More than five decades of experience with RTW laws has yielded a large body
of economic analysis of their impact on a variety of economic factors.
Right-to-work laws were enacted, in large part, to promote economic growth.
Anecdotal evidence suggests that they have. The economies of RTW states have
been growing faster than those of non-RTW states since the late 1940s. Much
research attributes this phenomenon to employers seeking to avoid unions. (Cobb,
1982; Newman, 1983; 1984; Cappelli and Chalykoff, 1985; Kochan et al., 1986;
Reder, 1988). For a review of the pre-1980s literature see Moore (1985).
Survey research also indicates that RTW laws are important in industry location
decisions (for a review of the literature see Cobb, 1982 and Calzonetti and
Walker, 1991). Businesses often cite RTW laws or "favorable business climate" as
major factors in location decisions. For example, Schmenner (1982) reports that
in his survey of Fortune 500 firms a "favorable labor climate" was the most
important factor in industry location followed by proximity to markets.
Holmes (1996) finds a precipitous drop in manufacturing activity when crossing
the border from a RTW into a non-RTW state. Relative manufacturing employment
declines by one-third as one moves from within 25 miles of the border in the RTW
state to within 25 miles of the border in the non-RTW state. Holmes finds that
this pattern did not become statistically significant until the early 1960s or
many years after the passage of the Taft-Hartley Act (which permits RTW laws),
suggesting that it may take years for these laws to yield significant returns in
Examining 311 U.S. metropolitan areas, James Bennett (1994) finds that while
families living in non-RTW states have higher average nominal incomes, the
average urban family in a RTW state has $2,852 more in after-tax purchasing
power per year than the same family would have in a non-RTW state. This is
because on average, residents in states without RTW laws pay 24.5 percent more
for food, housing, health care, utilities, property taxes, and college tuition
than those in RTW states). Moreover, Bennett finds evidence that the gap in
living standards between RTW and non-RTW states appears to be growing over time.
Employing similar methodology for nine Midwestern states, David Kendrick (2001)
finds inflation-adjusted, after-tax income to be $1,145 higher in RTW states
(IA, KS, NE, ND) than in non-RTW states (IL, IN, MN, MO, WI).