5 Things You Need to Know about “Right to Work” in WV

The West Virginia Legislature is poised to enact a so-called right-to-work (RTW) law this week. The House of Delegates is taking up an amended version of the “WV Workplace Freedom Act” this afternoon. The law would prohibit unions and employers from negotiating a contract that requires employees who benefit from union representation to pay for their fair share toward those costs.

So far, 25 states have enacted RTW laws, predominantly in the South and Southwest. While right-to-work laws have nothing to do with guaranteeing jobs for workers, some in the business community view it as a strategy for attracting new businesses to locate in West Virginia, despite its downside risks of lowering wages and hurting unions that helped build the middle class in our country.

Here are five important things you need to know:

 1. It’s about lowering wages and eroding workplace protections. As an economic development tool, the professed aim of RTW is to reduce the power of unions by depriving them of resources (dues), which ultimately weakens the union and strengthens the employers’ hand in bargaining for lower pay and benefits. By decreasing the likelihood that businesses will have to negotiate with their workers, this will lower labor costs, reduce the cost of doing business, and will supposedly incentivize out-of-state manufacturers and other businesses to locate in West Virginia. If RTW didn’t lower wages and weaken workplace protections across the board, there would be no incentive for companies to move to West Virginia. This, in a nutshell, is the hope of RTW supporters such as the West Virginia Chamber of Commerce.

 2. Academic research is unanimous that RTW reduces unionization. While there is no strong evidence that RTW laws help or harm a state’s economy, there is a broad academic consensus that it weakens labor unions. If this happens, it could mean even worse economic and social outcomes in the state. This is because unionization is strongly associated with higher economic mobility, less income inequality, higher wages, safer workers conditions, better benefits and larger voter turnout.

 3. The WVU report on RTW is fundamentally flawed. While a recent study by John Deskins at West Virginia University concluded that RTW would boost jobs in West Virginia, the study is fraught with basic design problems. For example, the WVU study misidentifies that Texas and Utah adopted RTW in the 1990s, when both states adopted RTW before 1960. The WVU study also failed to adopt a standard academic practice that accounts for unobserved differences between states, such as the advent of air-conditioning in the South, access to oversees markets, and other important state characteristics. When researchers at the Economic Policy Institute accounted for these problems and replicated WVU’s findings, they found no relationship between RTW status and employment growth. Tim Bartik, an economist with the Upjohn Institute and one of the country’s leading economic development experts, recently reviewed the WVU study and concluded that it “does not provide any convincing evidence that a state that adopts RTW laws will, as a result, experience faster job growth.” The flaws with the WVU study highlight why state policymakers should not rely on its conclusions to adopt RTW.

 4. RTW is not about “workplace freedom.” While RTW proponents define ‘workplace freedom” as letting workers opt out of paying a representation fee to pay for the benefits they are receiving under any negotiated union contract, most would define workplace freedom as being treated with dignity and respect on the job. That means getting paid an honest wage for an honest day’s work, and having access to benefits such as paid sick days, paid family leave, health care, and a retirement plan. The only freedom workers would receive if RTW were enacted is the ability to get something for nothing.

 5. Low workforce skills are the central reason for West Virginia’s economic woes, not lack of RTW. A recent in-depth study by the Center for Business and Economic Research at the University of Kentucky that explored why the state is so poor found that the shortage of skilled workers – not RTW – was the central reason for the state’s relative poor economic performance. Since West Virginia faces many of the same social and economic problems as Kentucky, policymakers would be well advised to promote polices that improve the skills of the state’s workforce instead of RTW that could reduce workforce training.

While we are all worried about our economic future and want to build a strong economy in our state with good-paying jobs, enacting right to work is not going to get us there. Instead it may hurt working families by redistributing income from workers to employers and from middle-class taxpayers to the wealthy.  I hope the legislature in West Virginia will see that we can’t build West Virginia by tearing down working families and unions. Instead we need  to focus on the policies that we know work, such investing in early childhood education, research and development, higher education, workforce training, and effective ways to help more people get out of poverty. 

Will “Right-to-Work” Grow West Virginia’s Economy? Not Likely

Back in November, the Business Bureau of Economic Research at West Virginia University released a study by John Deskins that concluded that the adoption of a “Right-to-Work” (RTW) law in West Virginia would boost employment and GDP growth, have no discernible impact on wages, and reduce unionization rates.

The problem with the WVU study – and many studies that look at the economic impact of RTW laws – is that it is very difficult to untangle the impact of RTW laws on a state’s economy from other important factors (e.g. air-conditioning, infrastructure, quality of life, etc.).  Another problem in teasing out the effects of RTW laws is that there are not a lot of  natural experiments where you can look at the before and after impact of RTW on a state’s economy.

While Indiana (2012), Michigan(2012), and Wisconsin (2015) have recently adopted RTW laws, only two states since 1980 have done so – Idaho (1985) and Oklahoma (2001) – that provide an opportunity to provide some significant correlations between RTW laws and state economic performance. This is precisely why state economic development expert Tim Bartik found that the WVU RTW study offered no conclusive evidence that RTW would boost economic development.

There are only two recent peer-reviewed academic studies (non-think tank studies) that examined the effect of RTW laws in Idaho and Oklahoma – both by Ozkan Eren (Louisiana State University) and Serkan Ozbeklik (Claremont McKenna College). Eren and Ozbeklik’s most recent study (2015) on the effects of RTW in Oklahoma found that it decreased private sector unionization and had no impact on employment, private sector wages, or the manufacturing sector. And unlike the WVU study that did not include any caveats about the impact RTW would have on West Virginia, Eren and Ozbeklik conclude that even with these results in mind, that there is “still no clear consensus among policy makers and researchers” of RTW laws on state economies.

An earlier study (2011) by Eren and Ozbeklik that looked the effects of RTW in Idaho and Oklahoma found similar results for Oklahoma (no impact on manufacturing wages or employment or per capita income) while in Idaho it found that RTW increased manufacturing employment but had no effect on per capita income.

These findings are illustrative of  why we should always proceed with caution in expressing certainty over the impact of RTW laws on state economic outcomes. This is one of the major shortcomings of the WVU study by John Deskins. For example, the WVU study concludes that RTW “would lead to a decrease in private-sector union membership, and an increase in employment and output growth in West Virginia.”

As Yogi Berra said a long time ago, it is difficult to make predictions, especially about the future. And this conclusion illustrates why this study does not rise to the level of scholarship found in peer-reviewed academic journals.

Another problem with the WVU study is that its own analysis seems to contradict its conclusion that passing RTW in West Virginia “would” increase the state’s job growth. As economist Tim Bartik notes

The West Virginia study includes information that undermines the claim that adoption of RTW laws “certainly” increases job growth. The study includes some information on trends before and after RTW adoption in 10 states that adopted RTW laws after 1950. In 5 of these states, job growth increased after adoption of RTW, and in 5 states job growth decreased after adoption of RTW. This very mixed and uncertain result is representative of the overall findings of RTW research.  Based on current evidence, it is highly uncertain whether RTW laws have any positive effects on job growth. 

Despite promises from RTW supporters in Oklahoma that the law would boost manufacturing job growth, the opposite has happened. Since the adoption of RTW in 2001, Oklahoma has lost over 38,000 manufacturing jobs. While the adoption of RTW in Oklahoma most likely did not cause these manufacturing job losses, claims that RTW would boost manufacturing employment clearly did not materialize.

RTWMEOK

While the debate about whether to adopt a RTW law is mostly about political power and the ability to “free ride” on the benefits provided by union representation, the economic research – as we highlighted in this earlier report – shows that RTW is unlikely to boost economic growth and it could, as Bartik suggests in this State Journal article, pave the way for a lower-wage economy in the Mountain State. This means less freedom for working families and more economic stagnation.

Unionized Women Earn More in West Virginia

In honor of Women’s Equality Day, recognizing the certification of the 19th Amendment granting women the right to vote, the Institute for Women’s Policy Research (IWPR) released a new report on women in unions. The report found that women in unions earn more than women who are not in a union in every state including West Virginia. 

Women have been growing as a share of total union members in the past three decades, from 33.4% of union members in 1984 to 45.5% in 2014. In West Virginia, women make up 41.9% of union membership. Overall 11.7% of working women are members of a union in West Virginia, compared to 11.9% nationwide.

Union membership tends to result in higher wages and improved benefits, particularly for middle- and low-wage earners, many of whom are women. According to the IWPR study, nationwide, women represented by labor unions earn an average of $212, or 30.9%, more per week than women in nonunion jobs. The union advantage for women is smaller, but still significant when controlling for age, education, and industry. In West Virginia, women in unions earn $176, or 29% more per week than nonunionized women.

West Virginia was one of 32 states where the size of the union-wage advantage was enough to cover the costs of full-time child care for an infant. The report also found women who are labor union members are more likely to participate in a pension plan, and more likely to receive health insurance benefits through their job than women who are not union members.

The report acknowledges that while unionized women enjoy a number of advantages, inequality in the workforce does not disappear for them. The report suggests a number of policies to support working women, including opposing “right to work” laws, increasing the minimum and tipped minimum wages, increasing the overtime threshold, expanding access to affordable and quality childcare, and enacting paid family and sick leave policies.