In general, we find evidence that counties in states with right-to-work legislation observe higher employment as a percentage of total private employment in union-dense industries than it would have been without right-to-work laws. The most interesting cases concern the border counties between states which differ in their policies regarding right-to-work. In most union-dense industries analyzed, there is a clear indication that border counties in states without right-to-work laws are losing employment share to neighboring border counties in right-to-work states. However, this relocation of employment opportunities to right-to-work counties is not the only source of increased jobs.
To illustrate the effects of right-to-work laws in counties along each side of a border between two states with differing right-to-work policies, we make the following assumptions regarding these border counties: 1) the typical county borders five other counties; 2) right-to-work border counties typically border three other right-to-work counties; and 3) border counties in non-right-to-work states border two right-to-work counties. These assumptions are intended purely for illustrative purposes and results can easily be computed with alternative assumptions. Also worth noting is that not all the results met the conventional thresholds used to determine statistical significance. Many of the economic effects are nevertheless large and worth discussing.
Using these assumptions, the results regarding the manufacturing industry, which accounts for just over 16% of private employment, are particularly interesting and distinct from the other industries analyzed.
We find that right-to-work laws led to increased employment in manufacturing as a percentage of total employment in all types of counties analyzed — both border and interior counties in right-to-work states and border counties in non-right-to-work states. This finding is based on a national analysis of border counties, but it is particularly large for post-2000 right-to-work states, such as Michigan.
Specifically, manufacturing employment as a share of total private employment in interior right-to-work counties was estimated to be 15.5% higher in pre-2000 states and 31.5% higher in post-2000 states.[*] Border counties in pre-2000 states had 12.1% higher employment share and in post-2000 states the figure was 20.7%.
The most interesting result regarding the effects of right-to-work on manufacturing employment might be that border counties in states without right-to-work laws also had increased employment share, by between 3.4% (pre-2000) and 10.8% (post-2000). This finding might be the result of increased demand for inputs by manufacturers in the bordering right-to-work states. With some of those suppliers being located across state lines in the non-right-to-work state, the employment benefits to manufacturing can spill over across state borders.
The results in the construction industry, nearly 6% of private employment, are mixed. Construction employment in interior counties is estimated to be 15.0% higher in pre-2000 states. However, in post-2000 states, construction employment in interior counties is lower by 7.1%.
In right-to-work border counties, the employment share of the construction industry was 14.2% higher in pre-2000 states and 1.6% higher in post-2000 states. Border counties in non-right-to-work states are estimated to experience 0.8% higher employment share in pre-2000 states but 8.7% lower in post-2000 states.
The effects of right-to-work laws on the transportation and warehousing industry, which accounts for just over 4% of total private employment, was not found to be statistically significant in any of the groups of counties studied. But we will present the point estimates here.
Interior counties in right-to-work states observe employment share in transportation and warehousing increased by 11.7% higher in pre-2000 states and 4.0% higher in post-2000 states. Border counties in pre-2000 states were estimated to also experience an 11.7% increase in transportation and warehousing share of total private employment. However, in post-2000 states, there was a 3.5% reduction in employment share in border counties.
Border counties in non-right-to-work states had no change for pre-2000 situations but experienced a 7.5% increase in transportation and warehousing employment share when bordering a post-2000 right-to-work state. Like manufacturing, this might be the result of the coordination of firm activities and suppliers across state lines.
Given the smaller industry share of total private employment for the utility industry (1.4%), the information industry (1.6%), and the educational services industry (2.3%), we only quickly highlight the results for these three industries.
In both the utilities and the information industries, right-to-work is estimated to increase employment share in border counties in right-to-work states but decrease it in both interior right-to-work counties and border counties in non-right-to-work states. Right-to-work in the educational services industry is estimated to reduce employment share in all cases except for border counties in non-right-to-work with post-2000 adoption.
[*] The estimates discussed here are percentages and not percentage points. The estimated 15.5% to 31.5% increase in industry employment corresponds to 2.5 and 5.1 percentage point increase in manufacturing’s share of total private employment, respectively.