Right-to-work states "have higher rates of income growth."
The new leadership in Wisconsin brought by the November 2010 elections are now bringing proposals for bold changes in policy. Republicans will take over the governorship, as well as control of the state Senate and Assembly, on Jan. 3, 2011. Governor-elect Scott Walker, in the run-up to his inauguration, has gone so far as to suggest stripping state employee unions of their rights to bargain contracts with the state. Unions -- for both public and private employers -- are also the target of Robin Vos, a Republican state representative from Rochester in Racine County. He is poised to become co-chair of the Legislature’s powerful Joint Finance Committee. Vos said Dec. 8, 2010 he may introduce a bill to make Wisconsin a "right-to-work" state. As a freshman lawmaker, Walker supported right-to-work legislation in 1993. In a Dec. 12 Milwaukee TV interview, Vos touted the virtues of such a policy change. "From my perspective, I think that if you look at all of the data that has been collected," Vos said on WISN’s "Upfront with Mike Gousha," "states that have non-forced, compulsory union membership when you want to work somewhere have higher rates of income growth, have higher rates of manufacturing -- actually, over time, have seen much greater increases in their standard of living." We decided to examine the question of whether right-to-work states are better off. We’ll start by taking on the terminology. A state is considered a "right-to-work" state if it prohibits unions from negotiating contracts with employers that provide for a "union shop." A union shop is a workplace in which all employees are required to pay union dues. A state that allows union shops is considered by unions to be a "free-bargaining" state. Currently, 22 states, including Iowa in the Midwest, are right to work, according to a map provided by the National Right to Work Legal Defense Foundation, which says it defends America’s workers "from the abuses of compulsory unionism." Wisconsin, Illinois and Minnesota are among 28 free-bargaining states, most of which are in the northeast quadrant of the country. In his TV interview, Vos made three claims about the benefits of right to work, but two are too vague for us to measure. Vos said right-to-work states have a "higher rate of manufacturing," which is not a common term. Asked to explain that claim, Vos provided one statistic about manufacturing gross domestic product and another about the loss of manufacturing jobs. A third statistic -- the percentage of a state’s workforce employed in manufacturing -- was cited when we asked the Wisconsin State AFL-CIO union about "rate of manufacturing." Vos also said right-to-work states have "seen much greater increases in their standard of living." Vos himself defined "standard of living" with statistics on four different topics. We’re going to set aside both in this item and focus on the very measurable claim that right-to-work states have "higher rates of income growth." Vos provided four pieces of evidence, but only two addressed growth in income. Both came from the National Institute for Labor Relations Research, which advocates for right to work. A Rutgers University economics professor, in a paperwritten for the institute, said right-to-work laws "are strongly correlated with faster growth" in real personal income. The paper, however, was written in 2006 and did not provide data. The institute, using data from two federal agencies, trackedgrowth in real personal income from 1999 to 2009. It found the growth was 28.3 percent in right-to-work states and 14.7 percent in free-bargaining states. That’s a figure that supports Vos’ claim. Meanwhile, the national AFL-CIO used census data to examine median income from 2000 to 2009. Those figures show that income dropped 3 percent in right-to-work states and 5 percent in free-bargaining states. The union’s figures adjusted for inflation. That isn’t income growth, which was what Vos pointed to; but the figures do come out in right-to-work’s favor. It’s possible, of course, that changes in income may simply be correlated with a state having right-to-work status, and not caused by it. That is, there could be other factors at work. We consulted five economics professors on this point. They agreed that income growth has been higher in right-to-work states. But there was no consensus on how important right-to-work status is in causing that growth, and many minimized its role. Abdur Chowdhury, Marquette University: He said because factors such as business incentives and corporate tax rates are also involved, "it would be a stretch to say" right-to-work states had higher income growth because of right-to-work laws. With union representation less than 10 percent of private-sector employment nationally, he said, right to work "is no longer as important as it used to be." Russell Sobel, West Virginia University: He said it’s unclear how right-to-work compares to other factors in causing income growth, but the amount of income growth in right-to-work states indicates the impact of right-to-work "is fairly substantial." William Rogers, University of Missouri at St. Louis: "There has been a lot of research on this topic, and the overall conclusion is that right-to-work laws may have a small positive impact on state income." Russell Kashian, University of Wisconsin-Whitewater: Any right-to-work effect on income growth likely is diminishing, he said. Employers seeking low wages are more likely to go overseas, rather than choosing a right-to-work state over a free-bargaining state in the U.S. Richard Vedder, Ohio University: Laws and regulations relating to taxes, the environment and other areas sometimes play a bigger role than right-to-work in income growth, he said. But right-to-work is an "extremely simple and inexpensive policy change to implement." In a nutshell: None of the economists said right to work has no effect on raising income. But opinion is mixed on just how much of a factor it is. Let’s punch the clock on this one. Arguing that Wisconsin would be better off economically if it became a right-to-work state, state Rep. Robin Vos claimed that income growth has been higher in right-to-work states than in free-bargaining states. He’s correct on that statistic. But he leaves the impression that right-to-work status is what causes incomes to rise. As our interviews with economists show, that’s debatable, at best. And that’s important context left out of the statement. We rate his statement Half True. (Note: Incorrect usage of "closed shop" was changed Dec. 17, 2010 to "union shop.")
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