says it’s not clear that creating a high number of low-wage jobs will drive up pay in the long term. The estimates are all over the map when it comes to right to work laws. He says we don’t know how the trade-off works out for improving workers’ standard of living.

“If you have a particular political opinion, you want to cherry pick studies to support it, you can find the right studies in the area of right to work laws.”

BalanceThe number of jobs shouldn’t be the only factor in creating policy, according to Bartik. He says wages and the mix of jobs are also important. Bartik says the goal of economic development should be to raise the standard of living of a broad group of people in the state. He says part of that is increasing the number of jobs. But Bartik says having a job that pays little is better than having no job, but not as good as a high-paying job. Bartik says there is a trade-off in attracting low-wage employers. He says available land and labor are resources that the state has to offer. Bartik says attracting too many low-wage jobs can use up the best land and take workers off the market, and discourage companies that offer better-paying jobs. Bartik says one factor that should be considered is whether companies pay good wages relative to the skills that they require.