The Potential Effects Of A Right To Work Law In Wisconsin

Source: Abdur Chowdhury, Marquette University, January 2015

There is an ongoing effort to make Wisconsin a ‘right to work’ (RTW) state. Proponents of RTW laws suggest that it will make Wisconsin more attractive to business investment. However, most evidence shows that RTW legislation, by itself, is not much of a factor in where firms locate. In annual surveys of small manufacturers conducted by Area Development magazine, RTW never ranked in the top 10 factors influencing location decisions. Another argument for RTW is the claim that it creates more jobs. But numerous studies have shown that it is not RTW laws that matter, but rather the `pro-business package’ offered by right-to-work states seems to matter. A national assessment of the effect of RTW laws on important labor market outcomes, such as, unionization, wages, employment, inequality and job-related injuries reveal some important findings. First, unionization rates in RTW states are less than half of what they are in Collective Bargaining (CB) states. Second, aggregate employment in RTW states has increased modestly while employment in CB states has declined. Third, wages are lower in RTW states than in CB states. Fourth, RTW increases gender and racial wage inequality and also makes for less safe workplace. The potential net loss in direct income to Wisconsin worker s and their families due to a RTW legislation is between $3.89 and $4.82 billion annually. Using a conservative estimate of an impact multiplier of 1.5, the total direct and induced loss of a RTW legislation is estimated between $5.84 and $ 7.23 billion annually. Based upon the two estimates of lost incomes and an overall effective tax rate of 4 .0%, the economic loss in state income taxes is estimated between $234 and $289 million per year. While considerable efforts are being made by certain legislators to pass the RTW law in Wisconsin, the empirical evidence on the effect of adopting such a law does not support prescribing it as an economic policy tool. Overall, this study shows that RTW legislation would provide no discernible economic advantage to Wisconsin, but would impose significant social and economic costs. Low wages would weaken consumption. Higher rates of labor turnover and adversarial labor-management relations would decrease productivity. It would also burden the state with higher ‘mop-up’ costs. Right to work is a shortsighted and superficial selling point. The citizens and potential investors in Wisconsin are all better served by economic development policies that lead to decent wages and working conditions.

Related:
The Growing Number Of Right To Work States And The Future Of Unions
Source: Diane Rehm Show, March 2, 2015
(audio)

Over the weekend, a few thousand union members gathered outside the statehouse in Wisconsin. They were there to voice their opposition to so called right-to-work legislation. If signed into law, which is expected, Wisconsin would become the 25th state with right-to-work laws on the books. These laws ban workers from having to pay union dues. Organized labor leaders say it’s another blow to their diminishing numbers. Supporters say the laws attract business and are good for economic development. Guest host Tom Gjelten and our guests discuss right-to-work laws and the future of unions.

Guests:
Melanie Trottman reporter, The Wall Street Journal
Philip Dine journalist and author of “State of the Unions”
Ross Eisenbrey vice president, Economic Policy Institute
Matt Patterson executive director, Center for Worker Freedom

An Explainer: What’s Happening In Wisconsin?
Source: Rachel Homer, OnLabor blog, March 2, 2015

Right-To-Work Laws: Designed To Hurt Unions and Lower Wages
Source: Ross Eisenbrey, Economic Policy Institute, Working Economics blog, March 2, 2015