Differences Between Right to Work and Non-Right to Work States

Larry Gigerich

By: Larry Gigerich - Managing Director, Ginovus

Category: Economic Development

For many years, economic development officials and site selection consultants have discussed the key differences between right to work and non-right to work states in the Midwestern part of the United States. In many cases, companies will not even consider non-right to work states for new facilities, out of concern for how their operations will be affected. When our firm is completing site selection analysis for a company, the question of right to work versus non-right to work is asked the majority of the time.

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Conventional thinking and anecdotal stories have supported the belief that right to work states fare better than non-right to work states. In addition, businesses view right to work states as locations where companies and employees can benefit from more economic growth. A recent study brings forward very compelling facts that reinforce these beliefs.

The American Legislative Exchange Council recently published research completed by the National Institute for Labor Relations which provides five different forms of tangible information regarding the economic differences between right to work and non-right to work states. The research completed was based upon statistics from the Bureau of Labor Statistics, United States Census Bureau, United States Patent and Research Office and Bureau of Economic Analysis. Five economic factors were analyzed in right to work and non-right to work states in the Midwest, with the following statistical outcomes:

1. Percentage Growth in Non-Farm Private Sector Employees (1995-2005)
a. Right to Work States: 12.9%
b. Non-right to Work States: 6.0%

2. Average Poverty Rate-Adjusted for Cost of Living (2002-2004)
a. Right to Work States: 8.5%
b. Non-right to Work States: 10.1%

3. Percentage Growth in Patents Annually Granted (1995-2005)
a. Right to Work States: 33.0%
b. Non-right to Work States: 11.0%

4. Percentage Growth in Real Personal Income (1995-2005)
a. Right to Work States: 26.0%
b. Non-right to Work States: 19.0%

5. Percentage Growth in Number of People Covered by Employment Based Private Health Insurance (1995-2005):
a. Right to Work States: 8.5%
b. Non-right to Work States: 0.7%

As noted above, right to work states create more private sector jobs, enjoy lower poverty rates, experience more technology development, realize more personal income growth, and increase the number of people covered by employment-based private health insurance. These facts provide public policy thought leaders with compelling information regarding the importance of being a right to work state. Many of the states that are faring most poorly in terms of unemployment rates and economic growth are non-right to work states. Most assuredly, this is not the only reason, but it is an important contributor to these states’ struggles. It is important for state-level policy makers to remove any barriers to economic growth in their state. A non-right to work state changing to a right to work state is an excellent example of how leaders can improve a state’s outlook. Elected officials in non-right to work states should seriously examine this issue and consider the potential benefits to their citizens.

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