by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Bill McMorris details for the Washington Free Beacon an interesting study from the Competitive Enterprise Institute about the impact of states’ contrasting labor laws.
Forced unionization cost the economy nearly $650 billion in 2012, according to a new study.
A state-by-state comparison of growth and employment rates found that right to work laws, which free workers from coercive unionization, boost competitiveness for local economies, as well as wages. Per capita income increases more than $13,000 per year for a family of four, according to the Competitive Enterprise Institute, a libertarian think tank.
The reason for the disparate growth rates, according to CEI Vice President Aloysius Hogan, is that investment capital generally migrates to business climates that are amenable to growth. Entrepreneurs and other small businesses—the primary drivers of employment—have a higher chance of profitability and survival when they are free to control costs and negotiate with workers directly. Their success increases employment opportunities in the region.
“Right to work laws attract businesses and create more jobs and ultimately create more prosperity and wealth for individuals,” Hogan said in a phone interview with the Washington Free Beacon.
About half of states currently have right-to-work laws on the books. Even traditional union strongholds are beginning to embrace such policies to drive growth. Indiana and Michigan became the 23rd and 24th right to work states in 2012, despite strenuous union opposition.
However, the business community has celebrated the new policies. Michigan jumped 21 places in the American Economic Development Institute’s annual ranking of business-friendly states, making it the most-improved state of 2014. Nine out of the top 10 states are right to work.
These findings should not surprise regular readers in this forum.