Research on the Economic Effects of Right-to-Work

Mackinac Center scholars have analyzed the differences between right-to-work and non-right-to-work states on several occasions.[*] The most recent data suggests that right-to-work states perform better than non-right-to-work states on several different metrics. For instance, James Hohman, the Mackinac Center’s assistant director of fiscal policy, has found:[†]

  • According to the Bureau of Economic Analysis, right-to-work states showed a 42.6 percent gain in total employment from 1990 to 2011, while non-right-to-work states showed gains of only 18.8 percent.

  • According to the U.S. Census Bureau, population increased in right-to-work states by 39.8 percent and only 16.7 percent in non-right-to-work states from 1990 to 2011.

  • According to the U.S. Census Bureau, 4.9 million people moved from non-right-to-work states to right-to-work states from 2000 to 2009.[‡]

  • According to the Bureau of Economic Analysis, nominal personal income grew by 209.3 percent in right-to-work states and by 148.5 percent in non-right-to-work states from 1990 to 2011.

A large body of empirical research has been performed regarding the effects of union membership changes, union organizing and right-to-work laws. Work by such scholars as William Dickens and Jonathan Leonard, Richard Freeman, Henry Farber, Edward Lazear, Melvin Reder, and Paul Jarley and Jack Fiorito offer a fairly clear conclusion that right-to-work legislation reduces measures of private-sector unionization and union-related activities such as organizing.[6]

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Much of this work is described by Moore (referenced above) in a study titled “The Determinants and Effects of Right-to-Work Laws: A Review of the Recent Literature.”[§] In this review, Moore zeros in on research designed to explain the impact of right-to-work laws. He describes the literature, examines methodologies and notes the findings on the impact of right-to-work laws on unionization, wages, economic development and other issues. Moore found both anecdotal and empirical evidence that right-to-work laws have a positive effect on state economic development, though not universally.[¶]

Newman (referenced above) tested the effect of right-to-work laws on the economic growth in manufacturing industries in southern states in roughly the two decades following the Taft-Hartley Act. The study, which controlled for taxation and unionization rates, found that right-to-work laws were a significant contributor to growth, and that this effect was more pronounced in labor-intensive industries.[7]

A 1998 study by Holmes (referenced above) measured the effect right-to-work laws had on firm location decisions at the county level. This study attempted to isolate the effect of right-to-work laws by controlling for other policies that may have impacted firm location decision, such as business tax rates and geographical setting. It found as large as a 33 percent increase in manufacturing employment in border counties in right-to-work states.[**]

The most recent research on the impact of right-to-work laws is more mixed. A 2009 study by Lonnie K. Stevans — which carefully attempted to control for endogeneity — analyzed state data from 1990, 1995, and 2000 through 2005. He found that there were no wage or employment effects of right-to-work laws.[8]

In 2011, however, Richard Vedder, Matthew Denhart and Jonathan Robe studied the impact of right-to-work using a model that analyzed the lower 48 states from 1977 through 2008. They found that right-to-work laws increased economic growth rates by 11.5 percent.[9]

In 2012, this co-author (Hicks) estimated the impact of right-to-work on manufacturing employment, manufacturing incomes and the share of manufacturing income in states from 1929 through 2005. This study examined the actual effect of right-to-work laws using an identification strategy which isolated southern states and 1947 manufacturing employment to account for political factors which may have contributed to the passage of right-to-work. This analysis found no impacts on aggregate manufacturing employment, manufacturing incomes or the share of manufacturing income. However, right-to-work laws produced a statistically meaningful contribution to manufacturing income growth in the majority of states which had adopted the legislation since 1950.[10]

[*] The Mackinac Center for Public Policy first published on this subject in 1992. George Leef, "Protecting the Political Freedom of Workers," (Mackinac Center for Public Policy, 1992), (accessed Aug. 20, 2013). Since then, it has produced hundreds of articles, studies, blog posts, press releases and videos on the topic. A keyword search for “right-to-work” on its Web site generates 781 matches.

[†] These statistics are based on the latest available data at the time of this writing. Oklahoma, which became a right-to-work state in 2001, was not included in the analyses.

[‡] For more information, see: Michael LaFaive, "Right-to-Work Laws Influence Migration," (Mackinac Center for Public Policy, 2012), (accessed July 30, 2013).

[§] William J. Moore, "The Determinants and Effects of Right-to-Work Laws: A Review of the Recent Literature," Journal of Labor Research 19, no. 3 (1998). This was Moore’s second literature review of the effects of right-to-work laws. His first was published in in 1985 with co-author Robert Newman. William J. Moore and Robert J. Newman, "The Effects of Right-to-Work Laws: A Review of the Literature," Industrial and Labor Relations Review 38, no. 4 (1985).

[¶] As mentioned above, Moore effectively dismissed results that did not find a significant positive effect, because they examined short time frames.

[**] Thomas J. Holmes, "The Effect of State Policies on the Location of Manufacturing: Evidence from State Borders," Journal of Political Economy 106, no. 4 (1998): 668. This large increase in manufacturing employment was only evident in counties that had no geographical complications and exhibited policies that could be considered “business-friendly.”