In his latest Economic Freedom Roundup, Jordan Bruneau of the Charles Koch Institute compares right-to-work (RTW) states with non-right-to-work states. His findings are instructive.
First, the 2012 unemployment rate in RTW states was half-a-percent lower than in non-RTW states — at 7.0 percent versus 7.5 percent. Indeed, unemployment has been lower in in RTW states in each of the last 23 years.
Second, when you adjust real median incomes for the cost of living, households in RTW states had higher average incomes in 2012 than their non-RTW counterparts: $51,345 versus $46,084.
Third, governments in RTW states spent and taxed less per capita than their non-RTW counterparts. Bruneau suggests a reason for this disparity, which has persisted over the past three decades: “unions, which are stronger in non-RTW states, are usually tied to sectors and industries that are close to the government and therefore better able to bid up government spending — and the resulting taxation necessary to fund it.”
Finally, people appear to be voting with their feet in favor of RTW states. Between April 2010 and July 2012, “809,000 American residents moved into RTW states. At the same time, 823,000 American residents left non-RTW states.” With less unemployment, higher cost-of-living adjusted incomes, and lower taxes, who can blame them?
The lesson here for state policymakers is that right-to-work laws have the potential to bring real economic benefits. And with many states still struggling to bounce back from the economic downturn, right-to-work should be a compelling proposition.
You can sign up for future editions of the Economic Freedom Roundup by emailing jordan.bruneau@charleskochinstitute.org. Bruneau’s regular analysis is well worth reading.