The Economic Effects of Adopting a Right-to-Work Law

Abstract

While considerable efforts have been made by legislators, business associations, and political organizations to pass right-to-work (RTW) laws in states across the country, the empirical evidence on the effect of adopting an RTW law on labor market outcomes and state budgets is both varied and mixed. This article provides a forecast on the effect of RTW laws on important labor market outcomes-including earnings, employment, unionization, and inequality. It also investigates RTW's impacts on two particularly affected industries (manufacturing and construction) and three demographic groups (African-American, Latino/a, and female workers). The findings are subsequently applied to the state of Illinois to project the potential law's impact on Illinois workers and on the state's tax revenues. By and large, as a policy prescription, RTW would generate harmful effects to Illinois' economy, lower its capacity to provide essential public services and degrade the quality and condition of the state's labor force.

What Are the Consequences of Right-to-Work for Union Membership?

“…Concern about simultaneity bias was often addressed (Warren and Strauss 1979;Wessels 1981;Farber 1984;Koeller 1985;Moore et al 1986; Davis and 1 Right-to-work potentially affects a number of outcomes beyond the rate of unionization. Outcomes studied in previous work include manufacturing activity (Holmes 1998), stockholder wealth (Abraham and Voos 2000), earnings (Reed 2003;Farber 2005;Gould and Shierholz 2011;Bruno, Zullo, Manzo, and Dickson 2015;Gould and Kimball 2015), business conditions (Stevans 2009), and union finances and political outcomes (Feigenbaum, Hertel-Fernandez, and Williamson 2019).…”

“…More recent work on the RTW effect pays closer attention to identification strategy (Dinlersoz and Hernandez-Murillo 2002; Bruno et al 2015; Eren and Ozbeklik 2016; and Manzo and Bruno 2017). Dinlersoz and Hernandez-Murillo (2002) compared Idaho, which adopted right-to-work in 1986, to six neighboring states and found that the trend in union membership in Idaho following adoption did not differ from the trends in neighboring states.…”

Does Union Canvassing Affect Voter Turnout Under Conditions of Political Constraint? Empirical Evidence from Illinois

“…Moreover, SEIU HCIIMK would have likely been financially affected by the passage of RTW laws elsewhere in the Midwest states they represent (i.e., Indiana and Missouri; Kansas has been RTW since 1958) because of the financial interlock with its affiliates in surrounding states. In the 2010s, after the Republican Party gained power in a number of Midwestern state legislatures and governorships, it introduced a round of initiatives to pass RTW laws partially as a response to the global financial crisis (Bruno et al 2015; Devinatz 2011). Concurrently during our sample time period, coordinated networks of right-wing activists, led by groups like the American Legislative Exchange Council (ALEC) and supported by right-wing media, pushed for the passage of RTW legislation throughout the region (DiGrazia and Dixon 2020).…”

“…As a result, Indiana, Michigan, and Wisconsin sequentially passed such laws. 3 Because RTW financially constrains unions within these states from contributing to political campaigns and mobilizing members (Bruno et al 2015; Feigenbaum, Hertel-Fernandez, and Williamson 2018), SEIU HCIIMK would have needed to engage in financial solidarity with its affiliates within these states to ensure their financial stability (Finger and Hartney 2021). In sum, although SEIU HCIIMK is headquartered in a relatively prolabor environment without its own RTW regime, its ability to support political canvassing would have been constrained by the union's financial interlocks spanning other RTW states, as well as the anti-union principles espoused by then-governor Rauner.…”

Does Individualizing the Labor Contract Hurt Women?

“…Researchers have used difference‐in‐differences (Bruno et al. ), propensity score matching (Roberts and Habans ), and synthetic control methods (Eren and Ozbeklik ) to estimate the effects of RTW laws. Still, the results have been mixed: on the high end, propensity score matching has found RTW to be associated with a wage penalty of approximately 6 percent (Roberts and Habans ).…”