Wisconsin going 'right to work': What’s the impact for jobs and incomes?

The Wisconsin legislature is moving toward passing a right-to-work law that unions oppose. But the arguments on both sides appear to overstate the impact such laws have.

As arguments over whether “right to work” laws help or hurt workers crescendo in Wisconsin, the reality behind the debate may be less clear-cut than either side lets on.

On one side, Republicans in the legislature who are pushing this week to make Wisconsin a right-to-work state, say the move will help attract needed jobs. In right-to-work states, workers at unionized companies can’t be forced to pay fees to the union.

Opponents say the change would reduce worker incomes by undermining organized labor, an institution with a long record of winning better pay and benefits for workers.

But years of study of right-to-work laws have not pointed to any clear and sweeping effects. Some scholarly research suggests the laws enhance job growth modestly. Others see the laws hitting worker wages with a modest ding. And in other cases, researchers have squinted hard at the data without finding meaningful evidence for or against right-to-work laws.

What seems clear is that the volume and tone of the debate over right-to-work laws far outstrips actual certainty about the impact.

All this doesn’t mean the choice facing Wisconsin is trivial. The expected vote this week by the Wisconsin Assembly would weaken the labor movement at a time when it is already struggling. And the existing research, while inconclusive, doesn’t preclude some real effects on workers (negative, positive, or both at once) when a state adopts right-to-work.

Wisconsin would be, if nothing else, a high-profile test case. Along with other recent converts Michigan and Indiana, it may show what happens when northern industrial states flip into the right-to-work camp.

“It's very difficult to tell what the impact of a right-to-work law is,” says Gary Chaison, professor of industrial relations at Clark University in Worcester, Mass.

He points to anecdotal evidence of jobs flowing to right-to-work states – for example, the way automotive jobs have migrated to Southern states in recent years.

But will Wisconsin reap an influx of manufacturing jobs by adopting a right-to-work law?  Labor economists say that’s far from clear.

The Republican Senate in Madison voted last week in favor of the move, with union supporters chanting “shame!” as debate on the bill was cut short. Gov. Scott Walker, who has already angered labor with his moves to weaken public sector unions, has said he’ll sign the measure.

In opposing right-to-work laws, the labor umbrella organization AFL-CIO says 2013 Census data show that workers in right-to-work states “earn an average of $5,971 less a year than workers in other states.” The group also says workers in right-to-work states are less likely to have health insurance.

Those points appear to be accurate, but with a big caveat.

Yes, workers tend to earn less in right-to-work states. Labor Department data for the same year show a similar gap, with hourly earnings 12 percent lower in right-to-work states, on average. On health insurance, too, employers in right-to-work states were generally less likely to offer coverage.

The problem is that it’s very hard to prove that right-to-work is a key reason for the gaps. California has a higher share of union workers than Arkansas does, for example, but its higher average pay could also stem from its very different living costs and its technology-rich industrial base. And on insurance, the overall averages leave out the fact employers in some right-to-work states (Utah, Iowa, Virginia) rank near the top among all 50 states in offering health plans, according to data tracked by the Kaiser Family Foundation.

Meanwhile, conservative groups such as the American Legislative Exchange Council counter that right-to-work states enjoy faster economic growth. From 2003 to 2013, for example, cumulative job growth in right-to-work states was 8.6 percent, compared with 3.7 percent in non-right-to-work states, according to the group's figures. It notes that people are moving from the one to the other. “Net domestic migration” has been adding to right-to-work states, and subtracting from non-right-to-work populations, on average.

Again, though, correlation is not causation. Have people been moving westward and southward because of right-to-work or because of other factors such as lower housing costs, easier commutes, or lifestyle choices?

And not all right-to-work states have seen a bounty of jobs. An analysis by the Economic Policy Institute, a research group allied with unions, found that Oklahoma saw no boost in job creation, relative to neighboring states, after it went right-to-work in 2001.

For economists trying to reach solid conclusions, the key problem is how to disentangle right-to-work from other factors that influence state economies.

In an attempt to do this, some researchers have compared the economic fortunes of contiguous counties along state borders – some that are right-to-work and some that aren’t. One such study found manufacturing jobs growing faster in the right-to-work states. But the author noted that the right-to-work states tend to have other “pro-business” policies in place, so it’s hard to tell what role the law regarding unions played.

Barry Hirsch, a labor economist at Georgia State University, characterizes the right-to-work issue as “overrated … by both sides.”

He says a right-to work law carries some symbolic value as states compete for employers’ favor. “It serves as a signal that your state is somewhat more business friendly, [even though] I don't really think it ought to send that signal.”

Despite the avowed certainty of advocates on both sides of the debate, studies on right-to-work (RTW) are mixed and nuanced in their results.

“Some studies find RTW boosts job growth, while other studies do not,” writes Timothy Bartik, who is a senior economist at the Upjohn Institute for Employment Research in Kalamazoo, Mich. “Some studies find RTW reduces wages, while other studies do not.”

In a telephone interview, Mr. Bartik adds that “if RTW caused absolutely huge effects, then maybe you could detect it” more conclusively.

What if right-to-work states reap both more jobs and lower wages?

Bartik cautions against assuming that this is a good tradeoff for the state. For average residents, the adverse effect on wages might trump the added jobs.

Wages can be dampened in right-to-work states because employers may have less worry that their operations will confront a union organizing drive.

It’s also worth noting that right-to-work isn’t a death knell for unions.

Unions continue to exist, but have been declining, across the nation, whether states have right-to-work on the books or not. Alabama and Iowa are right-to-work states, but about 11 percent of their nonfarm workers were unionized as of last year. That’s more than in some non-right-to-work states, including Missouri, Delaware, and Colorado.

In both kinds of states, by the way, all employees at a unionized workplace are covered by a union-bargained contract – even workers who choose not to join the union. So the debate about state-level economics is, most specifically, a debate about the rules for those workers. Unions argue it’s fairer to allow contracts that compel all workers to pay fees (so no one gets “free rider” access to the rewards of bargaining), while the right-to-work camp says it’s fairer to say that those who don’t want a union don’t have to help support one.