“Right-to-work” does NOT increase union membership.

Right-to-Work Laws Reduce Union Membership

The movement to implement “right-to-work” (RTW) legislation has accelerated over recent years. Indiana, Michigan, Wisconsin, and West Virginia recently become “right-to-work” states. Missouri and Kentucky followed in 2017. Today, 28 states have “right-to-work” laws.

One of the main policy changes contributing to the decline of unionization across the United States is the ratification of “right-to-work” legislation. From 2015 to 2016, union membership in RTW states declined by over 293,000 members. Union membership declined in 20 of the 26 states (77%) with RTW laws.

Conversely, in fair-share collective bargaining (CB) states, overall union membership improved by about 56,000 members. Union membership declined in only 9 of the 25 CB states (36%)– which includes the District of Columbia– and increased in 16 CB states (64%) over the year.

However, Illinois lost nearly 35,000 members, one of 9 CB states to experience a decline. After netting Illinois out to compare the state to every other state, all other CB states gained approximately 91,000 union members over the year.

“Right-to-Work” Laws in the Midwest Have Reduced Unionization and Lowered Wages

A recent ILEPI and University of Illinois study found that the introduction of “right-to-work” laws has reduced the unionization rate by 2.1 percentage points and lowered worker wages by 2.6% in Indiana, Michigan, and Wisconsin.

As of 2016, there were significant differences between RTW states and CB states in the Midwest. Notably, workers in Indiana, Michigan, and Wisconsin earned 8% less per hour on average than their counterparts in Illinois, Minnesota, and Ohio. The unemployment rate was only marginally lower (by 0.3 percentage points) in the three RTW states last year.

After accounting for important factors such as education, occupation, and demographics, ILEPI and the University of Illinois found that the introduction of RTW laws has statistically reduced the unionization rate by 2.1 percentage points and lowered hourly wages by 2.6% in Indiana, Michigan, and Wisconsin. This corroborates previous research, which found that RTW laws reduce wages by 3.1% on average. The impact on wages has been largest for middle-class occupations, such as construction and office and administrative support jobs.

The Illinois Policy Institute’s Recent Article is Misleading and Poor Analysis

On May 9, 2017, the Illinois Policy Institute wrote that Indiana has added five times more union members than Illinois since passing its RTW law.

This is incredibly poor policy analysis and no independent economist would endorse this conclusion.

• The author cherry-picks two states. What if we cherry-picked Michigan and Illinois? Michigan became RTW in 2013. So what was the change in union membership from 2012 – the year before Michigan became a RTW state – to 2016? Michigan’s unionization fell by nearly 22,000 members while Illinois’ unionization increased by nearly 12,000 members. The point is that evaluating two states in two different years is an incomplete analysis.
• Good policy analysis looks at the big picture. After taking a larger sample size and comparing all RTW states to all CB states (see above), it is easy to see that RTW is not correlated with increases in union membership.
• Even better policy analysis accounts for other factors that influence labor market outcomes. African Americans are more likely to be union members than white workers. Construction workers are more likely to be union members than investment bankers. Public sector workers are more likely to be union members than private sector workers. The analysis is almost meaningless without controlling for other important factors in each state. The Illinois Policy Institute approach is flawed.

FYI: What Exactly Does a “Right-to-Work” Law Do?

A “right-to-work” law is a government regulation which prohibits workers and employers from including union security clauses into private contracts. Union security clauses ensure that each member from a collective bargaining unit pays a fair share of dues or fees for the services provided by the union. RTW makes the payment of dues or fees optional, allowing workers in any bargaining unit to “free ride” on the efforts and contributions of others. Consequently, workers can benefit from higher wages, better health and retirement benefits, legal and grievance representation, and other perks earned by the union without paying anything for the services provided.

Conversely, in a fair-share collective bargaining (CB) state, employers and labor unions are at liberty to negotiate a range of union security clauses. They may, but are not mandated to, agree to a union security clause that requires all persons covered by the contract to pay dues or fees to cover the cost of bargaining activities. In these states, covered employees are only required to pay for bargaining costs and are not forced to finance political or other non-bargaining activities.

Conclusion

“Right-to-work” does NOT increase union membership.

View this article as a Policy Memo: ILEPI Policy Memo- Union Membership Declined in RTW States